The Cliffs at High Carolina Property Report:Will Landslide Risks be Disclosed?

The planning for The Cliffs at High Carolina has been in the news since the summer of 2006 when Jim Anthony, President of The Cliffs Communities, Inc. acknowledged that the company had received permission to build homes and a golf course on an expansive 3,200 acre mountain tract in Swannanoa, North Carolina.

The New York Times recently featured The Cliffs at High Carolina in their Great Homes and Destinations Real Estate Section. According to Nick Kaye’s article The Cliffs Communities will open land sales in November 2008 for their eighth master planned subdivision. Prices for The Cliffs at High Carolina homesites will range from $500,000 to more than $2 million.

The Cliffs at High Carolina land sales are covered under the Interstate Land Sales Full Disclosure Act. The developer, The Cliffs Communities, Inc. is required to register their High Carolina subdivision plans with the United States Department of Housing and Urban Development and is obligated to provide each purchaser with a detailed Property Report.

The Property Report

A subdivision Property Report is the most significant document that a prospective buyer can receive when considering a land purchase. The Report is standard in design and table of contents. Developers are required to provide specific information about land risks such as soil erosion, flooding, landslides and other known hazards.

Buncombe County Hazard Assessments

Preliminary Buncombe County North Carolina Geological Survey hazard maps show that the High Carolina subdivision site is at risk of landslides. The Buncombe County Hazard Mitigation Plan (August 23, 2004) determined that the steep slopes and fragile soils of Western North Carolina put the county at high risk for landslides. This report was issued just weeks before the catastrophic 15 county slope failures of 2004. (Western North Carolina received 2 federal disaster declarations in September 2004)

The Cliffs at High Carolina Property Report

The Cliffs Communities, Inc. should disclose the following material information under the Land Characteristics and Climate/Hazard Section of their High Carolina 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 earth movement property 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 additional information.

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 HUD Interstate Land Sales Full Disclosure Act website advises all purchasers to read their Property Reports before signing anything.

The North Carolina Real Estate Commission does not require land risk disclosure but federal law does. If developers fail to comply with the regulations mandated by ILSA, purchasers have two years to seek rescission of their purchase contracts and three years to seek damages.