Getting a loan on Bay Island in Newport Beach

Posted by Sam Smith on Wednesday, August 12th, 2020 at 12:14pm.

Bay Island is one of the premier islands in Newport Beach is the Bay Island community.  Real Estate prices currently start at $5 million and have sold for more than 10 million dollars in recent years.  The island is set up differently that other neighborhoods in Newport Beach which makes it problematic in case you need to get a loan. A real estate agent that has a listing on Bay Island sent me these quotes that help understand the situation here.  It reads "Unlike the financing of the purchase of real property where a lender records a deed of trust against the property as security for the loan, only the stock certificate may be used as collateral.  To protect the Corporation's interests, as well as the lenders, an agreement between the shareholders, lender and the Corporation is required for stock purchases that are financed."  

So the Island is basically set up as a corporation which "since the corporation, not the individual shareholders, owns fee title to the real estate, financing is complex. Shareholders may not record liens against the real property of the Corporation, including, but not limited to Bay Island and the Garage."   It was further explained "that under the Corporation's Bylaws, a purchaser/transferee may not leverage as security or collateral more than 50% of the value of his/her/its tock certificate without the written consent o f the Board of Directors."   So it's important to keep this in mind if you are determined to buy on this island and don't have the ability to pay all cash.  This is a unique situation and other neighborhoods in Newport Beach will have easier financing possibilities.  Although this information was received from a licensed California Real Estate agent we highly recommend verifying all of this information for yourself by speaking with a licensed real estate agent and/or attorney that if familiar with Bay Island.  For questions regarding buying a home in Newport Beach please contact our local real estate agents at 949-444-1901.

Bay Island Newport Beach

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