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Cliffs Communities on brink of foreclosure in South Carolina

It is a challenging time to be a real estate developer in South Carolina. Foreclosure has threatened individual homeowners and also large developers who cannot compete with the glut of already foreclosed properties on the market. Why buy an undeveloped lot in a proposed golf course community when you can buy a completed home in a completed community for much less? In effect, why reserve a tee time for the future, when you can tee of right now.

That is one of many conundrums facing noted developer Cliffs Communities out of Greenville County, South Carolina. The company is reeling from the recession of 2008 and the sluggish economic recovery and has suffered from lagging home sales and languished construction. And now foreclosure proceedings have started. A bank in Travelers Rest, South Carolina, has filed against Cliffs Communities, its president and La Bastide Investment Group LLC to collect over $3 million due from an original $4 million loan. La Bastide is an upscale French-style inn and restaurant used as collateral for the loan.

Further, a Florida company has sued to recover close to $4 million due on a note involving one of the Cliffs' numerous developments. It alleges it had agreed to sell five improved land parcels to Cliffs Communities for almost $7 million. Apparently, no payments have been made since a notice of default was sent in August.

Another of the developer's projects, High Carolina in Buncombe County, North Carolina, remains largely undeveloped. The development appears to have suffered from the inability to market in an environment where other, more attractive investments are available to wealthy homeowners through already foreclosed properties. The Cliffs development has also sued several "partners," claiming they have attempted to defraud the developer to orchestrate a "secret plan" to steal the investment. Interestingly, with so much money at stake, the lenders who started foreclosure have also professed their faith in Cliffs Communities.

Source: The Asheville Citizen-Times, "Cliffs' woes deepen with foreclosure filing," John Boyle and David Dykes, Oct. 3, 2011

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