How can a lot in a rural undeveloped Western North Carolina subdivision be appraised for these extraordinary sums? The answer may lie in the Ginn Laurelmor Lot Loan Program. Ginn Financial Services, LLC offered:
Financing Available for Loans up to $1,250,000... Stated Income Loans Available… Flexible Point Structure to Suit Your Needs…Rate, Term and Product Availability Subject to Approval… In House Financing Eliminates Communication Issues and Expedites the Closing Process.Ginn Laurelmor and the Interstate Land Sales Full Disclosure Act
The developer Ginn-La Laurel Creek Ltd, LLLP, Laurelmor land sales, HUD subdivision Id:31640, are subject to federal law under the Interstate Land Sales Full Disclosure Act. The following text was extracted from the Act:
Sec. 1750.20 Unlawful sales practices - -regulatory provisions
(h) Use, as a sales inducement, any representation that any lot has good investment potential or will increase in value unless it can be established, in writing, that:
(1) Comparable lots or parcels in the subdivision have, in fact, been resold by their owners on the open market at a profit, or;
(2) There is a factual basis for the represented future increase in value and the factual basis is certain, and;
(3) The sales price of the offered lot does not already reflect the anticipated increase in value due to any promised facilities or amenities. The burden of establishing the relevancy of any comparable sales and the certainty of the factual basis of the increase in value shall rest upon the developer.
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 taken from Vanessa Denha-Garmo’s article “Paradise Lost” The Chaldean News, January 6, 2008.
Village of Penland
In the summer of 2007 a Mitchell County, North Carolina development called The Village of Penland made national news when Attorney General Roy Cooper filed a civil suit against the developer, Tony Porter, his business associates and affiliated companies. During the course of the inquiry investigators found that Mr. Porter was selling lots for as much as $125,000 when the lots were actually worth less than $20,000. For additional information please read Ann Carrns’s article "Investors Left Holding the Bag in a Land Project Gone Wrong" Wall Street Journal, July 19, 2007.