The Hagerstown Hotel and Convention Center property at 1910 Dual Highway is scheduled to be sold at a foreclosure auction on Tuesday.
The sale is set for 11 a.m. at the entrance to the Washington County Courthouse, according to a notice filed by Richard E. Hagerty, substitute trustee with Troutman Sanders LLP of McLean, Va.
The property is being sold because owners Watchwood LLC and Bahman Inc. defaulted under the terms of their 2006 financing agreements with BB&T, according to the auction notice.
Michael Turner, the hotel's general manager, said the bank that financed the hotel placed it into receivership on Sept. 10, barring the owners from the property, and the hotel changed management at that time.
An investment firm in California bought the note on the property in December and is now proceeding with a foreclosure so it can own the real estate, Turner said.
He said he could not name the California firm.
"On Tuesday, the people that own the note now will more than likely buy the property out of the receivership, and then they'll own the real estate and will proceed with whatever their plans are going to be," Turner said.
If that happens, the sale will not affect operations at the hotel, he said.
"The property will continue to operate just like it has been," he said. "It's just a matter of who owns the real estate."
The 108-room Hagerstown Hotel and Convention Center also includes a restaurant and meeting facilities.
Watchwood LLC bought the hotel in November 2006 for $7.4 million from longtime Hagerstown businessman, Nick Giannaris, The Herald-Mail reported at the time. It opened in 1970, and the Giannaris family took on the hotel 10 years later.
The property was scheduled for a foreclosure auction in August 2009, but the owners filed for Chapter 11 bankruptcy protection just hours before the auction was scheduled to begin.
Chapter 11 documents filed at that time showed the owners owed BB&T $5.5 million.