Legacy National Forecloses on Barber Condo Project

by Andrew Jensen  on Thursday, Jan. 3, 2008 12:00 pm  

On Jan. 2, Legacy National Bank of Springdale filed an $18.1 million foreclosure action against Brandon Barber and his partners and asked for a court-appointed receiver to take over management of the 37-condo Legacy Building in downtown Fayetteville.

Legacy was one of two area banks to file foreclosure actions against Barber on Wednesday, joining The Bank of Fayetteville, which filed for foreclosure on Barber's balance due of $933,000 on a $3.25 million loan for Timber Trails subdivision in Fayetteville.

The BOF filing stated Barber bounced a check for quarterly interest on Nov.
30. In its filing, Legacy stated Barber is in default on two mortgages originally totaling $19.4 million set to mature on June 15. According to the filing, Barber owes $15.3 million on the first note and $2.8 million on the second.

First National Bank of Fort Smith, Metropolitan National Bank of Little Rock and First National Bank in Green Forest shared in the funding of the note with Legacy National Bank, according to the filing. The amount of their participation in the loan was not included in the filing.

Seven contractors with claims totaling more than $1.1 million have filed lien against the Legacy Building for unpaid bills since July 30, and EWI Inc. subsidiary RGC Glass Inc. asked for a default judgment against Barber's Lynnkohn LLC on Nov. 21.

In the motion in support of default judgment, EWI asserts Barber has not answered any filings in the case and has ³wholly failed to appear, answer or otherwise defend this action and RCG submits that it is entitled to judgment by default against Lynnkohn.

EWI filed the first foreclosure action against Lynnkohn and Barber on Sept.
21, leading to a rush among the contractors to make counter- and cross-claims to assert the priority of their liens.

As the first lien holder on the building, Legacy National Bank asserted the superiority of its claim in the Jan. 2 filing, which stated two mortgages for $16.7 million and $2.7 million are in default after the maturity date passed on June 15.

Barber and partner Seth Kafka are guarantors on the first mortgage, signed in December 2005. Barber is the sole guarantor of the second mortgage, which he received in April 2007, one month before the building opened.

Only seven on the condos have sold, for a total of $2.95 million.

In a separate action Wednesday, Legacy asked for the Washington County Circuit Court to appoint a receiver to manage the property, market the condominiums, pay operating expenses and take over Lynnkohn's position in the property owners association.

The original mortgage agreement states that Barber agreed in the event of default a receiver would be appointed to protect the property and rights of Legacy National Bank.

Barber's Legacy Building and his Bellafont mixed-use project on Joyce Boulevard in Fayetteville were the target of numerous legal actions in the last half of 2007.

Bellafont business owners Mason Hiba, of Masons Boutique, and Helena Gadison of East Meets West Spa & Salon filed fraud lawsuits against Barber in November for broken promises related to the completion of their buildings.

Hiba's building has been hit with liens totaling $175,000 since June and EMW is still incomplete. Barber's contract with EMW stipulated the building was to be ready for occupancy on May 15 with a penalty of $1,000 per day.

General contractor Precept Builders Inc. of Dallas, Barber's partner on the Bellafont project, is off the job in a dispute over payment. Barber asserts Precept did not fulfill its obligations under the contract. On Dec. 6, Precept filed a lien for more than $924,000 against Barber for work performed at the site.

 

 

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