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Bushnell Condo Owners Want Answers

Greg Bordonaro

January 18, 2010

Nearly two dozen Bushnell on the Park condo owners have been granted the right to join the ongoing foreclosure case involving the signature downtown Hartford property.

The owners have asked for intervenor status — to be heard in the case — citing concerns that their financial interests are not being “adequately” represented by the property’s majority owners, according to a 21-page document filed in Superior Court in Hartford last month.

A key concern among the condo owners is whether or not Bushnell Regency, the company that owns 129 condominium units within the 180-unit complex, has been paying its fees owed to the Bushnell on the Park Condominium Association. They also want to protect their lien rights, should ownership of the property change hands.

Bushnell Regency has failed to make payments on a mortgage for its share of the property since November 2008, court papers show. The property under litigation, recognizable by its horseshoe-shaped residential building, is used for rental apartments and office space.

In November, a Hartford judge ordered the 129 condominium units owned by Bushnell Regency into strict foreclosure, a type of legal action taken against delinquent borrowers’ whose debt is greater than the value of their property, documents show.

Bushnell Regency has until Feb. 9 to pay Wells Fargo Co. $9.8 million in order to reclaim the property, or they risk losing control of it, said Avon lawyer Jonathan Starble, who is representing the intervening condo owners.

Payments Unknown

In the court documents, condo owners say they have been unable to ascertain whether Bushnell Regency, which also controls the condo association, has paid its condo fees for the 129 units that it owns. Additionally, the condo owners, whose properties are not part of the foreclosure, maintain that they have not been given access to the association’s financial records, as is required by law, court papers said.

Starble said that in the event of a foreclosure, the association gets paid before the bank, but that priority is usually limited to six months worth of condo fees.

“In most situations, the six-month limit is not a great concern, as long as the association is diligent,” Starble explained. However, if Bushnell Regency owes more than six months in fees, and the bank takes title to the 129 units, then part of the association’s claim for unpaid condo fees may disappear. In that situation, Starble said the association and its members would have to file a legal claim against Bushnell Regency’s owners for their failure to collect fees from themselves.

In their complaint, the condo owner’s state, “It is highly doubtful that Bushnell Regency is paying all of its association fees.”

“We don’t know if Bushnell Regency is actually up to date on its condo fees because they won’t tell us,” Starble said. “Meanwhile, the other unit owners continue to pay their condo fees every month. It’s like paying into a black hole because no one knows if their money is being used for legitimate association expenses.”

Starble also said that Wells Fargo has agreed to hire an accountant and do an audit of the condo association’s finances, should they take over the title of the property.

Improper Management

According to the intervenor’s motion, Wells Fargo asked the court last summer to appoint a receiver for Bushnell Regency out of concern that the operators weren’t good landlords.

Wells Fargo accused Bushnell Regency’s owners of improperly managing and maintaining the property, going so far as to tell the court the bank suspected rents had been diverted from Bushnell Regency, court papers show.

Bushnell Regency fired back, saying a receiver would not be in the best interests of the owners of the 51 condos not involved in the foreclosure, documents say.

The Bushnell on the Park property, constructed in 1978, was once owned by the scandal-plagued Colonial Realty, but in the wake of that company’s collapse in the early 1990s, it was sold to Aspen Real Estate for $2.2 million. In 2002, Bushnell Regency bought the property for $15.6 million, and took out a $12.7 million mortgage, city records show.

Bushnell Regency’s current debt on the property is $15.2 million, and the property has a fair market value of $8.9 million, court records show.

Bank, Owner Negotiating

Wells Fargo is the lead plaintiff in the case and is acting as a “trustee” for registered holders of GMAC Commercial Mortgage Securities. CW Capital Asset Management is listed as a special servicer of the security.

Starble said Wells Fargo has negotiated an arrangement with Bushnell Regency, giving its owners the opportunity to regain control of the 129 units by paying $9.8 million by Feb. 9, a much smaller amount than it actually owes on the property.

Starble said he thinks Bushnell Regency may come up with the financing to redeem the property because it has paid a fee to the bank to extend by 30 days the time it has to come up with the money, which also means it will still control the condo association.

Initially, the court gave Bushnell Regency until Jan. 11 to pay its debt.

Reprinted with permission of the Hartford Business Journal. To view other stories on this topic, search the Hartford Business Journal Archives at http://www.hartfordbusiness.com/archives.php.
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