By: Robin Ford Wallace, Reporter
Land Trust and the trustee for the TAS Properties Chapter 9 bankruptcy have
agreed to terms for the sale of the lion’s share of the Preserve at Rising
Fawn. Pending the outcome of an Oct. 3 hearing in U.S. Bankruptcy Court in
Chattanooga, the land trust will buy 1,217 acres of the failed Johnson’s Crook
development for $1.2 million.
The deal had
been held up earlier by a last-minute snag over a tract the land trust had not
originally included in its offer but which it later requested on the premise
the parcel might contain a cave the conservancy wished to protect. Richard
Jahn, the bankruptcy trustee, said last week that detail has now been tidied
“The cave is
not on it, they found out,” he said by email on Friday.
The sale is
good news to the Dade County government: The “motion to sell real estate free
and clear of liens” Jahn filed with the bankruptcy court specifies, “Dade
County is owed approximately $600,000 in real estate taxes, and these will be
paid out of proceeds of sale at closing.”
have been waiting for that money a long time – the county had arranged a tax
sale specifically for Preserve lots on Jan. 3, 2012. That auction happened as
planned, but most sales were invalidated when it emerged that Southern Group,
the developer of the Preserve, had earlier transferred deeds to the land to
TAS, a corporate entity that shares the same ownership, which then declared bankruptcy
in the waning days of December 2011.
Land Trust was a big buyer at that abortive auction but will now snap up a good
deal more land than it bid for then. As set forth in the motion and in a Sept.
11 purchase agreement, Jahn will sell the trust 136 individual lots of one to
five acres apiece as well as most of a larger (800-acre) tract containing
certain of the limited amenities completed at the Preserve. Exempted from this
latter are three areas called in the document “the office,” “the red barn” and
“the activity center.”
center, an area where construction of a clubhouse was begun but never finished,
and where a swimming pool was laid out but never filled, Jahn has made a
special case, specifying in the purchase agreement that the Georgia Land Trust
has a 60-day exclusive option to buy it for another $60,000.
period begins the day after closing, and if the trust does not exercise its
option the trustee may offer the parcel for sale to any interested party, as he
may the barn or office tracts and the parcels specified in the purchase
agreement as exempted from sale.
Jahn says most
of these retained parcels contain buildings or houses that he thinks will bring
a better price sold individually. He
said he plans to list them with Jasper, Tenn., real estate agent Tommy Stanfill
if the sale is approved at the October hearing.
the developer of the Preserve at Rising Fawn, sold about half the lots at the
Preserve through a no-money-down, no-monthly- payment scheme that federal
prosecutors later claimed had bilked multiple banks out of millions of dollars
in bad loans.
As described in
trial testimony, the developer recruited “straw buyers,” or buyers in name
only, who in many cases had never seen what they were buying, to take out bank
loans on Preserve lots and turn the proceeds over to Southern Group. The
developer’s role was to use that money to build out the luxury second-home
development, increasing value, after which the buyer would sell the lot back to
the developer at a hefty profit.
A lot of money
was borrowed on Preserve lots. By 2009, a two-or-three-acre Preserve lot was
fetching on paper $175,000-250,000, and the Federal Bureau of Investigation put
the total bank loss at $45 million.
But not that
much was ever built there. After the 2008 crash of the housing market, lot
sales stalled and the developer changed tacks, rebranding the Preserve in 2009
as a rental resort called Wild Moon. During the heyday of the rental operation,
it boasted 20-odd cabins, though of those the developer withdrew a number after
permit skirmishes with the Dade County Health Department.
Jahn has high hopes of selling that kind of Preserve asset on the open market
at respectable prices. “All those lakeside properties are in high demand,” he
auctions of Preserve lots failed to fetch many bids but Jahn says it’s a new
ballgame now: Buying from a bankruptcy trustee erases all the trouble with
prior liens and claims that may have muddied title before and thus kept
prospective buyers away.
beauty of a bankruptcy sale,” he said. “You get clear title.”
He says he’s
already had some nibbles about various properties and seen real interest in the
“red barn” property. “I don’t know what it’s worth but it’s a nice barn,” he
eventual buyers of these reserved parcels, Preserve land is held by a number of
other private owners, notably the lending institutions that eventually
foreclosed on lots after Southern Group’s 100-percent financing scheme
collapsed in the summer of 2009 and monthly payments loan payments abruptly
approval of the sale, the Georgia Land Trust will now be by far the biggest
landowner at the Preserve. Earlier this year, the conservancy’s Bobby Davenport
announced it had accepted 435 acres of Preserve lots donated by foreclosing
The Oct. 3
hearing on Jahn’s motion to sell will begin at 10:30 a.m. in Courtroom A of the
Federal Bankruptcy Courthouse, 31 E. 11th St., Chattanooga.