Friday, May 30, 2008

The Headwaters at Banner Elk and the Interstate Land Sales Full Disclosure Act

In 1968 Congress passed the Interstate Land Sales Full Disclosure Act to protect consumers from fraudulent sales practices. This bill requires land developers to register their subdivision plans for a 100 or more non-exempt lots with the U.S. Department of Housing and Urban Development (HUD). Developers offering 25-99 lots as part of a common promotional plan are not required to register but are subject to the anti-fraud provisions. Violations of the Act may result in criminal and civil penalties and the buyer's right of rescission.

The law also stipulates that each purchaser receive a pre-sale Property Report detailing all material facts about the land offered for sale. The sale of condominiums is covered under this Act.

The Property Report is intended to be a revealing document. It is uniform in design and requires full disclosure of known potential land risks.

Fact: Western North Carolina Mountain Land is Hazardous.

The mountain terrain in the 21 county region known as Western North Carolina is inherently unstable: landslides are significant threats to lives and property. Western North Carolina mountain developers who are subject to the Act should disclose the following material information under the Land Characteristics and Climate/Hazard Section of their property reports:
1. The land in this subdivision is naturally hazardous. Geologists and soil experts have determined that the lots in this subdivision are at risk of slope failure. Homeowner policies will not cover this damage.

2. This project was approved without landslide hazard mapping and under regulations that did not require site specific stability studies. Please contact the North Carolina Geological Survey for information regarding the Western North Carolina Landslide Mapping Program.
Another section of the report defines financial responsibilities for the Property Owner's Association. If applicable, the following should be disclosed:
Roads in this subdivision are private and will be maintained by the Property Owner's Association after the developer's obligations are satisfied. Subdivision roads are presently stable but are subject to erosion and slope failure. All future road costs will be shared by members of the association.
The Headwaters at Banner Elk subdivision is located near the town of Banner Elk. It is unknown whether The Headwaters at Banner Elk sales are covered under the Interstate Land Sales Full Disclosure Act. For information concerning consumer rights and protections please contact the U.S Department of Housing and Urban Development.

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