Monday, December 13, 2010

Reynolds Blue Ridge: A Hazardous-Land Subdivision

Watauga County Landslide Hazard Maps

These federally-required (FEMA) hazard maps show that significant portions of Watauga County are unstable. The North Carolina Geological Survey has determined that 70% of the region is moderately stable to unstable, with landslides occurring in designated low risk areas.

Rock Instability, Debris Flow Pathways, Stability
Index, Slope Movement/Deposits Hazard Maps

Watauga County Real Estate: Hazardous-Land Disclosure

Since landslides and slope failures are expected to damage homes and Planned Community roads, the North Carolina Real Estate Commission has ruled that landslide maps must be referenced on property listings and in sales contracts.

Watauga County Planning and Inspections provides a link to the hazard maps but Realtors and developers are presently not sharing hazardous-land data with their clients. This is the case for Lubert-Adler Partners, the financier for the Reynolds Blue Ridge endeavor.

Reynolds Blue Ridge Remains a Lubert-Adler Investment

At 5,400-acres, the Reynolds Blue Ridge residential development tract is one of the largest planned communities in Watauga County. Approximately 800-acres of the 6,200-acre subdivision are located in Wilkes County.

When Lubert-Adler and partner Bobby Ginn initiated sales (November 2006) the Ginn-LA joint venture was called Laurelmor.

Plaintiffs in a number of lawsuits allege that the business partners sold questionably-appraised lots and did not disclose that Laurelmor and four other jointly-owned properties were encumbered by $675 million cross-collateralized Credit Suisse liens. Please see Lubert-Adler, The Ginn Development Company et al Charged with Fraud.

In June 2008 Lubert-Adler and the Ginn Development Company defaulted on its obligations. A restructure agreement with the Credit-Suisse lien holders allowed Lubert-Adler Partners to retain control over the Laurelmor project.

Reynolds Capitol Group settled the approximately $30 million Ginn-LA Laurel Creek LTD., LLLP liens in December 2008. New owners were recorded as BR Development Group LLC and Blowing Rock Resort Venture LLC: management is currently provided by Reynolds Signature Communities. The Laurelmor name was retired in September 2009.

Legal Questions re Reynolds Blue Ridge Real Estate Sales

A check of the Reynolds Blue Ridge real estate site finds that the developer is not in compliance with the North Carolina Real Estate Commission’s ruling regarding Western North Carolina landslide hazard map disclosure. Until such time this matter is rectified, purchasers should conduct their own due diligence to assure that building sites are stable.

Although not recommended by the developer, experts advise that all mountain home sites be independently evaluated for slope stability as a condition of contract.

Rendering of a Reynolds Blue Ridge Cottage

Other than taking legal action against the developer for failing to disclose material real estate risk information, those who suffer property damage have no recompense. Homeowners insurance policies do not cover landslide losses.

Reynolds Blue Ridge property owners face another undisclosed financial risk. It is joint ownership of the planned community’s private roads.

This legal obligation emanates from the Subdivision Street Disclosure Statement which all North Carolina planned community property owners are obliged to sign. In essence this legal document states that neither the State nor the county shall be responsible for maintenance and repair of any streets within the subdivision. Developers' use of this standardized conveyance document for hazardous-land subdivision roads is disputable.

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 ____________ Subdivision are private. It is the obligation of _____________ Homeowners' Association, Inc. (hereinafter "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 in ___________ Subdivision in accordance with the recorded Declaration for Planned Community. The Declarant specifically states that streets have not been constructed in such a manner to allow inclusion on the State highway system for maintenance.

Western North Carolina Landslide Hazard Maps

Federal legislation under Robert T. Stafford Disaster Relief and Emergency Assistance Act requires states and counties to comply with natural hazard identification/mitigation/disclosure protocol or risk losing access to disaster emergency funds.

Western North Carolina landslide hazards became a major federal concern after September 2004 rain events triggered slope failures throughout the region. The cost: five lives, extensive property damage and $72 million in federal aid.

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