Buyers grab downtown San Jose condos in foreclosure auction with winning bids up to $32,300
SAN JOSE — Buyers flocked to an auction to purchase ten condominiums in a downtown San Jose housing tower built by a troubled developer, despite court proceedings to delay the foreclosure and auction.
The hours-long auction of ten condominiums within the housing tower at 188 West St. James Street in downtown San Jose encountered numerous delays from the start of the proceedings on April 8.
China-based Z&L Properties, the owner of the double-tower housing complex at 188 West St. James, recently won a court-issued restraining order to temporarily delay a foreclosure proceeding to auction off several condos in one of the highrises.
The homeowners association for the two-tower residential complex had scheduled the auction after Z&L Properties became delinquent in paying HOA maintenance dues for the ten condos. The auction was held to sell the units to owners who would begin paying the HOA fees.
When Z&L Properties sells one of the condos in the tower, the new owner is then responsible for paying the HOA fees. Z&L, however, is responsible for paying dues on any condos that the developer has completed but has yet to sell.
Despite the temporary restraining order that Santa Clara County Superior Court Helen Williams issued on April 2, the auction efforts proceeded outside the courthouse.
The restraining order resulted from a lawsuit filed by Nixon Peabody, a law firm representing tower developer Z&L Properties. Z&L’s lawsuit was directed at some HOA members for alleged improper attempts to auction off the condos.
Just as the sales were about to get underway, Morgan Cahill-Marsland, a real estate attorney with law firm Nixon Peabody, presented the trustee’s representative conducting the auction with a copy of Judge Williams’ temporary restraining order. Cahill-Marsland is one of the Nixon Peabody attorneys representing Z&L in a lawsuit the developer filed to attempt to halt the auction, court records show.
Moments before the auction for the ten condos began, Cahill-Marsland warned the attendees — and prospective buyers — that the auction was being conducted in violation of the court-imposed restraining order.
Cahill-Marsland declined to comment about the situation. Maria Kao, an attorney with Briscoe Ivester & Bazel, a law firm that is representing the HOA for the two towers, declined comment. Kao also appeared at the auction.
The representative for Nationwide Reconveyance, the trustee handling the proceeding on behalf of the HOA, contacted Nationwide Reconveyance to discuss the presentation of the court order and then proceeded with the auction. The on-scene representative declined to identify himself.
Z&L has been attempting to sell the condos in the western tower in the double high-rise project and so far has sold scores of units. The residential complex totals 640 units. Each tower contains roughly 320 residences. The eastern tower remains unoccupied.
Despite the legal presentation of the court order just before the sales began this week, the unidentified representative for trustee Nationwide Reconveyance proceeded with the auction to sell the condos.
One buyer bought three condos, two other buyers each bought two condos, and two other people each bought one unit. The HOA wound up owning one unit that attracted no outside buyers. The buyers all declined to be identified.
Some of the new owners already live in the western tower of the 188 West St. James complex. The man who bought three of the condos doesn’t live in the property yet and was asking the existing residents what it was like to live in the highrise, many of whose units command striking views of San Jose and the Bay Area.
The prices paid by the new owners were jaw-dropping by today’s standards in a Bay Area that features sky-high housing costs.
The bidding began in all cases at somewhat higher than $31,000. The winning bids ranged from $31,500 to $32,300.
The prospective buyers, in the very early stages of the auction, unofficially crafted an agreement to avoid bidding against each other for an individual unit.
These hastily arranged agreements meant that while the proceedings were technically an auction, a bidding war never broke out for any one of the 10 condos, which all sold for only a small amount above what the HOA sought for the units.
The auction, which began in the morning and went into the early afternoon on Wednesday, represented a fresh twist in the long-running saga of Z&L Properties in San Jose.
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 N. First St. 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 S. Almaden Ave. This project has been delayed and is up for sale.
Z&L Properties has also put up for sale the two towers at 188 West St. James.
The development firm has managed to sell two properties, both in San Jose.
In 2021, Z&L sold a vacant downtown San Jose parcel on Terraine Street for $11.4 million.
In January 2024, Z&L sold the 3,654-acre Richmond Ranch through a $16 million deal.
As for the recent condo auctions, Z&L still has 90 days to regain ownership of the just-sold units — If Z&L pays the delinquent dues, late fees and penalties for each condo.
For now, though, the buyers of the nine condos paid a stunning fraction of what people might expect to pay for residential units in a Bay Area highrise.
Z&L’s sales of units in the western tower typically have been in the range of $500,000 to $1 million, or even more, according to documents on file at the Santa Clara County Recorder’s Office.