Early in 2026, Five Star Development closed on three Ritz-Carlton Residences villas in a single day, with more under contract to close within a couple of months, according to the Phoenix Business Journal. Thirteen villas had closed since a December court order, the listing broker told the paper. All of this happened while the developer was in Chapter 11 and the resort meant to anchor those homes was still unfinished.
For anyone shopping near Lincoln Drive, the court has made a villa purchase mechanically safe. The value of that purchase is a separate matter, and it now depends on a hotel sale that has not happened yet, to a buyer who will be required to finish construction.
What the December order changed about a villa closing
F-Star Socorro, L.P. and affiliated debtors filed for Chapter 11 on November 4, 2025, in the U.S. Bankruptcy Court for the Southern District of Texas, Case No. 25-90607. That is one year ago this week. Construction liens and a disputed lender claim would normally make any closing at the property slow and uncertain. The Final Villa Sales Order, described in a December 2025 report republished by the Rose Law Group Reporter, handled that risk in four ways:
- Liens, mechanics' liens included, attach only to the net sale proceeds and not to the villa itself.
- Buyers receive federal "good-faith purchaser" protection, so a completed sale cannot be unwound even if someone appeals.
- Title insurers are authorized to issue clean, fully insurable title.
- Sale proceeds go into a court-supervised escrow.
After that order, the closing itself stopped being the risky part. The buyer's remaining question is what the home will be worth once the resort around it is finished, sold or left waiting. This is general information, not legal or financial advice, and anyone considering one of these purchases should go over the order and the title commitment with their own attorney and title professional.
Where the money from a villa sale goes
On October 14, 2026, the debtors filed an amended joint liquidating plan. A Bankruptcy Watch analysis from SPE Specialists summarizes how it handles the villas. After brokerage commissions, closing costs and royalty fees, net proceeds from future villa sales go "solely to Madison," the construction lender RC PV Lender I LLC and its affiliates, including Madison Realty Capital, to pay down its debtor-in-possession and construction loan claims. No other trust beneficiaries share in that money. Under the plan, the trustee can keep selling villas under the existing procedures, or individual villas can be handed to Madison in exchange for reductions in its claim.
That shapes the incentives on the other side of the table. A typical Paradise Valley seller is weighing a price against a move. Here, every net dollar from a villa sale lowers one creditor's balance. For plan purposes that claim is treated as allowed at about $570.31 million, though it remains disputed. Madison also put in an $8.5 million postpetition advance at 16% interest, which the plan would repay from villa proceeds before the effective date. Remaining villas can also end up in the lender's hands, which means some future resale supply could come from a creditor and not from a household.
As for price, the clearest public data point is still the August 2025 Phoenix Business Journal report of a villa that closed for $6.48 million while the lender litigation was underway. It records one sale before the bankruptcy filing. It is not a current comp.
The hotel needs a buyer who will also finish it
The resort at 7000 East Lincoln Drive is designed for 215 keys, made up of 78 traditional guestrooms and 137 casitas, plus restaurant, retail, meeting and ballroom space. In March 2025, The Arizona Republic reported an expected opening in late fall 2025 or early spring 2026. By late September 2026, the Phoenix Business Journal was still calling the hotel incomplete.
The plan would put the resort through a court-approved Section 363 sale. A qualified bidder has to name an experienced hotel developer the debtors accept, provide a sources-and-uses plan for completing construction, and give the plan trustee reasonable consultation rights over future building. The plan leaves three possible buyers open:
| Possible buyer | How the plan treats it |
|---|---|
| Existing parent equity or its designees | An option to buy the hotel and certain undeveloped land without an auction, starting at about $570 million before adjustments. Exercising it in time ends the wider marketing process. |
| A third-party hotel developer | Bids in the competitive process and has to meet the completion requirements. |
| Madison, through a credit bid | Allowed to try. The debtors keep the right to ask the court to limit or deny credit-bid rights, and a Madison-backed sale would remain subject to a clawback. |
The schedule is also open-ended. The resort sale has to close within six months after the court approves bidding procedures, and that deadline can be extended twice, by six months each time. That allows up to 18 months just to transfer ownership. The plan trust generally has to wind down within five years.
The brand agreements hold up the residential premium
The plan would assume three agreements with The Ritz-Carlton Hotel Company: the residential license and development agreement, the pre-commencement agreement and the operating agreement. Ritz-Carlton would waive any cure amounts and take no plan distributions.
For homeowners, the first of those is the one to read closely. A branded residence is valued partly on the brand name and partly on the expectation of an operating hotel next door. Keeping the license in place protects the name. The operating hotel arrives only when a buyer funds completion. So the villa premium that buyers paid, and that future buyers will be asked to pay, depends on the hotel sale succeeding. That outcome is out of any one owner's hands.
Across the street, the Palmeraie is still a plan
The Palmeraie has long been promoted as the retail half of the project. The residences' sales materials describe about 160,000 square feet of high-end mixed-use space at Scottsdale Road and Indian Bend with "more than 60 luxury and specialty boutiques, as well as restaurants." That description is written in the future tense. PBJ's September 2026 preview describes the same ground as land "earmarked for a luxury shopping center."
Mott 32 was announced in March 2024 as the resort's signature restaurant, set to open alongside the hotel. Its opening is now tied to the same unfinished hotel. Under the plan, undeveloped Palmeraie parcels and Ritz-Carlton estate lots may be sold together with the resort or on their own. If you are buying a nearby home because shopping and dining are planned across the street, you are relying on a parcel whose next owner and use are not yet known.
Why the Town has a stake
Paradise Valley levies no town property tax, so resort revenue does a lot of the work in the budget. In a June 2022 Q&A in her Preserving Paradise Valley newsletter, Councilmember Julie Pace said the Ritz-Carlton "should have a net positive impact" on town funds and noted that resorts supply occupancy-tax revenue. In a July 2022 edition of the same newsletter, she reported town-wide resort taxes of about $3.3 million in fiscal 2021 and $5.3 million through the first ten months of fiscal 2022. Those were 2022 figures for resorts already open. Neither is a Ritz-Carlton forecast. They do show that a 215-room resort that has not opened is also revenue the Town is not yet collecting.
In November 2025 the Paradise Valley Independent reported resident concern about the project's future, noting that the development had been close to 20 years in the making and that construction began about seven years before the filing.
What November brings
According to PBJ's September preview, a vote on the plan is scheduled for November. If the plan is confirmed and takes effect, existing management steps aside. Chief Restructuring Officer Lance Miller would become the plan trustee and the sole manager of each project debtor, in charge of asset sales, litigation against Madison and distributions to creditors. After that come the dates to watch:
- Court approval of hotel bidding procedures, which starts the six-month sale clock
- Whether existing equity uses its purchase option before the deadline set in those procedures
- Any challenge to Madison's credit-bid rights
- Whether remaining villas keep selling under the existing procedures or are transferred to Madison
Separately, Madison has been named successful bidder for the El Paso and Socorro, Texas, properties through a credit bid. Subject to court approval, that would cut its construction loan claim by about $90 million. That change lowers the debt the Paradise Valley assets have to cover.
Is title on a Ritz-Carlton Residences villa safe to insure today? The December 2025 Final Villa Sales Order authorizes title insurers to issue clean, insurable title and moves liens onto sale proceeds, according to the report republished by the Rose Law Group Reporter.
Will the resort keep the Ritz-Carlton name? The amended plan proposes assuming all three Ritz-Carlton agreements, including the residential license. Confirmation of the plan is still pending.
When will the hotel open? The plan makes completion the job of the hotel's buyer, who has to show a sources-and-uses plan for finishing construction. That sale has to close within six months after bidding procedures are approved, with up to two six-month extensions.
If you own a home within sight of Lincoln Drive or are deciding whether to buy one, Arizona Proper Real Estate can go through recent Paradise Valley sales with you and talk about how a stalled resort next door affects the price you pay or set. You can also start with a home valuation or browse our Paradise Valley neighborhood page. Schedule a private consultation and we will go over the November vote and the hotel sale timeline with you.
