The housing authority on Monday closed on a property deal that is the subject of a lawsuit, even after the Bank of Jackson Hole demanded legal protection late Friday.

Executive Director Christine Walker said the Teton County Housing Authority was able to finalize the deal to purchase 5.2 acres on Cheney Lane because it will borrow $500,000 from the sellers, Bill and Caryl Mantey, and use $1.5 million from a line of credit with Jackson State Bank and Trust.

The agency announced Friday it would borrow $500,000 from Bank of Jackson Hole, but Walker learned late that day the bank was requiring the housing authority to sign a hold-harmless agreement. That agreement would have required the agency to pay the bank’s legal fees if it got dragged into the lawsuit filed by Cheney Lane neighbors.

“The other banks were requiring the same thing,” Walker said. “Because it came at such a late hour, we were surprised by it. When they were bidding, they didn’t offer it at that point.”

The housing authority had been scheduled to close June 22, but that closing date was delayed because of the lawsuit Peter Moyer and 26 west bank residents filed the day before in 9th District Court.

The suit asks a judge to rule whether the agency’s decision to buy the land was done in accordance with state open-meetings laws. It also asks a judge to rule whether one plaintiff, Barbara Sellas, had the first right of purchase based on a handshake agreement she says she had with the Manteys. Additionally, it claims the housing authority violated specific-purpose excise tax limitations, breached its fiduciary duty and violated laws regarding public funding limitations and public subsidies for private individuals.

The suit alleges the county commissioners’ approval of the purchase also is invalid.

Because of the suit, the closing date was pushed from June 22 to Monday so the agency could look for other financing. Jackson State Bank and Trust was going to lend money to the housing authority to help complete the deal but then decided to await the resolution of the legal issues before proceeding on a deal.

Meanwhile, on June 29, the Manteys’ attorney, Andrea Richard, filed a response to Moyer’s suit and filed counterclaims asking that the Manteys be compensated for damages and attorney fees. The Teton County Housing Authority announced that day it would file a countersuit in the case, seeking answers, but not damages, to questions that Moyer has raised.