Michael Jackson's famous Neverland Ranch is to be sold

A source told RadarOnline.com: "Colony Capital has the legal right to sell the property to pay down the debt they are owed from the loan, interest, management fee and maintenance costs."

The property is worth around $27 million, but insiders believe it could fetch as much as $60 million because of its famous former owner.

Officials from Michael's estate said they are "saddened" by the news of the sale but insist they plan to keep the legacy of the 'Thriller' hitmaker - who died of acute Propofol intoxication in June 2009 - going strong at his other former home.

They said in a statement: "We are saddened at the prospect of the sale of Neverland which, under the agreement negotiated during Michael's lifetime, Colony has the right to sell. The estate will maintain Michael's family home in Encino, including its iconic recording studio there.

"[We will] continue to build upon Michael's legacy as an artistic genius and humanitarian through his music and new projects such as the Michael Jackson ONE show in Las Vegas."

The estate went on to appeal to any buyers of Neverland to respect the "historical importance" of the property.

They added: "We hope and trust that any new owners of Neverland will respect the historical importance and special nature of this wonderful property. Michael's memory lives on in the hearts of his fans worldwide."

And the officials told fans they had "explored" a number of "potential options" for the ranch.

However, they added: "Zoning, financial and land use restrictions limited the alternatives and ultimately Colony made the decision to sell."

A source added: "Efforts were made to keep Neverland, and Michael's estate tried to make it happen. However, they were unable to come to an agreement."

Michael bought the 3,000 acre property in 1988 and lived there until his child molestation trial in 2004.