New American Land Rush

AT the stroke of noon on April 22, 1889, some 50,000 settlers scrambled into the Oklahoma Territory in one of history's most famous land rushes. Today that phenomenon is being repeated. The object of the new American land rush is vacation and retirement property in nearly every part of the country. Developing planned recreational communities has become a billion-dollar business, and property that is often much less desirable than the Oklahoma Territory is being peddled as shamelessly as snake oil.

More and more companies are buying up giant tracts of wilderness or desert, subdividing them and launching hard-sell campaigns. The selling effort typically includes idyllic newspaper and magazine ads, mass telephoning, softening-up cocktail parties and din ners for prospective customers, paid transportation to the site, and even free green stamps just for showing up. Many developments are models of intelligent planning, from Titan Group's Yosemite Lakes Park in California to J.M. Huber Co.'s Beaver Cove on Maine's Moosehead Lake. But fraud and misrepresentation persist, and large swatches of unspoiled wilderness are being turned into tacky subdivisions.

The Losers. In New Mexico, about 100 companies control more than 1,000,000 acres, and have plotted enough lots to triple the state's population from 1,000,000 to 3,000,000. The Colorado State Land Board estimates that recreational developers control as much as 2,000,000 acres there. Land projects in California now occupy an area larger than Rhode Island. A single firm, GAC Corp., is developing more than 300,000 acres in Florida. Recreational land development has grown so large in Maine that it is about to become a larger industry than commercial fishing.

State investigators are doing a land-office business. Florida's Land Sales Board received 498 complaints last year. New York's attorney general has 20 land development investigations under way. Maine's Office of Consumer Protection handles hundreds of consumer complaints a year with only one investigator, two attorneys and a secretary. In Massachusetts, whose residents invested $100 million in out-of-state recreational housing last year, several hundred new property owners sought help from the attorney general's Consumer Protection Agency. "A lot of these people who buy go up for a look at their lot," says Chief Investigator Mike McGrath, "and the salesman tells them 'Your place will be on the 17th hole of the golf course.' He's told 15 other people that the same day. Someone's going to lose." An aggrieved Bay Stater can complain to McGrath, who can investigate and, if necessary, take a company to court.

The large, publicly held developers are generally scrupulous about making truthful representations to prospective customers. AM-REP Corp., for example, offers a customer his money back any time within six months after a contract is signed, provided he has seen the land. GAC Corp. executives earlier this month even proposed federal registration of land salesmen, who would have to meet certain standards. But smaller companies are not always so quick to please. In one typical case, Ronald LaPorte of Plainville, Mass., has complained to the Maine Office of Consumer Protection about the developers of Belgrade Lakes Colony, Me., where he bought two lots in 1968. Since then he has been waiting for running water, tennis courts, swimming pools, beaches and marinas that he says he was promised. Instead, the developers have opened a campsite near by and allowed campers to swarm past LaPorte's house to reach the colony's lake. "I came here for privacy," he complains, "and now I've got campgrounds across the street."

Snake Acres. Many buyers surrender the standard 5% to 10% down payment for their lots through the mail without even seeing what they buy. Others overlook restrictive covenants, tax liens and hair-raising warnings in the property reports that large developers must file with the Department of Housing and Urban Development. Horizon Corp., the largest subdivider in New Mexico, is supplying future residents of its 150,000-acre Rio communities with neither water nor sewage systems. Southwest Land Corp. is developing Santa California City, N. Mex., without selling new owners the mineral rights to their land; other people, who bought the rights earlier, can dig up the yards at any time for silver, coal, or even gravel. Other items in the property report that Southwest filed with HUD: "There are no provisions for street maintenance after 1975 . . . Flash floods may destroy portions of the streets in certain units."

Why do people buy such property?

Many have no intention of living there, but view the purchase as an investment. After years of selling, Great Western United's California City, Calif., has some 40,000 property owners but fewer than 600 houses. Selling out at a profit is often more difficult than the companies suggest. Los Angeles newspapers carry classified ads offering California City lots for sale by their owners at substantial discounts from the purchase price. Robert Rosen, a Rye, N.Y., orthopedic surgeon, has been trying to unload his 5.5 acres in Canaveral Groves, Fla., for two years. He bought the property in 1960 but visited it for the first time in 1970. Contrary to what he had envisioned, there were no passable roads leading to some of his property. When he tried to walk through the brush to see his land, a caretaker turned him back because the area was infested with poisonous snakes. Neither the developer nor local real estate brokers will buy back the land. Rosen continues to pay taxes of $94.86 a year on his property while waiting for a better market. "Who knows?" he muses. "Maybe in 1 5 or 20 years . . ."

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