Five residential plots and two condos off Highway 41 in Atascadero linked to the bankruptcy of former North County developer Kelly Gearhart are to be sold.
A U.S. bankruptcy court judge in Ohio last month allowed bankruptcy trustee Harold Corzin, who represents the many people Gearhart owes money to, to sell the properties and divvy up the proceeds.
Gearhart filed for bankruptcy in Ohio two years ago. He moved there in 2008 with his wife and co-debtor, Tamara Lowe, after their Atascadero home and several of their real estate assets were auctioned off.
Gearhart, named 2005 Citizen of the Year by the Atascadero Chamber of Commerce, developed a real estate empire in the North County over the years, only to have it crumble into defaults and foreclosures in spring 2008 after he could no longer pay his creditors.
The properties on Tecorida Avenue to be sold didn’t appear to be listed for sale as of Friday evening, according to online searches of local real estate websites.
The assets include one condo in Gearhart’s name as well another condo and five additional undeveloped parcels under the name Atascadero Homeowners LLC.
The properties are in a small neighborhood of condos bordered by Highway 41 and Merchant Avenue. It appears the majority of the development’s homes are already built with families living there.
Only two of the built homes there are on the bankruptcy judge’s list to sell. The value of the seven properties in total is assessed at approximately $770,000, according to San Luis Obispo County assessor records dating to 2006.
The sale proceeds of the seven properties would first be paid to the beneficiaries on the Tecorida Avenue development’s deed of trust. It’s not clear from the court documents which creditors the money would go to, but there appear to be many.
U.S. Bankruptcy Court Judge Marilyn Shea Stonum ordered that once all seven properties are sold, $70,000 plus one-half of proceeds exceeding a benchmarked sum of $460,000 would go to the deed’s beneficiaries. The remaining money would then go to Corzin to distribute.
Corzin and his attorney did not return calls for comment Friday.
Gearhart’s creditors claim he owes them more than $100 million, according to court records.
— Tonya Strickland