A lender wants to put the kibosh on the planned $17.5 million sale of a spec mansion project in Coconut Grove that was being built by Location Ventures, the defunct real estate development firm founded by Rishi Kapoor.
Martin Halpern, as trustee of two trusts under his name and his family’s name, is objecting to a request by the court-appointed receiver overseeing Location Ventures’ assets to sell the unfinished home at 3610 and 3620 Stewart Avenue, records in Miami federal court show. The Halpern trusts hold a second mortgage on the development site for $4 million.
The receiver, Bernice Lee, is managing Location Ventures and various affiliates as part of an ongoing federal lawsuit against Kapoor and his former companies. The U.S. Securities and Exchange Commission accuses him of defrauding more than 50 investors out of $93 million meant for his real estate projects.
Lee declined to comment. An attorney for Halpern did not immediately respond to an email requesting comment. A hearing before U.S. District Court Judge Jacqueline Becerra, who is presiding over the SEC case, is scheduled for Monday, May 20.
Part of Lee’s duties include selling off development sites and unfinished projects owned by Location Ventures and subsidiary Urbin in order to pay back investors, court records show.
In the latest development, Lee filed a motion on May 2 stating that she wants to sell the nearly finished 9,824-square-foot home to JWY Trust, a buyer that had submitted its $17.5 million offer last year when the property was initially listed.
In her motion, Lee argued that selling the property as soon as possible would end a pending foreclosure complaint in which Location Ventures is accruing 24 percent default interest every day the litigation remains active. The lender, 3610 Stewart Acquisition, led by Robert Gutlohn in Coral Gables, has agreed to accept payment of $13.9 million of the $14.5 million mortgage debt allegedly owed by Location Ventures, once the sale goes through, Lee’s motion states.
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Any leftover funds would be used to start paying back investors, the motion states. However, Lee is asking that Becerra approve the sale “free and clear of any liens, claims and encumbrances through the closing date.”
Miami-Dade records show 22 liens totaling $237,000 have been filed against the Location Ventures affiliate that owns the spec mansion site. The Halpern trusts also separately sued the affiliate for allegedly defaulting on the $4 million second mortgage.
Granting Lee’s request would not provide any leftover funds to repay the $4 million debt, violating the trusts’ fifth amendment rights to due process, the Halpern motion states.