Quantcast

LOUISIANA RECORD

Friday, March 29, 2024

Bucking foreclosure ruling won't be easy for investors in Baton Rouge high-rise

Late 07

BATON ROUGE – Getting a foreclosure ruling overturned is an uphill task, according to Elizabeth Futrell, a bankruptcy attorney for the New Orleans-based Jones Walker law firm.

Futrell told the Louisiana Record that banks have wide latitude to collect what is contractually owed them, and that the courts traditionally have supported their right to exercise foreclosure rules.

“(The bank) can do it any time the borrower defaults on the loan,” she said.

But a group of investors in a Baton Rouge building is going against those odds and petitioning the court to have a foreclosure decision rendered against it reversed.

The investors, Florida Street Holdings, LLC, plan to file an appeal over an April judgment that allowed U.S. Bank National Association to take over the Chase Tower building in downtown Baton Rouge.

In that judgment, according to businessreport.com, the bank was given the building in lieu of nearly $22 million, plus 6.5 percent interest, the bank said the investment group owed in late payments dating back to October 15.

The New York-based investors group is arguing that U.S. Bank in fact does not hold the note to the 21-story, 333,000-square-foot office building, which opened in 1968. A second tower on the property, the north tower, is owned by another company.

Florida Street Holdings has also filed documents with the U.S. District Court for the Middle District, asking the judge to vacate the seizure and sale order, as well as the bank’s original complaint.

Futrell wouldn’t speak directly to the Chase Tower case, but she said when a commercial foreclosure is put into effect, the court places the building into a conservatorship in order to allow it to continue operating.

She said that’s different than in a residential foreclosure, where a resident could be asked to simply vacate the premises if payments weren’t made.

“There’s not really much difference between a commercial and residential foreclosure, except in a residential foreclosure you can’t install a ‘keeper,’ or a conservator,” she said.

She said the new keeper generally oversees new lease agreements and operates the building on the bank’s behalf until a buyer for the property is found.

Once a commercial property is foreclosed on, depending on the contract status of individual leases, the leases could be revoked or changed substantially by the bank or its keeper.

She said that it’s usually in the best interests of the new owner to extend current leases or negotiate fairly with tenants, because they represent revenue.

“In a commercial setting, the keeper and the new owner of the property have an interest in making the right business decision,” she said.

Futrell said there are ways to avoid foreclosure, even when a building owner is struggling, but doing so requires the cooperation of the bank.

“Banks won’t necessarily move immediately to foreclose,” she said. “It’s more on a situation-by-situation basis. It’s a matter of whether they think it’s a long-term problem (of the borrower), or a short-term problem. The borrower and the bank are also always allowed to restructure the deal. But the bank isn’t obligated to do that.”

More News