The developer of the Harbour Gates apartment complex in Annapolis has gone into default on its construction loan, tenants learned this month, and the bank has scheduled a foreclosure sale for next month.
Residents of the 516-unit development, on Bestgate Road near the Annapolis Mall, received notice from attorneys for the project's lender that all rent payments should be made to an agent for the bank, San Diego-based HomeFed Bank.
Unless HomeFed and the developer, Catwil Corp. of Stockton, Calif., can reach an agreement, the property will go to a foreclosure sale Sept. 10, said Michael Milhaupt, regional president of Robertson Development, a Catwil subsidiary in Bethesda.
Mr. Milhaupt said a foreclosure would have no effect on the tenants. "The property is going to be run in a first-class manner," he said, "and all the services will continue to be provided."
He said that Harbour Gates, which opened to tenants this summer, is nearly 70 percent leased and more than 60 percent occupied.
Catwil went into default on the $33 million construction loan from HomeFed after a California partnership failed to come through with its share of an equity payment it had promised to make to Catwil, Mr. Milhaupt said.
Despite talks throughout the summer, the bank filed the foreclosure notice at the beginning of August and asked an Anne Arundel County court to appoint a receiver. Circuit Judge James C. Cawood Jr. denied HomeFed's request this week and allowed Robertson to continue to manage the complex for now.
The bank doesn't intend to keep Harbour Gates if it takes control, said Monica Wiley, a HomeFed spokeswoman. "We aren't in the apartment business," she said, "so if it does go into REO [real estate owned status], we would want to get moving on it."