Minor buys his own farm at foreclosure auction
Auctioneer Dick Heatwole takes bids from the crowd at the January 4 foreclose auction for Halsey Minor's Fox Ridge Fam.PHOTO BY DAVE MCNAIR
In the bitter cold outside the Albemarle County Courthouse Monday, January 4, Internet tycoon and half-built hotel owner Halsey Minor, through his attorneys (David Pettit and Michael Derdeyn of Feil, Pettit & Williams), appears on his way to coughing up some cold, hard cash to avoid losing his 205-acre estate, Fox Ridge Farm.
As the highest bidder at his own foreclosure auction, attended by about two dozen people despite the cold, Minor had to put down $75,000 of the $1.39 million he bid to settle a loan secured against the property earlier this year and avoid losing his farm. The loan came from a limited liability company fronted by Virginia National Bank founding president Mark Giles, who attended the auction and made several bids himself, driving up the $1.1 million opening bid announced by trustee Nancy Schlichting, of Lenhart Obenshain, the law firm handling the foreclosure for Giles and company.
There was one other bidder who went as high as $1.35 million, and as the second highest bidder, will have first dibs on the property, which would mean taking over the $6.7 million first mortgage loan from First Republic Bank, should Minor fail to make good on the balance owed to Giles and company.
According to the trustees, the balance of the payoff amount to Giles, including fees, unpaid real estate taxes, and a five percent cut to Lenhart Obenshain, is $1.155 million, which means Minor ended up paying $235,000 more–roughly 22 percent–than he originally owed on the second loan. However, that's not as bad as it sounds because any payment Minor makes over what's owed to Giles and company goes to the owner of the property–Minor himself. So, in reality, Minor actually paid around $115,000 more than he owed. Confused? You're not alone. That's because its pretty unusual, according to a spokesperson at Lenhart Obenshain, for a property owner who has been foreclosed on to buy back his own property at auction.
Mark Giles, the investor who foreclosed on Minor, made several bids on Minor's farm.PHOTO BY DAVE MCNAIR
As local real estate developer Richard Spurzem points out, the event on the courthouse steps was more of a high stakes poker game than a real auction.
Sprurzem says the fact that Giles bid meant he had the means to purchase the property and felt it was worth the roughly $8 million it went for. But Spurzem remains curious as to why Giles didn’t continue bidding. As he points out, Giles would have really got the property for only $6.7 million, as any bid money against the second loan would have gone back to him as the holder of the loan. Of course, Minor, too, could have easily kept challenging any bid, for as we've mentioned already, anything more than the amount owed to Giles and company would have come back to him as the owner of the property. Giles or Minor did not respond to questions about their motives by press time.
So what the heck was this whole exercise about?
“Minor probably thought these guys weren’t going to foreclose because they didn’t want to buy the first mortgage,” says Spurzem, adding that maybe Minor figured he could buy back his property for considerably less than he owned on it at auction. “But he should have realized that when it was foreclosed on it meant Giles had the money, and was willing to buy the farm.”
Still, Spurzem agrees with Minor when he told the Hook that Fox Ridge Farm had as much chance of being sold “as I do appearing on the cover of the Hook with a halo and wings.”
“It was all part of a game,” says Spurzem. “Halsey’s game.”
Of course, Minor has alleged that the foreclosure was part of a game being played by Giles and his “friend and golfing buddy” Lee Danielson, the developer of Minor’s stalled Landmark hotel project, whom Minor has re-filed a lawsuit against. But that’s a rationale Danielson has called preposterous.
Who is the mysterious third bidder?
PHOTO BY DAVE MCNAIR
--major update 4:00pm January 5
–minor edits at 10:14am January 4
–original headline: "Minor holds on to Fox Ridge Farm"
–update 4:00pm Jan
25 comments
Minor claims Giles is best golfing buddy with his arch-nemesis Danielson.
Most of you just do not get it do you?
Stick with your day jobs and let the big boys play.
Who was the second highest bidder?
The banker bid against the person that was borrowing money from him to keep their home? Top marks Mr. Giles, and please accept the Tosspot of the Year award. Maybe it's me, but I would be a tad upset if I was Monsieur Minor.
Good day.
And let me remind you it is still about the HOTEL.
If the property in question was let go.
We who live here in this wonderful town would know all to well that
the show was over.
Your turn to deal.
Thank Youuu.
Richard Spurzem isn't an expert on how to value property even though he owns a lot of it ala Neighborhood Props. He's had a half dozen houses for sale for over a year, JPA, Belmont, Little High St, etc. All just had priced drops of $100,000. They're still overpriced $100-200,000. Funny you asked his opinion.
Joe, that hotel's dead. RIP.
Halsey Minor is now like one in four American mortgage holders: he's "underwater," which means he owes more than the property is worth.
A prudent business move would be "strategic default":
http://realcville.blogspot.com/2009/11/law-professor-says-homeowners-sho...
However, Mr. Minor may choose to keep the property at such a steep price for several reasons:
1. He's a native son
2. He actually enjoys the property
3. Strategic default is not--yet--socially acceptable
4. To let the property go into foreclosure would be taken as a sign that Mr. Minor has lost his fortune, and encourage the local and national media sport of shouting "He's broke!"
Let's face it: The Landmark Hotel is never going to be completed, by Mr. Minor (broke or not) nor anybody else. It was a great idea in a different era.
Hotel revenue in 2009 was the lowest since the Great Depression. The American economy is going to remain weak for years. No bank or private investor is thinking "Hey, Charlottesville really could use a luxury hotel."
Let's all move on....
Looks like Minor has his usual two people who are beholding to him writing on his behalf (or is it really him as he probably doesn't have two people who would do squat for him?). Typical to plant seeds of Giles being the "bad" guy...Minor borrowed money and didn't pay...Giles wanted to collect on his collateral. Minor certainly wasn't surprised at the action as it is well disclosed. So in the end Minor gets a 30 day extension for $75,000 plus attorney fees to his attorneys (Pettit) who probably won't collect on them either. Then Minor will sue his attorneys claiming they misrepresented him.
That farm's not worth $6M or $8M because there's nobody out there to buy it. It's assessed at half the price. There are thousands of acres and millions of dollars of unsold rural real estate in Albemarle County. It's a buyer's market for the next decade.
Halsey Minor isn't broke. He's toying with Giles b/c he CAN. If he gives the farm back to the bank it's just a big FU.
Maybe Mark Giles is broke. If he thought the property was worth at least $6.7M he would have kept bidding. But he blinked.
How about a story on Virginia Nat'l Bank, home of both Mark Giles and real estate loser Hunter Craig? How's that bank doing?
Also I love the photo of Mr. Giles. He looks strictly bidness baby!
Halsey Minor already defaulted on the payments. There is no way on God's green earth he'll pay over $1 million cash to buy the second mortgage, bid up to hundreds of thousands more than he owed, on a property that is already way "underwater." No instead he is going to claim the auction was collusive, Giles and his puppet bidding up the price against him. Halsey's lawyer will file suit demanding a new auction, this time with transparent bidding i.e. no undisclosed principals and collusive bidders excluded.
What I don't get its why the LA bank holding the first mortgage hasn't started its foreclosure yet. Best guess is California is so overwhelmed with foreclosures that Minor's sits in the middle of a huge stack--and the California bank itself is tottering, maybe unwilling to admit how bad its loan portfolio really is.
Oh we all know Halsey Minor is a buy-now-pay-never rogue. America loves a rogue, especially when he tweaks the noses of banks and auction houses, and stays one jump ahead of the sheriff.
Much as I like Mark Giles I have to say A) he knew full well 2nd mortgages are trouble because he warned three or four years ago that the 2nd mortgage market was unsustainable and we were headed for a collapse-- this BEFORE the real estate collapse; and B) taking a second mortgage on a property which cannot be developed because of a conservation easement, and cannot be sold because of a huge first mortgage, is asking for trouble. Just what bill o' goods did Halsey Minor sell him: a guy allegedly worth hundreds of millions of dollars needs to take out a $1 million second mortgage? Hey Mark, I'll sell you my farm, and all you need do is cash this huge check for me and send the proceeds to Nigeria . . . .
Rather than bid at the foreclosure, why didn't the winning bidder pay off the note, eliminating the need for the foreclosure? It would have saved the Trustee's fee, if nothing else.
Hey, I was actually thinking of having a small business.I followed
this Link online. And luckily, they had what I was looking
for.They also helped me get started the same day. They had an
eBook download and then mailed me out a hard copy of the book a
few days later. Foreclosure Clean
So--did Halsey stiff Mark Giles AGAIN? First when he defaulted on the 2nd mortgage, then when he bid on his own property in the foreclosure? It's been 30 days. So where's the money? And where does Mark Giles stand now that the Big Boys in L.A. are foreclosing on their $6 million first mortgage on a property that will never fetch anything close to that? What happens to Giles' comparatively puny $1.1 million? Inquiring minds want to know.
HM should sell shares in the hotel project, let's say $500 shares with a ROI spread out over 10 years. That way the project could get completed and lots of local people could own a piece of Landmark posh pie and get a brass plaque on a bar stool or a suite named after their labrador. It's a thought?
/btw Dave, line 14 should read 'losing'.
You're welcome.
Floozy...thanks. It's fixed. And for you "seriously," instead of disparaging Mr. Spurzem, why don't you point out what you think he got wrong? Or perhaps add your own analysis? And maybe tell us why you think the hotel is RIP? Just a thought.
Dave McNair
Giles didn't want that mortgage--he was playing 'chicken' with Halsey. Giles isn't quite as rich as he'd like, because he was mostly paid in Va. Nat. bank stock rather than salary, stock now in the dumpster ($14.50 a share, down from nearly 40 at one point, almost down to where it started at $10). And if he'd won the auction, would he then co-own the property with Halsey Minor? Would they sit across the empty dining room table surrounded by unpaid-for Sotheby's artwork, glowering at each other in sullen silence? Just exactly what good does a foreclosure do on a second mortgage, since the property is still owned by the owner and encumbered by a huge first mortgage? Further explanation is warranted.
Well I have to say it because the hook will not. Halsey told ya so!
Lesson to be learned...
Don't be so greedy, pay cash and live within your means....
Just think of how nice a life you could have. He got 350 million for Cnet. If he put even 200 million in the bank and just let it get 4% interest he would get 8 million dollars a year to live on... and still keep the balance... (thats 21,000 dollars a day folks)
Anybody that feels even remotely sorry foe this guy needs to have their heads examined.
Seems to me if Mr giles ended up with the note then the only thing he would have accomplished is owning a lien on the property for the original amount of the note. Even if he had bid the note up to ten million the lien would still have only been the amount filed in the foreclosure, (principal interest and legal fees)not the sales price. So long as the first mortgage was current he could do nothing with the note but wait until the property was sold to collect his money. I would suppose he bid to protect the princiapl from going DOWN.
Who is gonna step it up and write the book on this guy>? The hook has it for him maybe someone should pen it now and get it underway just in time to publish right after the ever elusive always right around the corner anit=climax of Mr. Minor's contentious affairs.
The reason that the la bank does not foreclose is because they would then have to absorb the loss accountingwise instead of claiming an asset. Its all that "mark to market" accounting.
They would rather let it sit and hope the market turns up or that his ego causes him to pay up.
In the long term it is the wizer thing to do.
I agree with Risky Bidness' comment that Minor will assert a claim that the auction was "collusive". this reasoning is consistent with HM's well documented pattern of behavior in all of his other suits, including threatening letters, and public statements attacking his (perceived) adversaries' personal lives and past business practices (HM has made statements in this magazine smearing Lee Danielson and has even posted comments suggesting that Danielson is an alcoholic under another moniker-- see:http://readthehook.com/blog/index.php/2009/09/08/thains-bane-minor-hit-with-harassment-order/ under the Danielson_Is_God post, and has insinuated that Hawes Spencer may not have led a "clean and pure" life in a bizarre email posted here: http://www.scribd.com/doc/22769794/Halsey-Minor-Bizarro-Email.
How HM is still in a position to wreak havoc with peoples lives, having already been slapped with restraining orders for harassing and threatening Bank of America bigwigs, as well as sending "venomous" letters to race track owners, many of whom are no financial lightweights themselves (see: http://www.horseraceinsider.com/blog.php/west-coast-wash/10062009-misnam...), is beyond me.
Eventually HM will lock horns with someone in his own weight class, or, God willing, in a higher weight class, and it won't be pretty. For the moment, though, it does look like he has dodged a bullet”Š
@ just curious- my guess is that Minor "bought" this note as a stall tactic, and has no intention of paying up- again. Commenter "Risky Bidness" has the right prediction, in my opinion.