Some of the most desirable lots in the entire Lake Holiday subdivision are the lots in Sections 1A and 7. For many years, the Association didn't have enough money. Following the end of the building moratorium, there was pent-up demand for new construction at Lake Holiday. The real estate economy was booming. So what did some of the present and past directors of the Association decide to do? Would you have guessed they would have sold the most valuable lots at the lowest possible prices and thrown in a waiver of all fees and dues for 2 years – just to sweeten the deal? It made it so sweet it might make you sick.
How do we know the lots were sold too cheaply? Take a look at the table below.
before the Development Agreement was executed. The directors knew or should have known about these transactions, because they received information on each and every property transfer as it occured. This very topic was discussed at the January 23, 2003 Board Meeting, and it is recorded in the minutes:
The Board engaged in considerable discussion on the various options for establishing the value of lots owned by LHCC. Do we get a formal appraisal, or do we get a broker's assessment? Do we appraise all lots or do we appraise only selected lots? Do we appraise only lots the specific sections/lots that Lake Holiday, LLC are initially interested in purchasing? One Board member suggested that we survey the LHCC members about their feelings regarding the sale of LHCC lots. The Management Office receives a report that lists all lots sold and the purchase price; this report could be used to establish a base for lot prices.
Many resources could have been used to establish the value of the Association's lots. Did the directors actually use any of these resources or did they ignore what they learned? It's simply not credible to sell appreciating real estate for a fixed price of $25,000 per lot when one has access to information on many transactions settling at more than twice that price.
Our own experience trying to buy a lot in Section 7 is also revealing. We offered $50,000 to a buy a lot in Section 7 in April of 2005. A short time later, Dave ingegneri, the General Manager of LHCC, responded that the lot was “not for sale….” A short time later that same lot was sold – for $25,000, 1/2 the price we offered!