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There goes the neighborhood: mansions in distress

Morgan Brennan
See many more jaw-dropping photos of Miami Beach's Casa Casuarina in the Yahoo! Homes property listing.

When it comes to America’s most expensive homes, outrageous amenities like theaters, auto showrooms, and solid gold fixtures are to be somewhat expected. But some mega-mansions come with more than even a prospective buyer would want: legal woes.

Take the $100 million Casa Casuarina. The Miami Beach mansion peddles an enviable address on South Beach’s Ocean Drive, a storied history as the former home of Gianni Versace, a 10-suite boutique hotel staffed with British-trained butlers, and a glittering 24-karat gold-lined swimming pool. It also totes a laundry list of lawsuits, starting with a federal foreclosure suit filed in December of 2011 by VM South Beach, an entity affiliated with Jordache Enterprises’ Nakash family. It alleges that Casa Casuarina’s owner, telecom entrepreneur Peter Loftin, defaulted on a $25 million mortgage note. In December of 2012, Loftin countered with his own suit, through Casa Casuarina LLC, against original mortgage holder WestLB, alleging multiple counts of fraud pertaining to VM South Beach’s note.

Still following? A bankruptcy trustee also has a claim on the property, because Scott Rothstein, convicted of a $1.2 billion Ponzi scheme, held a minority share. Adding to the complications, taxes have not been paid in three years, reportedly due to a legal dispute between Loftin and Casa Casuarina’s hotelier tenant Barton G. Weiss, whose boutique hotel Villa by Barton G. rents one-bedroom suits for more than $2,000 a night.

Since the downturn, a series of high-end homes located across the U.S. have faced financial troubles, struggling with foreclosure filings, bankruptcies or lawsuits. Yahoo! Homes is publishing five of them here; to see even more, go to

In many cases the troubles were the result of a zealous development plan undertaken during the housing bubble, whether it be Bank of America’s 2011 repossession of ex-billionaire divorcee Patricia Kluge’s Charlottesville, Va., estate, Albemarle, or the 2012 bankruptcy auction of realtor-turned-developer John McMonigle’s Newport Coast, Calif., spec home, Villa Del Lago.

In Palm Beach, Fla., another developer, Dan Swanson filed for voluntary Chapter 11 bankruptcy protection in September against more than $27 million loans owed to two creditors on a lavish spec home. In October one of those creditors, TD Bank filed its own complaint via circuit court, seeking repayment on $21 million. On the market since 2010, the $74 million lakefront home, located at 1220 South Ocean Boulevard, has 27,000 square feet of living space including a 4,000-square-foot master suite with fireplace, a 3,000-bottle wine cellar and a commercial-grade elevator. If the property doesn’t snag a buyer by the end of the year, it’s reportedly expected to sell off in a bankruptcy auction come December.

Florida eclipsed Nevada as the nation’s foreclosure capital in 2012, according to RealtyTrac. High-end homes were not immune, including the largest single-family home in the U.S., Windermere, Fla.’s massive Versailles estate. The unfinished 90,000-square foot structure, which has a two-story wine cellar, three pools and 13 kitchens, faced a foreclosure auction last April due to an outstanding construction loan from Bank of America. It was the second scheduled auction in roughly six months. The owners, timeshare titan David Siegel and wife Jacqueline, were able to thwart repossession by refinancing with $20 million mortgage from ICR Finance Services. The hulking home is listed for sale: $65 million, unfinished.

Here’s a rundown of U.S. estates where, either presently or within the past several years, a lawyer may have done more good than a broker:

Casa Casuarina's pool is lined in gold. Click the photo to go to the listing (with many more pictures).

Casa Casuarina, Miami Beach, Fla.

List Price: $100 million.

The Digs: 23,000-square-foot spread, where Gianni Versace was shot, has a hotel and gold-lined pool.

Owner: Peter Loftin.

Legal Woes: VM South Beach filed foreclosure suit in December 2011 on a $25 million loan default; a year later Loftin's LLC is suing lender WestLB for fraud. There's also a pending bankruptcy claim.

1220 South Ocean Boulevard in Palm Beach. Click either photo to see many more pictures in the listing.
The home is on Billionaires Row.

1220 South Ocean Boulevard

Location: Palm Beach, Fla.

List Price: $74 million

The Digs: The 27,000-square-foot lakefront house built on spec has a sculpture garden and an auto showroom.

Owner: Dan Swanson

Legal Woes: In October 2012 Swanson filed for Chapter 11 protection on $26 million in loans from two creditors, including TD Bank.

The Beverly House. Click either photo to see other Beverly Hills homes.
The Beverly House is a former Hearst estate.

Beverly House

Beverly Hills, Calif.

List Price: $95 million.

The Digs: Former Hearst estate has double master suites, two screening rooms, an art-deco nightclub and spa.

Owner: Leonard Ross.

Legal Woes: Longtime owner Ross filed for Chapter 11 bankruptcy protection in 2010, reportedly because of legal disputes with several banks; he still owns the mansion, at least for now.

Villa Del Lago. Click either image to see other Newport Coast properties.
The home is on 12.5 acres.

Villa Del Lago

Location: Newport Coast, CA

2010 List Price: $57 million

2012 Auction Price: $19.4 million

The Digs: The 12.5-acre estate includes a 16,600-square foot-main house, 17-car garage, stables, vineyard and a wine cave.

Former Owner: John McMonigle

Legal Woes: The estate was sold in a bankruptcy auction after the owner, a Realtor-turned-luxury home developer, filed Chapter 7 bankruptcy, having reportedly amassed $50 million in debt.

Versailles. Click either image to see other Windermere properties.
Versailles is America's biggest home.


Location: Windermere, Fla.

List Price: $65 million (unfinished)

The Digs: The half-finished 90,000-square-foot home is America's biggest, with a two-story wine cellar, three swimming pools and 11 kitchens.

Owners: David and Jaqueline Siegel

Legal Woes: In 2012, Bank of America scheduled a foreclosure auction for April (the second since 2011), but the time-share tycoon and his wife scored a $20 million loan from ICR Finance Services in that allowed them to refinance, escaping foreclosure.

The St. Regis Penthouse. Click either image to see other San Francisco properties.
The home eventually sold for 60% off its original asking price.

St. Regis Penthouse

Location: San Francisco, CA

2008 List Price: $70 million

2011 Bank-Owned List Price: $35 million

REO Sales Price: $28 million in December 2011

Former Owner: Victor MacFarlane

Legal Woes: The penthouse garnered several most expensive titles, from when its initial 2008 listing debut to its REO resale, including most expensive foreclosure after Bank of America took ownership in lieu of foreclosure in 2011. The lender eventually found a buyer willing to pay $28 million -- a 60% discount off of the original asking price -- in December 2011.

To see even more mansions in distress, go to