Once bankrupt, Snowmass home sells at foreclosure
The note-holder on a Snowmass spec home that went bankrupt last year has taken ownership of the property through a foreclosure sale.
Okean Investments of Florida Inc.’s sole bid of $6.99 million at Wednesday’s foreclosure auction at the Pitkin County Courthouse gave it possession of the home at 999 Brush Creek Road, which had been developed and owned through a limited liability corporation controlled by Peter Droste.
Droste could not be reached Friday, but his counsel in the bankruptcy proceedings said he’s cutting his losses. The six-bedroom, 10-bathroom home at one time had been advertised for $16 million. Construction on the home was completed in 2015.
“He’s gone through this battle with Pitkin County … and I think he’s resolved himself to move on,” said attorney John LaSalle of Carbondale.
The Droste family sold their Brush Creek Ranch open space — now a mountain-bike haven known Sky Mountain Park — for $17 million to Pitkin County in 2010. The sale of more than 800 acres came after the Droste family and the county had been immersed in litigation over the property the Drostes had eyed for the development of a residential subdivision.
Members of the Droste family still owned some property in the area, however, including 999 Brush Creek Road, which Peter Droste developed through 999 Brush Creek Road LLC, the legal entity that owned the property.
The real estate website Zillow describe the property as a “14,688-square-foot home on 46 private acres minutes from world-class skiing, shopping and dining. … Its main rooms capture the quiet beauty of the Rocky Mountains in every window. Many generous rooms for large scale entertaining. Grand salon with carved fireplace, large kitchen, butler’s pantry to serve the dining room which can seat two or 32. Main floor office, guest master and soundproofed theatre. Handcrafted antique mahogany entry doors. 2400-square-foot main master suite with steam shower, large dressing room, two balconies with mountain views.”
Yet the LLC was unable to pay down Okean Investments’ $6.75 million secured note on the property, prompting the note holder to begin foreclosure proceedings in April 2019.
“The LLC couldn’t come up with the monthly payments of over $60,000, and that’s why the foreclosure got started,” LaSalle said.
The LLC, however, was able to stall the foreclosure proceedings by seeking protection from its creditors through a Chapter 11 bankruptcy filing Aug. 12 in Denver, the same week the property had been scheduled to go to auction by the Pitkin County Treasurer’s Office. A bankruptcy filing triggers what is called an “automatic stay” on a foreclosure proceeding, effectively postponing or possibly canceling the auction.
The bankruptcy filing achieved its purpose by initially staying the foreclosure proceedings for 999 Brush Creek Road LLC. U.S. Bankruptcy Judge Joseph G. Rosania Jr., however, ruled Dec. 3 in Okean Investments’ favor to lift the stay on the foreclosure proceedings.
Even so, “the judge held that the value of the property was at least $9.5 million and so there was definite equity in the property,” LaSalle said, noting Okean Investments issued a “gross underbid” for the home.
“Two years ago when the LLC got the loan that was foreclosed on, the property was appraised at $13.5 million, and that was approximately half the loan amount,” LaSalle said.
The LLC had owed more than $8.3 million to Okean Investments, which said it had not received any payments on the note, with interesting accruing at $4,500 a day, attorney Jason Buckley said at an October hearing.
Buckley is a member of the Aspen law firm Garfield & Hecht, which provided legal counsel to Okean Investments during the foreclosure action and bankruptcy.
Attorney Chris Bryan, also of Garfield & Hecht, said last week it was unclear what Okean Investments’ immediate intentions with the property were; a certificate of sale was introduced Thursday in the Pitkin County Clerk and Recorder’s Office.
Okean was one of two secured creditors in the bankruptcy case; the Pitkin County Treasurer’s Office is the other one, with a tax lien of $21,807 on the property, according to court documents. The Pitkin County Building Department has an unsecured claim of $85,000, and an Aspen law firm has a $5,800 claim. The bankruptcy case remains pending.
D&D Mortgage of Florida originally held the loan note.
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After relaxing the lease restrictions at the city-owned Marolt Ranch affordable housing complex, the units are all spoken for this winter.