Friday, June 13, 2008

Legal Questions Concerning Laurelmor Land Sales

Laurelmor, a Ginn Clubs & Resorts mountain development, covers more than 6,000 acres and is located near the communities of Boone and Blowing Rock. Project plans envision the eventual sale of 1,500 single-family home sites and 400 condominium units.

Ginn Clubs & Resorts hosted a mountain party in the fall of 2006. They were celebrating the unveiling of Ginn Laurelmor, the company’s first North Carolina real estate venture. On November 11, 2006 Ginn reportedly sold 240 Laurelmor lots during the auction/sale event with signed contracts worth $150 million. For a description of the land sales please read Scott Nicholson’s “Laurelmor property: Ginn auction draws $150M” Watauga Democrat, November 13, 2006.

History of Watauga County‘s Landslide Hazard Designation
Mountain land in Watauga County, the primary location of the resort, was classified highly hazardous in 1998 by the North Carolina Department of Emergency Management.

In September 2004 Watauga County was declared a federal landslide disaster area. Inside the White Laurel subdivision one home was destroyed by embankment failures and eight were condemned. These properties are located near Boone.

North Carolina geologists warned in October 2006 that the county’s mountain terrain was likely to experience disastrous slope failures. ( "Watauga tops landslide list" Watauga Democrat, October 6, 2006)

On January 22, 2008 the North Carolina Geological Survey presented the following facts to the Watauga County Planning Board: 41% of the county lies within the path of potential landslides and 20% of the land is high hazard based on the landslide stability map. This risk rating is now applicable to individual properties.

Ginn Laurelmor and the Interstate Land Sales Full Disclosure Act
Ginn Laurelmor sales are subject to the Interstate Land Sales Full Disclosure Act and all buyers must overtly receive a Property Report prior to making a decision to buy land or condominium units.

Ginn Clubs & Resorts Lawsuit
A group of Ginn purchasers filed a federal class action lawsuit in May 2007. The disputed sales transactions involve a variety of Florida Ginn resort properties. Joseph Shallal, an attorney representing some of the plaintiffs, provides an overview of the complaints:
The Ginn Resorts failed to make material disclosures and failed to deliver a Property Report to many, if not all, of the purchasers prior to signing a purchase agreement and therefore violated the Act permitting the purchaser to rescind or cancel the deal even after closing. The lawsuit also claims that there were violations of Securities and Exchange Commission Rules and Regulations, and that Ginn engaged in a Ponzi scheme. Ginn marketed these properties as investment properties. This claim is similar to selling stock which requires registering with the SEC. Ginn did not do this and violated the SEC Rules and Regulations.
Mr. Shallal’s comments were extracted from Vanessa Denha-Garmo’s article “Paradise Lost” The Chaldean News, January 6, 2008.

Laurelmor and Landslides
Geologic studies have determined that some Laurelmor mountain acreage is unsuitable for development.

The sale of hazardous land exposes homeowners and property owners' associations to possible uninsurable financial loss. Laurelmor purchasers should be warned that they will be self-insuring for potentially costly or catastrophic earth movement damage. The insurance industry will not underwrite this peril. Red zones on landslide maps indicate high hazard building sites. Land in these areas require full investigation. Prospective buyers should engage their own professionals to determine slope stability. Costs for these surveys are reasonable, generally less than $2,000.

Failure to Disclose
The Ginn Laurelmor promotional/sales website does not disclose landslide hazards nor does it show the location of the resort on the Watauga County Landslide Hazard Maps. It is unknown whether Ginn Laurelmor purchasers were provided with a Property Report and what information was contained therein.


Anonymous said...

Can you tell us who you are? Your About Me and profile is blank. Some of the info here is incorrect yet there is no way to contact you. Thanks.

Anonymous said...

There are fraudulent land sales practices running rampant everywhere nowadays by developers and their agents. See "Edith Ellen Estates" in Hampton Florida, Lake front lots are sold that are actually Protected Wetlands and cannot be developed. However, you can get a permit to access the lake for a small fortune. You pay for 2-5 acres, but only can use .5 acre if you're lucky. One person had 98% of their lot restricted which left 40 feet to build on? They complained and got sued for slander? See