Basalt bank ponders eviction of tenants
August 16, 2013
Four families renting townhouses in an El Jebel project with a debt-plagued past are facing possible eviction at a time when it's nearly impossible to find affordable apartments elsewhere in the midvalley.
A bank that acquired the Shadowrock Townhouses served the four families with a notice contending that they allegedly owe rent for March through August. In addition, renters Celeste and John Kemp said an attorney for the bank told them they likely will be notified this week that they will be given three days to move out.
The Kemps said they have paid their rent diligently to the former developer of Shadowrock since moving in in September. The developer, David Forenza, lost the property in a foreclosure sale in July. The Kemps said they are prepared to pay their rent to First Citizens Bank and Trust, which foreclosed on the property and placed the only bid for it, once it becomes clear legally that's the step they should take.
Meanwhile, they have the fear of eviction hanging over them at a time they said they should be concentrating on preparing their four kids for school. The kids are in fifth, sixth, eighth and 10th grades.
"We have to put everything on hold," Celeste Kemp said.
"It's a waiting thing," John Kemp added. "You're just waiting for a bomb to drop."
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Bank closing and foreclosures
Shadowrock is the poster child not only for the real estate bubble in the Roaring Fork Valley that contributed to the recession that started in late 2008 but efforts made to capitalize on depressed real estate values that followed.
Texas developers Blue Ridge Investments Inc. built 30 luxury townhouses across Highway 82 from the El Jebel City Market before running out of financing in the fall of 2008. Sales of the units topped out at $1.1 million.
Forenza said he was brought in as the developer of the project by Colorado Capital Bank's branch in Edwards, which repossessed the property from Blue Ridge. The project had approvals remaining for 70 units. Forenza completed five units before trouble returned.
The Colorado Division of Banking closed Colorado Capital Bank on July 8, 2011. The banking commissioner told the Denver Business Journal at the time that the bank was insolvent.
First Citizens Bank, whose parent company is in Raleigh, N.C., acquired the assets of Colorado Capital, including the loan on the Shadowrock property.
Forenza said his agreement with Colorado Capital didn't make him personally liable for the loan repayment, but he said he sank about $500,000 into the project that he couldn't recover from either bank. Work came to a halt on the project when Colorado Capital ran into trouble.
First Citizens Bank filed a foreclosure action against Forenza on Feb. 28, 2012, according to records at the Eagle County public trustee website. Forenza said the bank didn't aggressively pursue a foreclosure sale until midvalley property values showed an "uptick" this year.
The foreclosure sale occurred July 10, 2013 and the property was deeded over to First Citizens Bank on July 29, records show.
Rented at bargain rates
Forenza wasn't able to sell the five units he completed, but he decided even before Colorado Capital ran into trouble that he would rent them. He received a temporary certificate of occupancy on March 24, 2011, and a final inspection was performed in connection with issuance of a final certificate of occupancy, Eagle County's Building Department confirmed.
The final certificate of occupancy wasn't issued because the five units weren't individually platted, according to Dan Stanek, chief building official. There is no life-safety question regarding Shadowrock, he said.
Stanek said Eagle County has not taken action nor set a deadline that would prohibit the five Shadowrock units from being rented. They just cannot be sold until the plat issue is resolved, he said.
Celeste Kemp said the bank is trying to convince the residents that the lack of a final certificate of occupancy is driving their eviction. She said she spoke to First Citizens Bank attorney Amanda Halstead, of Denver, earlier this month and was told the bank was going to evict the residents because there was no certificate of occupancy and, therefore, no valid lease.
Halstead didn't return repeated voice messages or an email from The Aspen Times on Monday and Tuesday. A representative of First Citizens Bank wasn't immediately able to get back with a statement about the situation on Tuesday.
Families in a jam
The Kemps and other families are all on short-term leases. Celeste, a concierge at a Snowmass Village hotel, said she and John, an employee of a bank, were aware that Shadowrock was in foreclosure but they weren't concerned about immediate eviction. Celeste researched the issue and found that Congress passed legislation in 2009, during the height of the recession, that gave renters in foreclosed properties 90 days of protection. She figured that would apply to Shadowrock.
They found their corner, three-bedroom unit through an advertisement on Craigslist by a Grand Junction real estate broker Forenza worked with.
"It was cheap rent. It was a good deal," Kemp said.
She said they and the other renters had no idea something was amiss until notices were placed on four of the five doors Aug. 5, notifying them they owed First Citizens Bank rent for March through the present. The Kemps didn't receive a notice, so they contacted Halstead, whose name and phone number were on the alleged-late-payment notices to the other tenants.
The notice caught the residents by surprise, according to Kemp.
"You just trust that your broker is doing the right thing," she said.
Another resident, who didn't want to be identified, verified the Kemps' story, although that resident hadn't been told an eviction notice is imminent.
The second resident questioned how Forenza was able to rent the units without a final certificate of occupancy. Numerous features of the townhouses weren't in "final" condition, the tenant said, such as the walls having primer but no paint, cabinets not securely fastened to walls and no venting for smoke from stoves.
Kemp and the other tenant said either Forenza was slow to respond to requests to fix problems with the units or the requests were ignored altogether.
Forenza's representative is no longer collecting rent. He recently notified the Kemps that their security deposit of $1,250, equal to one month of rent, will be returned.
The Kemps want to put their August rent into escrow until the confusing situation is sorted out. Meanwhile, Halstead's alleged verbal warning that the tenants will be evicted has set the residents on edge.
"It's just so scary," Kemp said. "We've been looking in the papers, and there's just nothing available."
The least expensive three-bedroom unit on the market is $2,000 per month, she said, and most are significantly more.
Ideally, the Kemps would like to stay in the unit. If that cannot happen, they want at least 90 days to find other housing.