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Land Sale - Ten Cents on the Dollar

|Includes:BB&T Corporation (BBT)

Building lots in development communities in North Carolina can be bought for as little as 1/10 their former cost, but nobody is buying.  These communities are near coastal and mountain resort areas and had people standing in line, entering lotteries for bidding order and vying for invitations to overnight sales events in 2005 and 2006.  Now the developments lie unattended with missing streets and utilities that were promised and required of the developers by state law.  Where did the $100,000 to $700,000 per lot go?  It is a long way from the recent time that people were falling all over themselves to get these "opportunities of a lifetime."  The money has disappeared in many cases.

According to an article by Jay Price in the Raleigh News & Observer, developers that have not gone bankrupt are claiming that they do not have the capital needed to complete contractual requirements in a timely manner.  The result is a dozen or more laws suits charging fraud and seeking completion of development facilities and/or return of purchase monies.  In addition to developers, at least one appraiser and one bank, BB&T (NYSE:BBT), have been named as defendants.  Others are not suing but filing complaints with the North Carolina Attorney General's office.  Price writes that some buyers are stopping mortgage and purchase contract payments and simply walking away.

A Personal Story

This writer visited a resort community development, Gray Rocks at Lake Lure, NC, in May of 2007.  I didn't know it at the time, but this visit constituted a bit of investigative reporting.

An extensive network of roads had been cut into the mountainside community, with more still planned, but the only house I saw was the 2006 HGTV Dream Home.  I was told by a developer's representative that the winner had sold the home back to the development.  I was shown a number of lots offered by the developer, some on roads not yet finished to the point of being drivable, even though we had a-wheel drive vehicle.  My recollection was that lots were typically in the $200,000 range, although some high lots with sweeping views were much more.  One red flag was that the developer had a number of resale lots available, with asking prices below the original sale prices.

An article at The Southern Way of Life about a year ago reported that that the final bankruptcy court hearing for the sale of Grey Rock assets, located in Lake Lure NC was held on Tuesday, Feb 24, 2009.  The developer, Land Resources, LLC, had filed for bankruptcy under Chapter 11 on October 30, 2008.

Land Resources also had a total of 35 subdivision developments and 19 resort communities affected by the bankruptcy filing, according to an article in the Jacksonville Times-Union (Florida).

The Southern Way of Life  reported that the assets at Lake Lure were being acquired, in part, by The Nature Conservancy (NYSE:TNC) and, in part, by an entity known as Catalyst that had also purchased two other Land Resources properties.  A group of Gray Rocks landowners was outbid for the property.  The Gray Rocks Community association was deeded ownership of all common land except for a piece of lake front property, which Catalyst will develop.  The Dream Home remains a bank REO (real estate owned) property.

The results of the foreclosure auction for all Land Resource LLC assets can be found here

In the case of Gray Rocks, it appears that the community will survive at about half of the original planned size.  The other half, purchased by TNC for enough money to settle all secured liens, will be deeded to the state and become a state park.

A Tragic Ending

Final note:  On September 23, 2009, Fox News reported that Land Resources LLC CEO James Robert Ward had been arrested and charged with second degree murder following the death of his wife from a gunshot wound to the head on September 21.  An update of the report on November 16, 2009, indicated that there was conflicting information about whether or not the death might have been a suicide.

However the death occurred, and on top of the collapse of their company, W.C. Varones has reported that the Wards had personal financial problems as well.  According to Varones:

In 2007, he and his wife moved from Atlanta to Orlando's tony Isleworth country-club community; and it was in that mansion Monday night that, police say, Bob Ward shot and killed Diane Ward.

The seven-bedroom, nine-bathroom house — once owned by legendary golfer Arnold Palmer, former major-league pitcher Orel Hershiser and publishing mogul Rance Crain — is in foreclosure.

The Wards hadn't made a monthly mortgage payment of $16,841 for more than a year, and as of July, they owed $3.6 million on the home they bought for $4.3million, according to court records.

Listed for $5.2 million, the house has been for sale for nearly two years, according to its listing on realtor.com.


Varones titled his piece in a macabre fashion:  "Greenspan's Body Count: Diane Ward, wife of James Robert Ward". 

If the name Isleworth sounds familiar, it was in the news for another reason recently.  Tiger Woods lives there.  Another famous resident is Shaquille O'Neil, according to Fox News.  A search of the archives of the Florida Times Union (Jacksonville) revealed no entries related to this case after September 25, 2009.  The most recent article in the Orlando Sentinal, dated January 28, 2010, reported that state crime lab investigators had found no gunshot powder residues on Ward's hands following the death.

On January 26, the Orlando Sentinal reported that the Ward residence was scheduled to go to foreclosure auction on March 23.  On March 21 the Sentinal reported the auction had been cancelled and rescheduled for May 11.  No reason was given.

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