Legacy Building foreclosure OK’d
Posted on Thursday, July 24, 2008
Legacy National Bank can foreclose the Legacy Building in Fayetteville now that all the claims of subcontractors and suppliers have been settled.
A consent decree foreclosure was signed Wednesday by 4 th Judicial Circuit Judge William Storey in Division 1. A sale date has not been set.
This high-r ise luxur y condominium project at 401 Watson St. is owned by Lynnkohn LLC. Springdalebased developer Brandon Barber; his wife, Keri; and her sister, Laura Kaffka; and the sister's husband, Seth Kaffka are named in the lawsuit as owners of Lynnkohn.
The foreclosure includes 34 of the 41 units included in the project. The bank released the seven units that have been sold, according to the order. The property secures two loans totaling more than $ 18 million.
Typically, banks initiate foreclosure lawsuits because banks make construction loans that put them in a firstlien position. This case was different from most because a subcontractor filed the lawsuit that resulted in foreclosure.
EWI Inc., doing business as RGC Glass, filed a lawsuit on Sept. 21 against Lynnkohn. The bank filed its counter-claim seeking foreclosure on Jan. 3. The company obtained a default judgment on Jan. 9 for $ 124, 604.
The glass company claimed in filings that Legacy National Bank failed to secure its first-lien position because it loaned money to build the project after work had started.
Several other suppliers and subcontractors joined the suit, which increased the amount of unpaid claims to about $ 2 million.
Those other parties include Harness Roofing Inc., Lasco Acoustic and Drywall Inc., Loyola's Custom Finishes Inc., Labor Ready Inc., Johnson Mechanical Contractors Inc., Tom Keck doing business as War Eagle Welding, A 1 Ornamental Inc., National Home Centers, Metro Builders Supply and Blair Electric Inc.
Marshall Ney, the attorney for the bank, said that this case became a simple, straightforward foreclosure once the other claims were settled. He would not say whether the bank paid the other parties in full or in part to settle the claims.
David Pruitt, in-house counsel for RGC Glass, said he is not allowed to disclose how much the glass company received in the case because the settlement is confidential.
Legacy is not the only bank facing a loss from the foreclosure sale. Three other banks - First National Bank of Fort Smith, Metropolitan National Bank and First National Bank of Green Forest - all entered into participation agreements on the loan. Participation agreements allow banks to loan more than their legal lending limit by selling part of the loan to other banks.
The Legacy Building is not the only Barber project involved in foreclosure.
Bank of Fayetteville foreclosed property in the Timber Trails subdivision in June, securing debt to SCB Investments and Brandon Barber. The bank's judgment was $ 189, 217 following the sale.
First Federal Bank of Arkansas filed a foreclosure petition July 15 against Barber and others on a debt of more than $ 5 million secured by 40 acres at Arkansas 112 and Howard Nickle Road.
The Arkansas Democrat-Gazette contributed information to this report.
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