The foreclosure auction of four Waterhouse condos scheduled for Monday, January 29, was canceled, and trustees for the sale are mum about why.
Isak Howell is named as a substitute trustee on the legal notice that ran in the Daily Progress, but the phone number listed is for a Roanoke law firm that says he hasn’t worked there in a while.
Lawyer Jonathan Deem, who represents Water Street Investments LLC, the Chuck Rotgin entity that holds a $20-million credit line deed of trust and that initiated the foreclosure sale, did not return phone calls from C-VILLE.
Nor did substitute trustee David Mitchell, who works for Rotgin at Great Eastern Management and who is a defendant in a case heard in court last week brought by the only buyer of the primo, top-level condos in Waterhouse. Lauren Driscoll found her 2014 purchase was also under foreclosure.
According to her attorney, David Thomas, the would-be foreclosers sent a letter to the court January 26 postponing the sale of all the condos until February 14.
And because the lienholders said in court they didn’t need to re-advertise the sale if it took place within 30 days, should they proceed, the public may not be invited if the million-dollar condos are sold at auction.
Updated January 29
Waterhouse condos head to auction block
What started as a “friendly” $20 million loan is headed to foreclosure and an auction on the courthouse steps of four Waterhouse units because the arrangement between architect Bill Atwood and Great Eastern Management’s Chuck Rotgin has become decidedly less friendly.
The legal notice of a trustee’s sale of five condominiums that recently ran in the Daily Progress caught Atwood off guard, and he told that paper the auction would not take place. But after a court hearing today, four of the five units are still scheduled to be sold January 29 in front of the Albemarle Circuit Courthouse.
One unit—the only residential condo that sold when the top floors went on the market in 2014— got a two-week reprieve in the building that houses WorldStrides headquarters and two top floors of empty units with stunning views.
Its owner, Lauren Driscoll’s HHII LLC, bought a 1,942-square-foot unit for a little more than $1 million, and that property is part of the foreclosure sale because it was one of the units securing a deed of trust for the $20.57 million loan Great Eastern’s Water Street Investments made to Atwood’s Waterhouse LLC.
Even according to court documents, the sale was unusual because most of the purchase price was held in an escrow account for three years because Driscoll wanted to make sure the building would indeed be built out.
The purchase agreement said “the seller’s attorney shall see to the release of this property from the deed of trust.” That didn’t happen and part of the arguments in court were about whether emails and oral agreements that Water Street Investments allegedly made constitute a contract.
“It was reliance on that assurance that Ms. Driscoll went ahead with the closing October 24,” said her attorney, Ed Lowry.
Attorney John Dezio represented Atwood in the sale, and he followed up with Water Street Investments to release the lien, according to Lowry. A representative of the lender asked for changes, which Dezio made, and “WSI never in fact signed it,” said Lowry. “Is that a contract?”
Water Street Investment’s attorney Jonathan Deem argued that the person asking for the changes was an administrative assistant not authorized to release Driscoll’s condo from the deed of trust.
In December, Atwood and Driscoll amended their agreement to release the escrow funds, and according to Lowry, Rotgin had no objection to the release of funds.
However, none of those funds went to Rotgin’s entities to pay off the debt. “That’s the real reason we’re here today,” said Deem.
He said Driscoll has remedies should her condo be sold at auction, such as title insurance or a claim against whoever gave her advice on buying a condo with a deed of trust.
For Lowry, the scenario that his client could sue to find relief wasn’t a good one, especially “if Waterhouse is broke,” he said.
Judge Rick Moore said he needed time to make a decision, and Deem agreed to postpone the sale of Driscoll’s unit for two weeks.
In November, Atwood transferred five units to Rotgin’s LLC for a little more than $5 million. In 2016, he handed over six units for nearly $3.3 million. Atwood, who still owns the remaining three units on the top floor, says he owes Great Eastern $13.5 million “and change.” He says interest on the loan is $6.5 million.
Atwood was not in court, but earlier he said the decision to sell the condos on the courthouse steps “was completely wrong and damages the project. It’s a very bad business decision and hurtful and it damages me.”
Rotgin was in court, and afterward, when asked to comment, he said, “You’ve got to be kidding.”