Colony Lender proceeds with foreclosure process

Part of the The Colony Beach & Tennis Resort’s settlement conference and looming closure is how foreclosure proceedings by Colony Lender LLC will affect the process.

Longboat Key resident David Siegal, one of the partners of Colony Lender LLC, told The Longboat Observer last week that he and his partner, Longboat Key businessman Randy Langley, are working toward a revitalization of the property while simultaneously moving forward foreclosure proceedings on $10 million in bank loans that they purchased from Bank of America in March 2009.

Siegal said he can’t allow any more time to go by without pursuing a foreclosure action on the bank loans his company owns.

As loan owner, Colony Lender will have a seat at the settlement conference occurring July 28 in Sarasota.

“We are going to continue our mortgage foreclosure, and no one knows who the owners will be of the guts of the resort, outside of the units themselves, while the resort is foreclosing or how long that process may take,” Siegal said. “If one wants a resolution right now, either that person has to give $11 million to Dr. (Murray) Klauber to pay Colony Lender what is owed on the loans or one invites Colony Lender to the conference. I think our collateral is necessary for the resort in this process.”

Meanwhile, Colony Lender plans to file a notice in Sarasota County Clerk of the Circuit Court announcing its decision to move forward with a foreclosure.

Klauber, chairman and owner of the Colony, then has the opportunity to admit or deny he owes the money on the loans in court. The court would hold a hearing if the debtor (Klauber) questions the amount of the unpaid balance due.

After interest and legal fees, the total loan amount due could be $12 million.

If Klauber cannot pay the total loan amount, he would lose the collateral he put up, including the Colony recreation property (tennis courts and walking trails), his restaurant, bar and the hotel resort property. He would retain the right to his office/penthouse living quarters and Vagabond beachfront unit.

Once the amount due is set by a judge, an online foreclosure sale will be scheduled in Sarasota County if Klauber doesn’t satisfy the debt.

For Klauber to hold onto the property, he would have to make a bid higher than what Siegal and Langley paid for the loans.

At that point, Siegal and Langley can decide whether to sell to the highest bidder or hold onto the property themselves.

If no one bids on the property, Colony Lender could decide to take the title for $100, and Klauber would not owe his debt on the loans.

Currently, Colony Lender is getting ready to set a court hearing to calculate the total loan amount due.

Siegal said he can’t gauge a timetable on the length of the foreclosure process.

“But I’m told this foreclosure is not caught up in the glut of foreclosures in Florida because it’s a commercial foreclosure and not a residential one,” Siegal said.

But he said the foreclosure proceedings could take a couple of months.

“If it’s delayed, the number becomes larger than what needs to be paid to resurrect the Colony,” Siegal said.

Contact Kurt Schultheis at [email protected].