An Albemarle House divided?

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It appears that no house is a safe house for former winery owner Patricia Kluge, whose financial struggles continue. Last week, a county judge appointed J. Todd Willett, Director of Asset Services for real estate firm CB Richard Ellis, to “maintain the status quo” of Albemarle House, the property she acquired in her divorce settlement from billionaire John Kluge, while one bank forecloses on the home and another lays claim to the objects inside.

Farm Credit of the Virginias will auction Albemarle House, the former home of former winery owner, Patricia Kluge, on the steps of the county circuit court in February.

“What we are trying to do is head off a situation where we have a dispute between us and Bank of America,” says William Shmidheiser III, the attorney representing Farm Credit of the Virginias.

“We can foresee a situation where the person who has the real estate says, ‘Wait, chandeliers, fireplace mantels? Those sound like part of the real estate to us,’” says Shmidheiser. Willett, who did not return a call for comment, will mind the day-to-day affairs at Albemarle House and make sure that the 45-room residence remains as-is.

Bank of America holds a $22.8 million lien on the Albemarle House property, which it will offer at a foreclosure auction on February 16 on the steps of the Albemarle County Circuit Court. The house is assessed at $16.5 million.

Farm Credit has a $34.8 million lien on the Kluge Estate Winery & Vineyard, which it purchased for $19 million at a foreclosure auction in December. The bank has also filed a $1.9 million civil suit against Kluge and husband William Moses, to acquire a portion of the collateral it is allegedly owed.

To secure payment for the winery loan, Farm Credit claimed a lien on personal property within Albemarle House—including art, antiques, and furniture. Many of those items, according to Farm Credit, were part of a June Sotheby’s auction that netted Kluge $20.2 million in two days, while others are under a consignment contract with Royal Athena Galleries, based in New York. According to documents filed by the bank in Albemarle County Circuit Court, Farm Credit dropped its lien on items contracted for consignment, with the understanding that it would receive some payment for those items that sold and retain its lien on items that did not.

According to the civil suit, Farm Credit claims that Kluge inked another consignment agreement with New York’s Arader Galleries in August for an estimated $700,000 in items that Sotheby’s did not sell in June. Farm Credit alleges that the majority of items were “not subject to the right of Kluge to reconsign”—a charge that Kluge attorney Edward B. MacMahon denies in a subsequent response. MacMahon’s response also denies the charge that Kluge and Moses have failed to deliver unsold and unconsigned property to Farm Credit. The attorney did not respond to requests for comment.

Farm Credit’s $34.8 million contract action against Kluge and Moses is currently scheduled for a May 16 jury trial in the county circuit court. Prior to that, Kluge and Moses’ Vineyard Estates real estate development project, which has also gone belly up, is rescheduled for auction on January 31 at the county circuit court. The lender in that action is Sonabank.

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