Huguely mistake: Dabbling dad lost cash on Morgantown
It's been said that nobody ever lost money buying property in Albemarle County. George Huguely IV may have found a way.
In September 2005, just as his namesake son was enrolling in his first year as a student-athlete at the University of Virginia, the elder Huguely made what he must have thought was a strategic land purchase near Charlottesville.
About five miles west of the city limits, amid the tony suburbs of Ivy, the 10.34-acre tract was near what was then the home of Dave Matthews Band bassist Stefan Lessard along Morgantown Road. Unfortunately, Lessard's home would burn down just two years later. Huguely's dreams would last a little longer.
Huguely, who lives in Bethesda (and who did not return a reporter's call), found that he could carve the Ivy land into three sellable homesites. What could possibly go wrong?
Things started out in a promising fashion. In 2007, Huguely sold one of the homesites for more than half of the total purchase price for the whole tract. With two more sites to sell– including a much larger one– he appeared well on his way not just to recouping, but perhaps doubling, his original investment.
Unfortunately for Huguely, he had agreed to accept just $100,000 of that homesite price in cash, holding the other $160,000 of the $260,000 purchase price as a subordinated loan to the buyer, a homebuilding firm that promptly put up a massive house.
By 2009, the market had soured, and the homebuilder defaulted. Eventually, the bank demanded the over-5,000-square-foot house and the land. Huguely's $160,000 loan would be erased in foreclosure.
It was April 2010 when a bank took over the developed lot and sold it. But Huguely would quickly find that he had much bigger problems.
Less than a month later, May 3, in a crime that rocked the nation, his son allegedly beat the life out of his on-again/off-again girlfriend, a fellow UVA lacrosse player named Yeardley Love. The 23-year-old Love was found face down in a pool of blood in her 14th Street apartment.
There were reports that the younger Huguely, now stuck in the Albemarle Charlottesville Regional Jail, had some prior run-ins with police. At least a couple of them happened in Florida while on holiday with his father. A feature in the Washingtonian paints a picture of a father and son perhaps too eager– as the father's recent arrest on drunk driving charges doesn't refute– for a good time.
Meanwhile, the loan the elder Huguely had taken out to obtain the undeveloped Albemarle land in the first place– a note for $325,000– had already come due. Virginia National Bank had agreed to extend the full payback date to March 1, 2010. But Huguely would eventually do what he'd been doing since 2007 with his Albemarle County property tax payments: quit paying.
Like Halsey Minor, another man who speculated on Charlottesville real estate (via a halted hotel called the Landmark), Huguely, now 56, must have known that a bankruptcy filing can stall foreclosure proceedings.
As the bank ramped up the collection efforts and threatened to take the property via auction, Huguely let his real estate agent– now vainly trying to unload the undeveloped tracts– know that he had other options. Huguely had titled the property to Maplehurst Associates LLC, a company he controlled with a 95 percent ownership stake.
"I will put Maplehurst in chapter 11 if I have to," he emailed his agent late last November.
Indeed, last December, on the day before the planned sale, Huguely voluntarily filed for bankruptcy protection and would proceed to ask the federal court to continue to hold off on the foreclosure to provide more time to sell the property and pay off the bank.
He conceded that he'd had to sell his 25 percent interest in a beach house he owned in Palm Beach County, Florida. Just the property taxes on that waterfront dwelling topped $25,000 per year. Online property records suggest that Huguely had paid over $2 million for the waterfront dwelling on plush Pelican Lane in Lantana and then unloaded it, 25 days after his son's murder charges, for just $800,000.
Back on Morgantown, the unpaid real estate tax bill had been mounting. When Huguely began his plan to flip land for houses, state law forced him to pull the property out of the rural-protection program known as "land use taxation." That meant he owed five years of back taxes on the two-acre parcel– an $8,000 bill. Between his two remaining tracts, the unpaid tax bill neared $27,000.
Meanwhile, agent David Sloan of the Sloan Milby real estate firm was ardently attempting to sell both parcels– with the 6.34 acres listed for $385,000 and the two acres for $185,000.
Although there was some interest in buying the land, there were, according to the court file, no offers; and the bank grew tired of waiting. In a filing, Virginia National accused Huguely of "using the bankruptcy process to continue to speculate on the land." The court seemed to agree.
In a May 2 order, bankruptcy judge William E. Anderson decreed that Virginia National could repossess and foreclose. After a July auction, the bank took title to the properties in late September and put them back on the market with Sloan Milby for $240,000 and $120,000, an overall price reduction of 37 percent. Barring any further price slashing, the bank– which the court file shows was owed $270,000– appears poised to recoup its principal.
As to whether the Huguely family will ever recover from their son's alleged actions on 14th Street, that will be determined in part by what happens in February in front of a Charlottesville jury.