Monday, April 28, 2008

A Five Million Dollar Landslide Loss

Mountain Air Resort property owners have experienced significant and potentially irreparable landslide damage. According to court documents:
…in 2003 the foundations of two buildings of the five unit Austin View Villas began cracking and in late 2004 the foundations of the Units began and/or continued moving and “sliding” on the side of the mountain upon which the Units had been constructed, causing the foundations, wall structures, floors, and other components of the Units to crack and to deteriorate substantially. As a consequence, the Units became-and remain-completely uninhabitable and the Intervenor Plaintiffs have been deprived entirely of the use and enjoyment of their Units since January 2005.
Current tax records show the value of each unit to be $640,000. For a copy of the lawsuit ( 07 CvS 19), please visit

During the summer of 2004, the Hemlock Bluffs units which are adjacent to the Austin View Villas, began shifting on their slope sites. According to court documents:
During the construction of the Golf Course adjacent to and below the units in Hemlock Bluffs, the Hemlock Bluffs units began moving and sliding. As a result of this moving and sliding, the foundations, wall structures, floors, and other components of the Hemlock Bluffs units cracked and deteriorated, causing substantial damages.
This complaint was settled out of court. (06 CvS 51)

On June 20, 2007 the Mountain Air Development Corporation placed a half page advertisement in the real estate section of The Wall Street Journal introducing the sale of their newest mountain slope properties:
Settlers Edge offers unbelievable views... the Settlers Edge opportunity is very limited... just 16 spectacular homesites... 11 mountaintop estate homes, and 38 condominium homes.
Readers of the Mountain Air promotion will find no mention that the land being marketed is in a hazardous area and that property owners in the resort have suffered extensive landslide property damage.

Mountain slope property is Western North Carolina’s most important salable asset. Unfortunately all of this real estate is located in a state designated high risk landslide hazard district. (1998 Report/North Carolina Department of Emergency Management)

Developers know that old landslide deposits and unstable soils are inherent property threats yet they are allowed to profit on their ability to site and sell homes in these locations without state regulation and without risk disclosure.

Landslides are costly. There is no coverage available to protect homes and property. Insurance companies know from experience that slope failures are predictable and expensive and they will not insure these losses.

The Mountain Air Resort slope failures are not unique or unusual. Landslides cause frequent unreported financial distress to property owners throughout the region. It is remarkable however, that the news media has chosen not to report on landslides in a nationally known mountain resort. ( Editors at both the Charlotte Observer and The News & Observer were provided with copies of the complaint in the summer of 2007.)

The filings show Austin View Villas condominium property losses in excess of $5 million. This amount does not include the diminished property value of the Hemlock Bluffs condominiums.

This lawsuit is newsworthy. How can investors make informed decisions about buying mountain real estate if landslides are hidden from public view?

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