Bankrupt Mortgages Ltd. is suing Scottsdale developer Grace Communities for defaulting on a $32 million loan for Portales Place in Scottsdale.

Portales Place, if built, will face steep competition from the mostly completed Optima Camelview Villages (video) across the street, which currently has over 50 units listed for sale in the MLS from $285,000 to $2,000,000. (Optima Camelview MLS listings)

Grace Communities is also the developer of the essentially completed 82 unit X Wine Lofts on Osborn Rd just west of Scottsdale Road. I’ve visited a couple of units and was not impressed with the value proposition of the X Wine Lofts. Apparently I wasn’t the only one. I just did some checking and I can’t find any evidence that any of the units have sold. Eight units that were in the MLS, had their listings canceled in late October. No units are currently listed in the MLS.

Bankrupt lender Mortgages Ltd. is suing the principals of development firm Grace Communities, accusing them of defaulting on a $32 million loan for a Scottsdale real-estate project….

Grace planned to use the loan to build Portales Place, a condo and hotel project north of Scottsdale Fashion Square.

The developer also had four other loans with Mortgages Ltd., including one for X Wine Lofts at Scottsdale and Osborn roads and another for Hotel Monroe in Phoenix. Grace, which tried to force Mortgages Ltd. into Chapter 7 this summer, claims the lender did not fully fund those two loans.

Mortgages Ltd. is seeking at least $38.3 million in damages plus attorneys’ and legal fees for the Portales Place loan.