Well over 100 delinquencies jolt downtown San Jose housing highrise
SAN JOSE — Notices of well over 100 delinquencies for unpaid homeowners dues have jolted a prominent housing highrise in downtown San Jose, raising ominous new specters of possible foreclosures at the troubled tower.
The housing tower at 188 West St. James Street in downtown San Jose was built by a China-based real estate firm, Z&L Properties, whose top boss Zhang Li has been linked to a Bay Area fraud case.
The owners association for the 188 West St. James tower has filed notices of at least 190 delinquencies for non-payment of homeowners’ dues for unsold condominiums in the highrise, according to documents filed on Dec. 13 with the Santa Clara County Recorder’s Office.
The two-tower project totals 640 units. Each tower contains roughly 320 residences. The delinquencies involve the western highrise in the housing development.
A review of a document totaling 184 pages that’s on file with the county revealed that a Z&L Properties affiliate that owns the unsold condominiums in the western tower has become delinquent in its payment of dues for an estimated 190 units.
The balance due for the unpaid assessments tops $1.3 million, the county records show.
The 188 West St. James Owners Association lodged liens against the property. The group warned that it might force a “private sale” of condos to satisfy the unpaid dues and other expenses that have arisen from the delinquencies.
After completing the delay-plagued project, Z&L decided to attempt sales of the individual condos in the western tower at West St. James Street and Terraine Street. The eastern tower at West St. James Street and North San Pedro Street remains empty.
The delinquencies have arisen from unpaid dues to the homeowners’ association for unsold condos in the western tower, county real estate records show.
Residents who have bought condos in the west tower are responsible for paying the dues on the units they own. The developer is responsible for paying the dues for units that have yet to be sold to anyone.
Some of the delinquencies have lingered long enough to trigger full-fledged notices of default, the final step before foreclosure and sale of the unsold units to satisfy the unpaid debts. The homeowners’ association has rescinded some of the default notices — but not all of them.
“With the avalanche of default notices hitting the project, we will have to wait and see how they will respond,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy.
Z&L Properties has proposed several projects in downtown San Jose but has yet to build any of them, other than the two-tower complex on West St. James.
Among the downtown San Jose project sites that Z&L Properties owns:
— A pair of housing high-rises and the revamp and rescue of a historic church at 252 North First Street. Neither tower has been built and Z&L has performed no renovation work on the church.
— A project of two housing towers that would replace a former Greyhound terminal at 70 South Almaden Avenue. This project has been delayed and is up for sale.
Plus, in April, Z&L Properties reached a preliminary deal to sell to two Bay Area real estate executives the Richmond Ranch site, nestled on some 3,654 acres of pristine hills, vales and fields in southeast San Jose. That deal has yet to be completed, however.
Some commercial property sources say that efforts are underway for the sale of the eastern tower on West St. James Street. This sort of deal could dramatically ease the financial pressure on Z&L Properties. However, the sources also say that a purchase of either tower won’t occur this year.
A potential deal for the eastern tower is being described as a “Hail Mary” transaction to help Z&L Properties salvage some stability for its problem-hounded highrises, according to Staedler.
“If that or another asset transaction doesn’t pan out, Z&L Properties will lose any chance of a respectful exit,” Staedler said. “Z&L has been an absolute embarrassment to the city of San Jose.”