Z&L Properties, with nearly 200 delinquencies for unpaid homeowner dues on unsold condos in Downtown San Jose, has moved closer to default.
The Foster City-based developer, owned by disgraced Chinese developer Zhang Li, faces foreclosure for failing to pay homeowner association dues for 190 unsold units at the twin towers at 188 West St. James Street, the San Jose Mercury News reported.
The twin towers contain 320 condominiums each, with the delinquencies in the western highrise.
A Z&L Properties affiliate that owns the unsold condominiums in the west tower owes unpaid assessments of more than $1.3 million, according to county records.
The 188 West St. James Owners Association filed the delinquent liens, warning it might force a “private sale” of condos to satisfy the unpaid dues and other expenses.
After completing the west tower, Z&L listed individual condos last spring for more than $500,000 each, with the total value of the unsold condos pegged at $300 million. The eastern tower stands empty.
Residents who have bought condos in the west tower are responsible for paying the dues on the units they own, according to the Mercury News. The developer is responsible for paying the dues for units that have yet to be sold.
Some of the delinquencies have lingered long enough to trigger notices of default, the final step before foreclosure and a sale of the unsold homes. The homeowners’ association has rescinded some of the default notices — but not all of them.
Commercial property experts say efforts are underway for the sale of the eastern tower, which could dramatically ease the financial pressure on Z&L Properties.
But that could be a “Hail Mary” deal.
“If that or another asset transaction doesn’t pan out, Z&L Properties will lose any chance of a respectful exit,” Bob Staedler, principal executive with Silicon Valley Synergy, told the Mercury News.
Li and his firm were at the center of a bribery scandal that sent Mohammed Nuru, former head of San Francisco’s Public Works Department, to prison.
With the scandal, Z&L projects stalled across the Bay Area, including the 640-unit double highrise on St. James.
Z&L had proposed several projects in Downtown San Jose, but only built the condominiums.
Its stalled projects include a pair of housing highrises and the rescue of a historic church at 252 North First Street, and two housing towers to replace a former Greyhound bus terminal at 70 South Almaden Avenue.
— Dana Bartholomew
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