Z&L Properties sues over sale of “$1M” San Jose condos for $32K

Z&L Properties has sued bidders who violated a court restraining order to buy 10 condominiums auctioned at cut-rate prices in Downtown San Jose.

The China-based developer filed the lawsuit against two buyers as well as San Diego-based Nationwide Reconveyance, a trustee for a homeowners association at a 320-unit condo tower at 188 West St. James Street, SiliconValley.com reported.

Despite a temporary restraining order by Superior Court Judge Helen Williams, the HOA hosted an April 8 auction of 10 vacant condos to collect HOA maintenance fees that were unpaid by building developer Z&L. 

Nine homes were sold by Nationwide Reconveyance, which conducted the auction, for between $31,500 to $32,300.

“The fair market value of each of the units exceeds $1 million,” Z&L Properties stated in the April 10 court filing. The damages sought by Z&L were not disclosed.

Morgan Cahill-Marsland, an attorney with Nixon Peabody, which is representing Z&L, had given the trustee a copy of the restraining order on auction day, according to SiliconValley.com. The attorney had also alerted its prospective buyers of the existence of the judge’s order.

The lawsuit claims that winning bidders were allowed to enter the tower at 188 West St. James to visit the condos they had purchased.

“On or about April 8, 2024, defendants, who do not hold title to the units, unlawfully changed the locks to the units and claimed they were the record owners of the units,” the lawsuit claims.

Z&L has 90 days to regain ownership of the just-sold units — if the company pays the delinquent dues, late fees and penalties for each condo.

A court hearing is set for May regarding violations of the temporary restraining order.

It was late last year that Z&L, owned by disgraced Chinese developer Zhang Li, faced foreclosure for failing to pay homeowner association dues for 190 unsold units at the twin tower complex. A Z&L Properties affiliate that owns the unsold condos in the west tower had in December owed unpaid assessments of more than $1.3 million.

The towers contain 320 condominiums each, with the delinquencies in the western highrise. The eastern tower is vacant.

The 188 West St. James Owners Association had filed delinquent liens, warning it might force a “private sale” of the condos to satisfy the unpaid dues and other expenses.

In its lawsuit, Z&L has named Nationwide Reconveyance, plus defendants Ollie Lopez and Angelica Robles, among those who successfully bid to buy the auctioned condos.

— Dana Bartholomew

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