A Notice of Foreclosure was taped to the door of the American/Mexican eatery at 14977 Cleveland Ave., east of Spring Lake.
The restaurant's owner, Fred Sears, said he is up to date on his mortgage payments. He said there was a glitch after his mother, Gwen Victor, whose name is on the mortgage, died late last year.
“We had a note with the bank and my mother was the guarantor,” Sears said. “I never realized that her dying was going to create such a havoc. Neither did she.”
The foreclosure notice from JP Morgan Chase Bank states that there will be a public auction for the property at 10 a.m. Aug. 9 at the Ottawa County Courthouse.
Chase Bank representatives on Monday were unable to confirm the reason for the notice. Emily Smith, the bank's media spokeswoman, said Monday night “our team is working to get details.” Those details were not available as of press time.
According to the document, $249,490 is due on the mortgage made by Gwendolyn A. Victor as trustee on behalf of her husband's trust (Ernest J. Victor) in 2003. Gwen became sole owner of the restaurant when Ernest died in 2003.
Sears said he filed all the necessary death certificates with Chase Bank shortly after his mom passed away. He said the bank requested the business' 2009-11 tax returns to “rewrite the loan."
Sears said his accountants always file an extension for the business tax return. The 2011 taxes are not yet completed and aren't due until Sept. 15. According to Sears, the bank is demanding them.
“They know my people are working on it and doing everything they can do,” Sears said. “Some dude with a clipboard came up with a big wad of tape and slapped it on there about 7:30 a.m. I didn't know anything about it. I thought it was a joke until I got to reading it.”
Sears' attorney, Paul Winter, said he believes his client is current on the business' loan. Winter said it's possible there was a provision in the mortgage that says that death constitutes default. Because the note was in her name, Gwen's passing may have triggered that clause.
“It's not an uncommon provision,” Winter explained. “He's been paying on that note right along. I know Fred was working with the bank on refinancing the note. I had not heard from the bank that they were going to take it to this next step. I'm sort of surprised. We'll see if we can't work something out.”
Bo Grant of Cascade Business Services prepares the tax returns for Vic's Restaurant and Lounge. She, too, said she's shocked by the foreclosure notice.
“When his mother passed away, they called the note,” Grant said. “He provided all the information they wanted — financial statements and tax returns. The 2011 corporate returns are on extension and aren't due until Sept. 15. The reason those taxes aren't done yet is because his mother passed away. It's hard to get on top of things.”
Grant said she and Sears thought things were progressing with the bank in a positive manner, until the notice appeared on the door. At this point, she sees three options for Sears: continue to work with Chase Bank for loan approval, obtain financing elsewhere or sell the business.
“We got no notification that his credit application was denied,” Grant said. “I don't think they followed the correct procedure. I think it's very inflexible and inappropriate for the bank to put this in the public forum without notifying him. We haven't heard anything from the bank to indicate it was headed this way."
Sears said he is the trustee to his mother's estate, but he is not on the deed to the restaurant property.
Sears said two to three weeks ago, a Chase Bank representative showed up at the restaurant to do an “environmental assessment.” Suspicious, Sears called his attorney and was told that is a necessary step in rewriting a loan.
Sears said only a few customers saw the note on the door on Sunday before one of his employees took it down. He vows to fight what he considers an improper procedure and keep the restaurant open for business as usual.
“I'm embarrassed by this, but we live in a great community," Sears said. "I'm going to keep making my payments. I'm going to work with my attorney and Chase Bank so we can hopefully get this thing resolved."