Interstate Land Sales Full Disclosure Act

The Cliffs at High Carolina Engineering Report

Cliffs Communities, Inc., developer of The Cliffs at High Carolina, disclosed in their October 21, 2008 subdivision Property Report that all of the ninety-nine (99) single-family building lots offered for sale on November 8, 2008 were evaluated by S&ME, Inc., a Raleigh-based engineering firm, for the possible presence of colluvium materials.

The High Carolina Property Report Hazards section states that:

History of Grey Rock

Land Resource, LLC purchased the 4,000 acre Grey Rock tract for less than 12 million dollars in 2003. Wachovia financed the acquisition.

Official land sales for Grey Rock, a yet-to-be developed mountain residential community located in Rutherford, North Carolina, commenced over the spring weekend of April 28-May 1 2005. The 900 home sites were priced from $200,000 to $700,000. (Court records show that in April 2005 Land Resource had received $15,693,000.00 from earlier sales.)

In November 2008 The Cliffs Communities, Inc. will begin showing land in their latest planned community, The Cliffs at High Carolina. This mountain slope development is located near Asheville, North Carolina.

During the private sales presentation, participants will have the opportunity to view the layout for the 3,200 acre mountain property that define High Carolina. Guests will be shown a map for the centerpiece Tiger Woods golf course and selected homesites. They will almost certainly be told that the High Carolina lots which are priced from about $500,000 to more than $2 million are desirable real estate. While this information may be true there are two factors that may undermine the future value and salability of land in this development.

Geologic Hazards

On August 26, 2008 a federal class action lawsuit was filed against the Orlando-based developer, Land Resource, LLC. The group of Grey Rock at Lake Lure land owners filing suit claim violations of federal and state laws. Plaintiffs allege that Land Resource and a number of their affiliates violated the Interstate Land Sales Full Disclosure Act and Florida and North Carolina Unfair and Deceptive Trade Practices.

Experts have determined that the soil composition in Madison County, North Carolina is “unsuitable” or “poorly suitable” for most mountain slope residential development. Their studies conclude that construction sites throughout the mapped area are imperiled by environmental threats and geological faults. This important consumer information is not recorded on plats or disclosed on real estate contracts but can be accessed on the Madison County Soil Survey website.

The 2008 Madison County Soil Survey states the following on page 476:

On August 26, 2008 a group of Grey Rock at Lake Lure property owners filed a federal lawsuit against Land Resource, LLC and their affiliates. The lawsuit Goetz et al v. Land Resource, LLC et al will be heard in Florida Middle District Court.

Property damage caused by soil erosion is commonplace, expensive to repair and uninsurable.

North Carolina scientists have determined that the soil composition on mountain slopes in the western region of the state is “unsuitable” or “poorly suited" for major subdivision development.

Legal Jeopardy