Popular Santa Cruz bed and breakfast sold in foreclosure auction

Something of a Santa Cruz, Calif., institution, the Darling House bed and breakfast was sold for nearly $2.78 million cash in a foreclosure auction on the steps of the Santa Cruz County courthouse Thursday afternoon.

Santa Cruz Community Credit Union, one of several loan creditors for the business' long-time owners Darrell and Karen Darling, made the successful — and only — bid for the inn. Capitola-based Omni Financial LLC, another of the Darling's lenders, called for the foreclosure due to their own accumulated $3.9 million in debt.

"We've got 500 members and we went five years without payment," Martin Boone, manager for Omni, said after the auction concluded. "It's too bad. It's an unfortunate set of circumstances that led us to have to be here."

The 314 W. Cliff Dr. property was in escrow with a potential buyer after the Darlings listed the site for $6.5 million earlier this year. Darrell Darling said he did not know why the deal fell through, but that it was not the first time they had tested the market through the years without success. Darling added that he and his family "did what could be done" on owed loan bills and were the "best trustees we could be for a beautiful home."

Darrell Darling said the family "lost several million in the financial collapse" almost a decade ago.

"In very large measure because the market, as it collapsed for us, it collapsed for everyone else and there was no market for the house, financially, that would be pay the debt," Darling said.

The Darlings paid Santa Cruz County nearly $11,500 in property taxes on the land in the 2016-2017 fiscal year, according to county records.

The Darlings, along with daughter Denise Wyldbore, were on hand for Thursday's auction. Darrell Darling said property owners do not usually attend foreclosure sales, but his family had a "keen interest in the house" after running their business there for more than 33 years.

The Darlings threw themselves a retirement party on Aug. 26 to sell off the inn's remaining furnishings and raise funds for their favorite charities. The couple have been long-time social activists and Democratic party contributors. Darrell Darling served as a Methodist minister for 25 years before opening the business with his wife.

The family said after the auction that they were pleased with the nonprofit credit union coming on as the new owners, adding that the operational permit for the bed and breakfast goes with the land and could be taken over by a new owner, if reactivated within six months.

Community Credit Union representatives on hand declined to comment on the property's future use.

Neighbor and real estate agent Rich Stachowski said he joined Thursday's small gathering to witness the outcome. He said he was sad to see the Darlings "in any kind of distressed situation."

The couple, who ran the bed and breakfast in partnership with Wyldbore in recent years, said they moved in with their daughter and her family on Oct. 5.

Tribune Content Agency
Foreclosures REO California
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