A deal to sell the Centerpoint Condominiums has fallen apart, and a legal battle is now expected that will keep the unfinished towers in limbo for months – or longer.
The transaction ended abruptly when the property’s title company reversed its position on a key element of the deal, said Mark Winkleman, CEO of Centerpoint’s owner, ML Manager LLC.
Contractors have more than $20 million in liens on the property, but Fidelity National Title Insurance had agreed Centerpoint’s buyer wouldn’t be liable for the debt, Winkleman said.
“They were working with us on a daily basis, getting ready for closing,” Winkleman said. “We were within 48 hours of closing when we got an e-mail message out of the air saying, ‘We have changed our mind.’ ”
That wasn’t acceptable to the buyer, the Ohio-based Zaremba Group. It had announced plans in September to buy Centerpoint for $30 million and it expected to close the deal in October.
ML Manager plans to sue Fidelity to free the title from the liens, Winkleman said. Buyers are only interested in the property if they can get it free of liens, he said.
“I don’t believe there is a deal that can be made to sell it right now based upon the position of the title company,” Winkleman said.
A Zaremba representative deferred comment to Winkleman. Fidelty could not be reached for comment.
ML Manager argues the liens are the responsibility of Centerpoint’s developer, the Tempe Land Corporation. It marketed the project through its Avenue Communities brand and has since filed for bankruptcy.
Centerpoint construction stalled in 2008 as its main lender filed for bankruptcy. Mortgages Ltd. had loaned Centerpoint $125 million that it raised from more than 1,000 investors. Its successor company, ML Manager, would pay those investors with proceeds from the sale. ML Manager is overseeing about 50 of Mortgages Ltd.’s projects and Centerpoint was the biggest loan the company made.
“Most of our deals are complicated, but Centerpoint is probably the most complicated,” Winkleman said.
If ML Manager wins its legal battle, it would contact potential buyers that include Zaremba, Winkleman said. It’s hard to know how long a legal battle could take to resolve, he said.
“Certainly months and it seems like those things can go on for years in some instances,” Winkleman said. “I hope that’s not the case.”