Bank Litigation
At the time of the fourth receiver's report, the receiver's attorney had been working with Barrington and Itasca banks, as well as Chubb Insurance to come up with a possible settlement in the bank litigation.
Ending this COSTLY lawsuit will be a HUGE STEP FORWARD for Cedar Run, especially for those looking to sell or refinance their units.
In nearly three years since this lawsuit began, the Sher/Shaw group has made NO EFFORT TO SETTLE the case and EVERY EFFORT TO ESCALATE IT. In fact, Itasca Bank made a settlement offer over two years ago that wasn't very costly to the HOC and basically required the following:
- Sher/Shaw/HOC group must return and account for all Phase Association dues it had collected (to date only about 40% has been returned).
- Sher/Shaw/HOC group must issue a letter to all Cedar Run Homeowner that retracts all previous statements that the loans were illegal.
Fast-forward to today........There have been a lot more damages and costs associated with this litigation over after two more years. Those damages are currently being tallied and evaluated.
How does this relate to selling/refinancing?
For quite some time, homeowners trying to sell their properties have not been able to sell to anyone except cash buyers (and usually for a cut-rate price). Mortgage lenders require disclosure forms from associations that state, among other things, whether or not the association is involved in litigation. This bank case has been a huge red flag, and has caused many real estate deals to die in Cedar Run. The mortgage lenders would back out, and nobody could secure a loan.
As of the last year or so, mortgage lenders have started making similar requirements when refinancing existing mortgages. We know of at least four cases where an owner was turned down on a refi due to lack of proper disclosures or impending litigation.
Ending the bank lawsuit will have an immediate effect on the phases. The phases will no longer be parties to a lawsuit. They will be able to check 'NO' next to the litigation question on the 22.1 disclosure form. As for the HOC (Master Board), it will be one step closer to checking that 'NO' box if this lawsuit is settled. The only other lawsuit would be the one that put us into receivership......which will end shortly after the upcoming election.
Opening up Cedar Run properties to mortgagees will bring us an INCREASE in property values, and we will likely start seeing more buyers as owner-occupants rather than off-site rental investors. It will also be easier for existing owners to stay in their homes if they have the option of refinancing.
We'd love to hear from you!
(224) 544-9058
Do we have any news on the audit? Any closer to ending all this?
ReplyDeleteWe're getting closer. The accountant that was withholding documents did appear in Court on 8/6. He did provide some documentation, but not everything the auditors wanted. Case was continued to 8/26, where the accountant is expected to provide the additional information.
DeleteDespite this, we are told that the auditors will press on to complete the audit. Can't give an estimated completion date, but it should not be too long.
Still no idea how the audit info will be disseminated to homeowners. But once that is done, we are likely to get an election date announcement shortly thereafter.
Why was Sher's accountant not found in contempt, if he failed to have all the documents needed for the auditors?
ReplyDeleteThe 8/6 hearing was for the purpose of something called "rule to show cause" which mean that Mr. Barr was required to prove why he shouldn't be held in contempt. He could do this by:
Delete(A) Handing over everything the auditors requested
(B) Proving that he is not able to provide what the auditors requested
He ended up providing some of what the auditors requested, so he partially complied. The judge gave him until 8/26 to provide the rest of the information.
So in a nutshell, the judge is giving him more time to fully comply before deciding if he is in contempt.
The good news is that the audit will reportedly proceed even without this last bit of information.
Does that mean there will be an asterisk (*) or footnote on the audit report indicating that a certain portion is incomplete due to lack of documents? We don't know.
Does it mean that the audit report will remain in "Draft" form until the information is in? Can't answer that either.
We should get a status update on the audit at the next hearing on 8/26.