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Buyers in Upscale RV Community Feeling ‘Lost’

November 21, 2011 by · Leave a Comment 

Buyers at Lost Lake Resort in Washington state, marketed since 2005 as an “upscale RV community” on the outskirts of Yelm, thought they were purchasing a little slice of heaven.

According to a report in the News Tribune, Tacoma, the resort was pitched as a place where they could spend the summer months of their retirement years living in peaceful seclusion on 130 acres of pristine wilderness. They could grab a fishing rod and walk to “an 11-acre private lake generously stocked with rainbow trout.” Or enjoy amenities such as tennis courts, an indoor-outdoor swimming pool and spa, or a clubhouse with a pool table, pingpong and shuffleboard.

But several RV lot owners at Lost Lake Resort say the dreams of easy living have collapsed because of the resort’s developer, Jeffrey Graham, 48, of Tacoma, and the complications of his financial meltdown.

Graham says he’s done everything in his power to get deeds to buyers and to fix the facilities at the resort. “I have been trying to help my owners get what I owe them,” he told The Olympian.

The park itself is a jewel. Pseudo-log cabins with green metal roofs dot the landscape next to luxury RVs nestled among towering Douglas firs.

The clubhouse on the lake boasts a game room with a pool table. But the indoor-outdoor pool – now undergoing repairs – hasn’t been used since mid-2010 because there’s no money to heat it or keep the lights on, residents said.

About 160 lots have been sold, and about 100 unsold lots have been platted. Unplatted lots still in the design phase would give the resort up to 522 lots, according to Graham. However, the resort has problems with its sewer and water systems that will cost $350,000 to $400,000 to fix.

Some buyers say they still don’t have deeds for properties they paid up to $60,000 for. Others have had to sue to try to get their deeds for properties whose values have grossly depreciated because of the resort’s problems and the sour real estate market.

“It’s a total nightmare,” said Madelin White, who once looked forward to parking her RV at the site to swim and fish with her grandchildren in the summer months.

She still is waiting for a deed to her property. “I can’t prove it’s mine, said White, a business owner in Lacey for 37 years. “There are no promises I’m going to get that title.”

White and other buyers blame Graham.

“The mistake I made was I trusted him,” said Robert Warren, who gave Graham a $52,000 check in 2008 for an RV lot at Lost Lake. Warren still has no deed.

But Graham says he’s limited in what he can do because a Thurston County Superior Court judge appointed a receiver to oversee the resort’s future after Graham defaulted on a $3.3 million loan to develop the property.

He’s also dealing with the fallout from filing for Chapter 11 bankruptcy.

Graham launched his project in 2004 after he bought a private RV campground known as Mother Nature’s Acres for $75,000 at a sheriff’s auction. The debt collection agency he owns had foreclosed on the site. He also bought adjacent parcels that would become part of the development.

He renamed the property Lost Lake Resort and used the site’s unique history to develop and sell RV lots as “airspace condominiums” without having to first show the site had adequate infrastructure in place.

He could do that, county Planning Manager Mike Kain said, because Mother Nature’s Acres predated Thurston County’s codes regarding RV parks and the resort was grandfathered in as a “legal, nonconforming use” after Graham bought it. That meant Graham did not need to obtain special-use permits showing the site had water, sewer and electricity in place before he developed and sold lots there, Kain said.

At first, Kain said, the county would not allow Graham to sell individual lots at Lost Lake Resort unless it was classified as a subdivision and was approved by the county’s permitting process.

“He found a state law that would allow him to create a condominium,” Kain said. “It’s the first one we’ve ever had in the county.”

Graham set up a limited liability company called Lost Lake Resort LLC, and set up a second LLC, Lost Lake Development, to develop land adjacent to Lost Lake Resort.

In 2007, a subsidiary of Sterling Savings bank lent Graham $3.3 million to develop the resort. In October 2009, the bank said he defaulted on the loans. The next year, Graham’s problems with some of the lot buyers landed him in court.

Four buyers sued Graham, alleging they had paid for lots at the resort but that Graham had never given them their deeds. One suit, filed by White, alleges Graham falsely said he had his own escrow company for “cash sales” and would provide a deed “in a week or so.”

When Graham failed to show up in court, default judgments against him were issued in two of the suits, including White’s. Graham disputes their validity.

The two other suits would later be put on hold after Graham filed for bankruptcy. Graham has paid off the liens for two lots whose owners sued, allowing the buyers to obtain their deeds.

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