A listed building bought with the help of £75,000 from community gifts and loans has been repossessed.
The coach house, Clifton Hill, Brighton, was snapped up for £325,000 two years ago with cash from 60 residents and a £250,000 mortgage.
But the building, which was to be transformed into a community centre and museum, has now been repossessed by lenders Baron Homes and sold for £260,000.
The mortgage lenders said that, with cost of the sale, the former owners would not see any money back.
The coach house was built in 1852 to serve the houses in Powis Villas. In April 2006, it was bought by Brighton and Hove Historic Buildings Conservation Limited, set up by Roger Amerena, chairman of the Montpelier and Clifton Hill Association, and other members of the group.
The company was to be changed into a trust and the mortgage repaid through charitable grants.
T he trust planned to renovate the building as a community centre and museum for the Montpelier and Clifton Hill conservation area.
But the Grade II listed building was repossessed by the mortgage lender after what it claims were "two years of problems".
A spokesman for the former coach house owners has rejected this, saying they had been up-to-date with payments.
He said the building was repossessed because it had been "slightly late" with a past mortgage repayment.
He added: "We had no communication, they didn't write to us saying that they were going to change the locks.
"It is disgraceful behaviour - we were up to date when it was repossessed.
"The company was going to change into a trust but this takes time and the mortgage lenders knew this.
"Hopefully we can get it back in the future."
The firm has yet to decide how it will deal with the loss and whether those who provided investment as a loan, rather than a gift, will get their money back.
Baron Homes said it had contacted all concerned and only took action as a last resort.
Richard Blencowe, of Brighton-based Baron Homes, said: "We gave the company every opportunity to resolve the situation over time.
"For almost two years it has been a problem.
"I feel very sorry for those that contributed but it has been handled very poorly."
The building has now been bought by the owners of North Laine Mod shop Jump the Gun who will use it as storage.
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