Washoe County held its tax sale this past week but I have nothing to report. I confess. I missed it completely.
I hope I can pay better attention next year.
New Tax Sale, But Nothing to Report
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Tag Archives: Tax sale
Would I buy a Belvedere Condominium?
My posts on this blog about the Belvedere condominium project and developer Bijan Madjlessi generated more interest than any other so far. Readers have even contacted me asking what I thought about buying units in the project.
I must begin with this disclaimer because except for what I have read or learned in newspaper or other reports my direct knowledge of the Belvedere is almost nonexistent. I’ve never been in the Belvedere nor have I ever met any of the players that I am aware of. As I said the extent of my knowledge has come only from news articles or from comments on this or other blogs. Therefore I believe I am not qualified to recommend in any way either positive or negative about the benefits of purchasing a Belvedere condominium unit.
My concern with the Belvedere project is that I am not convinced that the legal difficulties are yet over. There are some other reasons that I do not like condominiums but I will save that for another time.
As we have learned from the Reno Gazette Journal, the Belvedere condominiums were purchased at a Washoe County tax foreclosure sale by David Lonich, the attorney for Madjlessi. It would appear to me that Lonich is nothing but the straw buyer for Madjlessi.
We learned that Madjlessi failed to pay his mortgages, failed to pay his vendors, and failed to pay property taxes, thus resulting in tax foreclosure.
We learned that Madjlessi had been arrested in California for insurance fraud. Then as information began to grow we learned that Madjlessi was involved in the failure of Sonoma Valley bank. We further learned that Madjlessi had been involved in at least three other failed developments in California in the Sonoma and Petaluma area.
I would be concerned that the Belvedere is still a target rich environment for attorneys and law suits. I can only imagine that some hungry attorney will see an opportunity in coming to aid of the vendors that lost so much by their supplying goods and services to the project.
I just can’t imagine that they will be happy seeing Madjlessi win at their expense.
So, no. I would not personally be comfortable buying a condominium in the Belvedere project.
I would welcome comments from anyone having a different opinion.
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The Continuing Belvedere Saga
I have received a lot of visitors from the Reno Realty Blog because of the discussion on the Belvedere.
One thing I noticed is that the link to the RGJ article no longer work. After 30 days the RGJ places its articles in its archives. You can still find the article if you choose the correct term, and are willing to pay to read it.
I will attempt to address some of the comments at RRB:
Jo Amick says:
June 13, 2011 at 6:30 PMI also think “Tax implications and vacancy rates alone could very well put your return on investment at 4 years + ” to agree with “Nomad”. Guess I got beat to the punch!
I believe that all “tax implications” were wiped out at the Washoe County tax sale.
Renter says:
August 16, 2011 at 1:58 PM
…
Back to the discussion on being an investment opportunities, what seems to kill the deal is the “mechanic’s liens number in the hundreds”. I believe there are over $80K of liens on each apartment there.
…
As I understand the law a tax foreclosure takes priority over all other debts and obligations except IRS liens. Therefore, the mechanics liens were also wiped out.
GreenNV says:
August 16, 2011 at 7:52 PMOK, this is my understanding. In a foreclosure situation, all the junior lien holders have the right to bid to try to maintain their interests in the property. If they don’t and the Trutees Sale is completed, their claim on the property it expunged.
So for the Belvedere, short sale properties still have the mechanic’s liens in place and should be avoided. Properties that have gone TD should be free and clear of the mechanic’s liens. I think buying a unit from the bank is pretty safe legally (given the other risks), but there are NOT any of the foreclosed units on the market right now. That smells fishy to me, so there may be more to the story.
This would be correct if it were a Trustee foreclosure sale or short sale. The Belvedere properties were NOT short sales nor were they Trustee sales. These were tax deed sales, sold by Washoe County.
By using the tax foreclosure sale route the property no longer has any bank debt, mechanics liens, HOA liens.
The bank did not buy the properties. According to the RGJ, they were all bought by Madjlessi’s lawyer. Therefore, the bank is NOT the seller.
I welcome and invite your comments and especially your corrections to anything where I may have been in error.
Please feel free to Like this post.
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Belvedere Developer and the Glassman
Bijan Madjlessi is the real estate developer that was arrested because of dual insurance claims because of a fire at the Belvedere towers condo project.
It appears that he had a history of using and abusing people. It seems that not paying his contractors and vendors was his standard practice.
One of these vendors was Chad Empey of Petaluma, CA and it appears that he is fighting back. He has posted videos that explain in detail how Madjlessi ran his operation. This video is only one of many describing Madjlessi, his operation, and the corrupt bankers that enabled this fraud.
http://youtu.be/zhMpSmAS5tA
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Belvedere Developer also Linked to Failed Bank in CA
Bijan Madjlessi was/is the owner of the Belvedere Towers condominium project here in Reno and who had neglected to pay his property taxes resulting in the property being seized in a tax foreclosure by Washoe county.
Madjlessi has also been arrested in California for insurance fraud because he filed insurance claims on two separate policies.
Now, it appears that Madjlessi has a very busy man. He is also linked to the failure of the Sonoma Valley Bank that had three branches in the Sonoma Valley area of CA.
When Sonoma Valley Bank granted him a loan he had already defaulted on a loan from IndyMac bank for the same project.
At the center of the bank’s downfall is a series of large loans made to a small group of North Bay developers who were behind three Sonoma County projects that fell into foreclosure over the past few years.
The bank continued to fund the projects even after it became public in land records and lawsuits that the developers were defaulting on multimillion-dollar loans from other banks and were not paying construction contractors.
At this time I am aware of at least two other failed real estate projects. He blamed the bad economy.
Read more here.
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Washoe County Tax Sale and the Belvedere
Washoe County recently conducted the sale of tax delinquent properties. According to Nevada statutes the properties are placed for sale if the taxes have not been paid for at least three years.
The RGJ reported on the purchase of 92 condominiums by David Lonich, the attorney representing Bijan Madjlessi of Belvedere LLC. Madjlessi planned to market the condos in the Sundowner’s north tower, but the economy and the real estate market soured and he was unable to sell as planned.
The lawyer for the developer of downtown Reno condominiums — converted from rooms in the former Sundowner Hotel and Casino — on Wednesday purchased 92 of the condos for nearly $2 million at auction, after his client was delinquent in paying nearly $800,000 in taxes to the county.
But, here is the part that the RGJ, for whatever reason, did not tell.
The story was related to me by people that had attended the Washoe County Tax sale last week.
Lonich bought all 92 units and experienced little or no competition. Others bid on some of the properties, but were all out bid.
The nature of the tax lien is that it is superior to all other liens. Consequently, when a tax sale is conducted, all other liens are wiped out.
So, what else was wiped out? Since the taxes take precedence over all else, any financing, or mortgage loans were eliminated. According to notices of default totalling approximately $47.9 million, debt in that amount was eliminated, completely. The RGJ reported that the property was purchased for $7.89 million. I’m not clear how debt could grow to 47.9 million. Nevertheless, it would appear the banks lost, big time.
Likewise, public records showed a total of 359 liens had been filed against Belvedere LLC and the property. Some of these liens may have been satisfied, but this has not been verified. A total of 771 documents have been recorded associated with Belvedere LLC and I have not reviewed all of them. These liens have all been completely wiped out by the tax foreclosure. Each of these liens represents someone that Belvedere LLC owed money, and each was left holding the bag.
Contractors didn’t get paid. Vendors didn’t get paid. The HOA didn’t get paid. and even the City of Reno didn’t get paid.
Now, I believe that some of these liens may have been satisfied because some of the units may have been sold but this has not been verified. Therefore the total numbers may vary a bit, but this is still close.
And what did Madjlessi lose? You may be surprised to learn that he fared a bit better than his associates, the banks and the contractors and vendors. He was able to eliminate $47.9 million
in debt for a mere $2 million and he got a lot of his building upgrades for free.
It’s nice work if you can get it.