The Martha’s Vineyard Film Festival Wednesday took ownership of the Walsh property in West Tisbury, but announced that it would resell the property as quickly as possible, preferably to a neighbor group that surfaced this week as a potential buyer.

The announcement followed a flurry of confusion after it came to light that negotiations with the neighbor group to take over the purchase and sale agreement had fallen apart.

Late last month MVFF announced plans to buy 694 Old County Road, 12.5 acres and a farmhouse formerly belonging to the late Cynthia Walsh, for $1.4 million.

News of the sale sparked a strong public backlash from neighbors and others concerned the proposed use as a campus for the film festival would be out of keeping with the rural residential neighborhood.

Farmhouse belonged to the late Cynthia Walsh. — Mark Lovewell

West Tisbury artist Rez Williams confirmed Wednesday that a neighborhood group had formed an LLC and made a full-price offer to MVFF to take over the sale contract.

“We were negotiating with the film festival, but it did not come together,” Mr. Williams said early Wednesday afternoon.

As a result, a closing set for Wednesday between MVFF and the Walsh family went forward.

Speaking to the Gazette an hour after the closing, MVFF spokesman Brian Ditchfield said the third-party deal fell through after a trustee for the Walsh family declined to agree to it, acting on advice of counsel, West Tisbury attorney George Brush.

“It’s been crazy — our dealings with the neighbor group have been them have been really amicable it was all good as far as we were concerned and we were ready to sign that deal,” Mr. Ditchfield said. “I’m not sure why the seller pulled out, but they did.”

MVFF founder and executive director Thomas Bena was unavailable for comment, Mr. Ditchfield said.

But he said MVFF now owns the property, although it no longer plans to relocate its operation to Old County Road. Instead it will instead resell the property.

“We heard the neighbors and the community pretty clearly that this is not the right spot,” he said, referring to the public backlash.

Mr. Ditchfield said he did not know what price MVFF would ask.

“The film festival is not in the real estate business,” he said, adding: “We are the owners of the property, but right now we are exploring other options. We are going to continue talking to the neighbors, to conservation groups and to others.”

He said he hopes MVFF can sell to the neighbor group. “We are definitely going to be talking to them,” he said.

Mr. Williams indicated Wednesday that the group would still be interested.

“Right now we are just passively sitting here,” he said.

Meanwhile, in a statement issued Wednesday, MVFF struck a conciliatory note.

“Our aim is to build community, not divide it,” Mr. Bena said in the statement.

“It’s reassuring to know that in the current climate of rumors and anonymous online comments, we can still meet face to face to overcome conflict and embrace the true spirit of our Island community,” Mr. Ditchfield said in the statement, continuing: “Even though the option to transfer the purchase and sale has been taken off the table, we are going to continue to work with the abutters to preserve the land, and we hope the community will help the MVFF find a better location.”

The statement said MVFF is actively seeking another property, possibly “a rustic barn in which to gather the community, encourage all art forms, educate, and discuss the issues of our times.”

The film festival was founded in 2001 by Mr. Bena as a grass-roots winter film event for year-round Islanders. It has since grown and expanded through the years to include more events and educational programs, including for families and children.