On October 30, 2025, the buyers walked through the villa they had agreed to buy next to The Ritz-Carlton, Paradise Valley. According to their sworn declaration, a Five Star representative told them that day that the certificate of occupancy had been obtained. The next day, another representative wrote that the certificate had not been issued yet and that "there was one item to be completed for it to pass." One buyer then called the Town of Paradise Valley. The Town told that buyer no certificate had been issued and that the villa had not been inspected in more than six months.
They signed the contract in 2021. The price was $2,995,000, and the contract promised completion within two years of signing, which put the deadline at October 19, 2023. Under that contract, a villa is not complete until a certificate of occupancy is issued. No court order can stand in for that requirement. That is the main thing a buyer comparing Paradise Valley options should understand about this project in fall 2026.
What the Final Villa Sales Order settled
Five Star Development filed for Chapter 11 on November 4, 2025, in the U.S. Bankruptcy Court for the Southern District of Texas. The case is jointly administered as In re F-Star Socorro, L.P., Case No. 25-90607, before Judge Alfredo R. Pérez. The developer says it filed to stop collection and foreclosure efforts by its senior lender, Madison Realty Capital. That lender had provided a construction loan of up to $585 million, secured by the resort, the villas, the estate-home lots and the Palmeraie parcels. The debtors dispute the balance.
In December 2025, Five Star announced that the court had entered a Final Villa Sales Order. According to the developer, the order does four things for a villa buyer:
| Issue | How the Final Villa Sales Order handles it, per Five Star |
|---|---|
| Lender and contractor liens | All liens, including mechanics' liens, attach to net sale proceeds rather than to the villa |
| Reversal risk | Federal "good-faith purchaser" protections mean a completed sale cannot be unwound, even on appeal |
| Title insurance | Title insurers are authorized to issue clean, insurable title |
| Sale proceeds | Held in a court-supervised escrow |
These are the developer's descriptions of the order, published by a local business magazine. A buyer's attorney and title company should read the order itself. Even so, they cover the risks that usually worry a buyer purchasing from a developer in bankruptcy: liens, reversal and title. All of them apply at closing. The buyers' problem came earlier.
The deposit sits in a different place
The buyers paid a $299,500 deposit, 10 percent of the price, plus $384,546 for modifications they requested. By November 6, 2025, the escrow agent confirmed that $256,696.87 remained in their escrow account. The other $42,803.13 of the deposit had already been paid out as upfront commissions. In their declaration, the buyers say they no longer wanted the villa and asked to terminate the contract and get their deposit back.
The bankruptcy changed how they had to pursue that. On March 13, 2026, Judge Pérez lifted the automatic stay so the buyers could terminate the contract and seek a ruling on their right to the deposit. The order also states that it does not decide whether they are entitled to terminate, and it does not authorize collecting any judgment against the debtors' property, "including, without limitation, the Deposit." Our research did not find a later ruling on who gets the money.
For a buyer, this shows the full sequence. The Final Villa Sales Order controls what happens at closing. The deposit, money spent on modifications, and the completion deadline all come before closing, and if the villa is never finished, they are handled by the contract and the bankruptcy case. A delayed villa means waiting, and the buyers say they bought another condo in the meantime once they could see the 2023 deadline would be missed.
Villa construction has its own funding
The project is 122 acres. Plans call for a 215-key Ritz-Carlton resort, 80 branded villas, 32 homes and a 29-acre retail and restaurant district called The Palmeraie. The hotel was first expected to open in 2019, and as of February 2026 no new opening date had been announced.
In February 2026, the court approved up to $32 million in debtor-in-possession financing from BH Capital Ventures LLC, according to The Real Deal. Up to $24.6 million of that is cash collateral set aside for villa construction. A company spokesperson said separately that "discussions regarding dedicated hotel financing are ongoing."
So the villas and the hotel are paid for separately. Money is available to finish villas while the hotel still needs its own financing. That helps a villa buyer, but it does not answer how far along any particular unit is. Our research found no current count of villas closed, finished or still under construction. The most recent figure, 44 villa sales, comes from the November 2025 filing, which also called the original 80-villa release fully pre-sold. Pre-sold and closed are different things, and in this project many months can pass between the two.
November's vote and the separate villa sales
Five Star filed its proposed plan on September 24, 2026, along with a motion on the disclosure statement and solicitation procedures. The Phoenix Business Journal reports that the plan covers the unfinished hotel, unsold villas and the land intended for luxury retail, and that creditors are scheduled to vote in November. The sources we reviewed do not give an exact voting deadline or confirmation hearing date.
Jordan Rose, founder of Rose Law Group, is not involved in the case. He described how the plan could work, as quoted in the Business Journal:
"If they do not exercise this option, the hotel will go to auction and the rest of the land can be sold with it or separately. And in any case, the villas are sold separately."
The "option" refers to his reading that Five Star may get a limited chance to buy the full 120 acres at a price set by the court. That is one attorney's interpretation, not the plan's text. It does suggest that the villas will move through the process on their own track. Whoever ends up owning the hotel and the Palmeraie land could be a different party from the one that sold the villa, and the resort's amenities could depend on that outcome. In December 2025, Five Star said homeowners and residents were still receiving full Ritz-Carlton-managed services. We found no independent 2026 reporting on HOA finances, dues or service levels, in either direction.
What to get in writing before you sign
Each item below comes from a point in the record above. They are diligence prompts. Your own attorney and title company should answer them for your contract.
- Has the Town issued a certificate of occupancy for this unit? One buyer got an answer by calling the Town of Paradise Valley. A copy of the issued certificate settles the question.
- Will the closing take place under the Final Villa Sales Order? Ask for the docketed order and confirm that your title insurer will issue a policy based on it.
- Where does the deposit sit, and can any of it be paid out before closing? In this case, upfront commissions were taken from the deposit.
- How are buyer-requested modifications handled if the contract ends? The $384,546 for requested modifications was paid separately from the deposit.
- What does the contract say about the completion date, and what remedy applies if it slips? Have counsel review how that remedy works while the developer is in Chapter 11.
- Which services and amenities are written into the HOA documents? Find out which are tied to the hotel, since the hotel may be auctioned on its own.
Our buyer's guide covers the standard steps of a purchase. This project needs a few more. Other Paradise Valley purchases have their own hidden checks too, like slope limits on land and wastewater type at closing.
FAQ
Can a completed villa purchase be undone later in the bankruptcy?
According to Five Star's December 2025 description of the order, good-faith purchaser protections mean a completed sale cannot be unwound, even on appeal. Confirm that with your title company before closing.
Does a contractor's lien follow the villa?
According to the developer, the order attaches liens, including mechanics' liens, to net sale proceeds instead of to the home.
When will the hotel open?
No new date has been announced. The hotel was originally expected to open in 2019, and its future depends on the plan process, with a creditor vote scheduled for November 2026.
Is the Town of Paradise Valley involved in the bankruptcy?
In this case, the certificate of occupancy was the Town's question to answer, and under the buyers' contract the villa could not close without one. We found no 2026 Town Council action tied specifically to the project. The Town keeps a Five Star Development project page.
If you're considering a villa or estate home at the Ritz-Carlton, Paradise Valley, The Jakobov Group can help you collect the documents a closing depends on: the certificate of occupancy, the sales order, escrow terms and HOA documents. We coordinate with your attorney and title company before you commit a deposit. Schedule a consultation to go through your contract with us.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
