Original Buyer Fails To Complete Purchase

Lee Spence, an owner of Shipwrecks Inc. of South Carolina, who bought the Frying Pan Shoals Light Tower at government auction for $515,000 has backed out of the purchase. The offshore structure, which is 35 miles from the mouth of the Cape Fear River, and 25 miles southeast of Southport was offered in an on again, off again auction late last year and early this year through the Government Services Agency (GSA). Spence planned to rehab and use the tower as a diving platform and home for a dive charter business. However, he has refused to pay out the rest of the money owed because he wasn’t allowed to inspect the tower.

However, according to Louis Mancuso of the GSA, it was clearly stated before and during the auction that there would be no inspection due to the dangerous condition of the tower. Although it has a helicopter landing pad, five furnished bedrooms, a pool table in the rec room and a beautiful ocean view it is in a decrepit condition and access is severely limited. Mancuso also said in a story at Star News that Spence won’t get his $5,000 deposit back. The deposit is a requirement for bidding in a GSA auction.

Irregularities in Bidding?

Mancuso said the next highest bidder will be contacted and offered the lighthouse for the same price as Spence paid. That’s also standard for these auctions. If the unidentified second place bidder refuses, it will go up for auction again. And Mancuso also stated the starting bid will be “significantly higher” than the first time around. Also that Spence would be welcome to bid on the property again.

Spence also mentioned something about irregularities in the auction process itself, which is not terribly surprising. It was unclear what he meant in the story, but there have been complaints about auctions shutting down too early in the past. One lighthouse buyer, Michael Gabriel, who was prepared to bid before the stated 3:00 p.m. closing time, found he was unable to place a bid because the auction closed automatically before 9:00 am. Whether the same thing happened here, or it was more in the nature of the light tower being offered, withdrawn, and then offered again, I’m not sure. Or maybe it was something else…

From a Frying Pan Tower forum, Dr. E. Lee Spence posted this:

One reason was that even though we had the winning bid and we offered to sign a waiver of liability, they would not let us inspect the tower unless we first paid the balance of the 10% (i.e. another $46,500). They said we could inspect it after paying the full 10%, so it was ultimately neither a safety nor a liability issue, but a money issue. We have been told that the tower can be repaired and renovated for about $2,000,000. That would have been acceptable to us. But we were not willing to pay a total of $51,500 just to inspect it. We can afford to walk away from $5,000. But, I think that expecting us to be willing to shell out over fifty grand just to look at it is idiotic. If we inspected it and found that repairs and renovations would be four or five millions of dollars (as some have suggested) we would not want it. Who would?

The other reason we asked for our money back and asked to have it rebid, was that we questioned whether two or three of the top four bidders had violated the normal bidding rules by entering into written or oral agreements with each other prior to the bidding. If they violated the rules (which I don’t know enough to say that they did) and their bids were excluded, then we should have won at a significantly lower price.

In fact, what I honestly think they should do is simple toss out the bids of anyone who broke the rules (if any actually did) and offer it to us at the new price (if it is lower). And, they should let us inspect the tower with only the $5,000 at risk.

No proof on what he is saying is true, of course, but he does claim in another post that it isn’t about trying to get the price lowered. Or that he bit off more than he could chew.

However, as I mentioned, the government was willing to let us inspect it, they just wanted us to pay an additional $46,500 before we looked at it. So the “notice” about no “inspections” was BS. They obviously agreed with us that it wasn’t reasonable to expect someone to buy it sight unseen.

And, since they were willing to allow the inspection without the waiver of liability that we had offered, it wasn’t even a safety issue.

It was purely a money issue. They just wanted more for a look than we were willing to pay. We were willing to look at it and lose $5,000 but to not look at and lose a total of $51,500.

Don’t forget, we also had other reasons for asking for our money back and the most serious of those have already been given here.

I think the government bungled this sale.

This is at least the second time in recent months that buyers have complained about the auction process. Perhaps there is some truth in what they’re saying.

About the Tower

From the Coast Guard site on the Frying Pan Shoals Light Tower:

The Frying Pan Shoals “Texas Tower” was originally constructed and placed in operation in 1964 and was automated in 1979. Since that time the structure deteriorated to such an extent that the light has been formally extinguished and the “Texas Tower” structure is scheduled to be demolished.

Unless someone else buys the tower sight unseen, or rather un-inspected.

Photo Credit: The photo above is also from the Coast Guard, and had this caption attached:
“SERVICE MODERNIZATION–New U.S. Coast Guard Frying Pan Shoals Offshore Light Tower, placed in operation on November 24, 1964, replaces famous old 133-ft. Lightship (WAL-537) which guarded the shoals 28 miles southeast of Cape Fear, N.C., since she was built in 1930. The lightship circles the tower here, gives three farewell whistle blasts, and departs for Morehead City, N.C., to prepare for her new assignment at Cape May, N.J., as a Relief Lightship.”; caption sheet is dated 4 January 1965; Photo No. #5CGD-11-25-64(01); photographer unknown.

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