Thursday, September 17, 2009

Grey Rock at Lake Lure— Property Owners' Liability

Foreclosure Lot 206 $5,000

Foreclosure Lot 213(2A) $8,900

Photos— Grey Rock at Lake Lure roads adjoining the above lot sales. Under Land Resource, LLC ownership Grey Rock lots were priced from $200,000-$700,000.

The failed Grey Rock at Lake Lure development project has new owners. Jim Hester, editor of The Mountain Breeze, reported that a development group called Catalyst had purchased all of the Grey Rock inventory lots and will begin to reestablish roads in Phase 1 and 2 of the subdivision. When land sales are initiated, prospective buyers will be given the following required liability statement:

Sample Subdivision Street Disclosure Statement

Pursuant to N. C. G. S. Section 136-102.6 _______, as the Declarant of _______,
issues this statement indicating that all of the roads within_______ are private. It is the obligation of _______ Homeowners' Association, Inc. (hereafter "Association") to maintain and keep in good repairs all of the private roads in _______Subdivision. It is mandatory for all property owners in _______ to be a member of the Association and the property owners, with the exception of the Declarant, have an obligation to pay assessments to maintain the private roads. The Declarant specifically states that the streets have not been constructed in such a manner to allow inclusion on the State highway system for maintenance.

The North Carolina Real Estate Commission Web site offers the following advice concerning property owners’ liability linked to Subdivision Street Disclosure Statement:
Who is responsible for road maintenance in a subdivision or planned community?

Until responsibility for road maintenance is lawfully transferred to a municipality or the North Carolina Department of Transportation, either the developer or the owners will be responsible. However, if a developer becomes insolvent, is dissolved or dies, the owners alone will have to bear the cost unless a government agency takes control. Since there is no guarantee that any government agency will ever take control of the roads in a subdivision, owners are ultimately called upon to bear the cost of road maintenance in many situations.

Before I buy, will I know who is responsible for the road maintenance?

Not necessarily. Since October 1, 1975, developers and sellers of certain residential subdivision lots have been required by law to give the first purchaser of each property a Subdivision Street Disclosure Statement containing important information about road ownership and maintenance responsibility. However, the application of this law is quite limited, so it is very important that you inquire into the status of roads in the subdivision and find out who is responsible for their maintenance.
Hazardous-Land Subdivisions

Much of the Grey Rock at Lake Lure development site is steep slope. The generally accepted definition for steep slope is land above a 15% grade. Landslides and erosion are recognized common occurrences above this threshold and even with the best engineering techniques roads built on this terrain are inherently unstable and expensive to maintain.

The Grey Rock at Lake Lure building site is geologically hazardous but this information will not be revealed on the Subdivision Street Disclosure Statement. It has not been determined whether the Subdivision Street Disclosure Statement, as written, is a valid conveyance document for hazardous-land subdivisions so purchasers should be wary.

Grey Rock at Lake Lure Feasibility Studies

Initial planning for Grey Rock roads, under Land Resource, LLC ownership, would have required soil, hydrologic, and geotechnical analyses. These reports should be available for review. Caveat: The 1997 Rutherford County Soil Survey determined that soils on most steep slopes were not “suitable” or “poorly suited” for residential development— “Some are too unstable to be used as a foundation for buildings or roads.”

The decision to sign the Subdivision Street Disclosure Statement and join the Grey Rock at Lake Lure Homeowners’ Association should be taken under advisement. For an example of the financial consequences of sharing ownership of roads in a hazardous-land subdivision, please read the Horseshoe Cove Landslide Report.

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