The village's long wait to acquire a former commercial building on the Elk River will go on at least a bit longer.
Johan Bech, who once owned a mustard factory along Dexter Street in Elk Rapids, sued The PrivateBank & Trust Co., which foreclosed on the property, and in April sold it to the village for $600,000.
The suit, filed in 13th Circuit Court, alleges the Chicago-based bank's foreclosure action "is defective and insufficient and that the sale of this property in question to the (village) is a nullity."
A hearing on Bech's request for a temporary injunction to block the village from taking ownership is set for June 13 in Bellaire before Judge Philip Rodgers.
Elk Rapids officials aren't sure of their legal status in the case. The village isn't listed as a defendant but was served with a motion for the hearing, village attorney Scott Howard said.
"As far as I can tell, it is not (a defendant)," he said.
The village purchased title insurance for the transaction and will be represented at the hearing.
"They'll have somebody there defending the village under that policy," Howard said.
Bech filed the suit in pro per and will act as his own attorney. A local telephone number for Bech was disconnected, and he could not be reached for comment.
The property is located between Dexter Street and the Elk River and overlooks the village harbor. It's one of the oldest commercial sites in Elk Rapids, home to a general store that opened in 1857 and continued into the 1920s. It later was used for an oil company, a manufacturing plant and a private marina before Bech and his wife bought it in the 1980s and operated a gourmet mustard factory there for several years.
The village monitored the property for years but balked at a purchase price that once neared $4 million. It later was appraised at $2.9 million and $1.7 million, though the foreclosure price came in at less than a quarter of that figure.
Court records from Bech indicate the property was among several parcels used as collateral for a $1.5 million commercial mortgage secured by Bech and his wife in 2006. Others included land along U.S. 31 in Elk Rapids, and property near Kewadin and in Milton Township.
Bech's motion alleges the bank didn't properly follow state foreclosure laws and that it "does not show clear chain of assignment to prove (the bank) was the real party in interest to enforce the note."
Village Manager Robert Peterson said the lawsuit is delaying the village's plans to gather public input on potential future uses. He declined further comment, citing the pending litigation.
"(W)e have done some minor stuff before the lawsuit was instituted," Peterson said. "Until we go to court, I'm not sure what it's all about."
Howard said the village put off a planned open house to allow the public to tour the property, but officials haven't ruled out using at least part of the riverfront parcel this season for potential boat mooring.
"Hopefully, everything will be resolved on the 13th, and the village can move ahead with its plans," Howard said.
Bank spokeswoman Amy Yuhn declined comment.