Some lenders for the Skywater development in Horseshoe Bay have filed a $25 million notice of foreclosure on the 1,600-acre high-end development.

Nobody, however, wants to talk about it. When the property is sold, it will wipe out any liens on the property, leaving contractors and others owed money out in the cold.

The notice of the foreclosure sale, filed in Burnet and Llano counties Feb. 10, lists a March 3 sale of the property, although the location of the sale, either in Llano or Burnet County, or both, is unclear and neither clerk’s office had the information Thursday afternoon. The suit lists a New York corporation, HB Texas Funding Inc. as a debtor to Third Avenue Real Estate Opportunities Fund L.P., under terms of a Nov. 9, 2006 agreement.

Other lenders joined Third Avenue in the foreclosure. Michael Winer, who manages the portfolio containing Skywater for Third Avenue Management, Third Avenue Real Estate Opportunities Fund’s parent, issued a “no comment” when asked about the foreclosure.

IBC Bank of San Antonio, who is the senior lender on the project, did not return calls to The Highlander, nor did Jody Bates of South Star Development Partners Inc., of Coral Gables, Fla., who manages the day-to-day activities at the development.

IBC Bank is first in line for repayment, but it is not among the entities listed as filing the foreclosure. Third Avenue and other lenders hold liens that are secondary to IBC’s.

Speculation from a real estate industry source is that Third Avenue and other lien holders on the property may be doing a “friendly foreclosure” on the property. In that instance, another entity associated with the lenders might make a bid on the foreclosure, for $1 over the debt, and purchase the property.

Anyone may bid on the property at a foreclosure sale.

When the property is sold at foreclosure, however, it wipes out any liens on the property.

“It may be that the first and second lien holders are conferring, talking and strategizing about how they can wipe out some underlying liens and things like that,” the source said. “The second lien could foreclose, wipe all those out, then go negotiate with the first lien holder. That’s one scenario, it wouldn’t surprise me, but I have absolutely no personal knowledge of that.”

Contractors and other companies working on the project would also have their liens wiped out.

“There are going to be some contractors, probably, left empty handed over the deal,” the source said.

Most of the Skywater development is in Llano County. A portion of the development is located in Burnet County.