Greenbrier Sporting Club: 7000 sft, 5 bedrooms, wine cellar, billiards room, pool, hot tub, grill, bocce ball court, apartment: $5.995.
It was about this time last year that Kyle Crews, Juli Harrison, and Doris Jacobs all of Allie Beth Allman, and I hopped a plane to Charlestown, West Virginia to visit the one of the most beautiful, breath-taking and affordable vacation home spots in the nation: the Greenbrier Sporting Club.
Why I am telling you this story now? First of all, it’s the beginning of the vacation home season, and we should all be there, dry and happy and out of the rain. We are going back in a few weeks.
Secondly, I am sick of the rain. I know we need it, but this is getting ridiculous. Does Mother Nature know nothing but feast or famine? The only good news is that we may be able to sell some of this water to parched places in West Texas.
Jim Justice with Allie Beth & Pierce Allman, Judy Pittman, Dave Perry-Miller
Justice’s wealth easily trumps Rockefeller’s. The 64-year-old built a $1.7 billion fortune in coal and agriculture, and has painted himself a job creator who bought and restored The Greenbrier historic resort.
The values are unprecedented. When you see the resort, one of the oldest and largest in the country, and experience the magnificent homes and mountain home-sites that surround it, you will fall in love and seriously consider making your second home at the Greenbrier in White Sulphur Springs, West Virginia.
Ranches, cowboys, horses and cattle are Texas icons—just look at some of our professional sports teams. The Cowboys, Rangers, and Mavericks all harken back to the state’s historic roots. And remember famous “Southfork,” the site of many a double deal in the TV drama Dallas? It’s increasingly surrounded by development (and it’s a whole lot smaller than it seemed on TV).
There are still BIG ranches out there, such as the King Ranch, 6666 (the Four Sixes) and the YO Ranch (currently for sale for $81 million), but ranching and cattle are generally not the core business any more. More and more, ranches are purchased and owned for 3 reasons: (1) recreation, (2) energy development and (3) investment (which often means wait until it can be carved up and developed for higher prices).
While there is a powerful connection with the land, Texas has also historically led the nation in the amount of raw land converted to development property. This rampant expansion is continually changing our landscape. And let’s face it; much of what is developed and constructed does not have the most lasting value. Kind of seems like the same type of development gets repeated about every 5-10 miles no matter which direction you’re headed.
What does this all mean? Some areas have taken action to protect their heritage. In Austin, thousands of acres have been placed in conservation easements to protect open space, view sheds, wildlife, and water resources. The trend is also taking hold with some of our western neighbors. Recently, the Walls Street Journal reported that Scottsdale just purchased an additional 2,365 acres to add to the McDowell Sonoran Preserve, bringing it to 30,000 acres and making it the largest municipality-owned urban park in the U.S. While, in North Texas, the “drill, baby, drill” slogan has been adapted to “build, baby, build.”
However, at Cross Pines Ranch in East Texas (near Mineola and about 30 minutes from Tyler), over 1,800 acres have been permanently protected from future development by a conservation easement. This is beautiful and pristine property that had been planned for a 400-lot, high-end second home sporting community, complete with, among other things, a Tom Fazio golf course, riding stables, and skeet and sporting clays courses. While that would have made a stunning and high-quality development, the owners ultimately determined that they wanted to preserve the land in as close to its natural state as possible, while allowing a very limited amount of development.
The result is a conservation-oriented sporting ranch, owned by no more than 40 families. Each owner has a 5-acre building site upon which to build a home and ownership in the remaining 1,800 acres of the ranch, which includes a clubhouse, equestrian barn, skeet and trap range, miles of hiking and biking trails and over 200 acres of lakes, professionally managed for largemouth bass and complete with boats at the ready. The fishing is spectacular. In fact, the world famous fly fisherman Lefty Kreh visited Cross Pines this fall and was so impressed that he’s discussed returning to use Cross Pines for his next video.
There is also a full-time ranch manager that takes care of the ranch (and its owners!) as well as a full-time equestrian manager, who will have horses saddled and ready for owners and who is always ready to lead a trail ride. The concept is really “plug and play,” where owners can show up and just enjoy their favorite activities, without all the hassle involved if they had to take care of it all. Since the ranch is about the size of Highland Park with virtually no fences, there’s plenty of room to spread out and play.
On the conservation side, in addition to the conservation easement that reduced the number of sites from 400 to 40, the owners implemented restrictions on building size, materials, tree removal and landscaping to preserve view corridors and encourage resource conservation. They are currently working on the re-introduction of native grasses as well as a significant ongoing reforestation program. These efforts earned Cross Pines Ranch a spot as one of the 4 finalists in this year’s Green Project of the Year-Non LEED category at the Green Gala & Awards put on by the North Texas United States Green Building Council. While the victor was the Perot Museum of Nature and Science (where the event was held), Cross Pines was certainly in good company.
Is Cross Pines a model for future development? Due to its unique nature, it’s probably only suited for certain exceptional recreational properties. However, the real emphasis should be on integrating a focus on conservation, preservation and the environment into all of our developments. As discussed above, Dallas is not known for its environmental ethos. Maybe we should start changing that. Why? If you read my Aspen report, I coined a term “selfish sustainability.”
Think about it. We’re a magnet for jobs for many reasons, but we must continue to make choices to position ourselves and our area strategically for the long term. Resource use, resource conservation, land conservation, etc., is important to many people, particularly the “creative classes” that increasingly drive our economies. It’s all about making the right next choice. As I said before, if it makes economic sense today, helps protect and enhance businesses (or an area) long-term and helps protect the environment, that sure seems like a win-win-win. Cross Pines is a model for that kind of thinking.
Full Disclosure: I have been involved in the conceptualization and creation of Cross Pines Ranch from its beginning. We’ve always said that it’s all about the land, and we’re continually delighted when families see and enjoy this incredible landscape that has been protected in perpetuity.
Dallas Addison is a Dallas-based lawyer who has helped many clients throughout the country buy, sell, develop and manage all types of real estate over the years, with a particular focus on recreational and hospitality-based real estate, such as golf courses, resorts, ranches, second homes, etc. He is also a founding principal of Preservation Land Company. He is a regulator contributor to SecondShelters.com.
I don’t know how many divorcing couples own vacation homes. But I have a feeling it’s not a small number. After all, the latest numbers from the National Association of Realtors show that buyers purchased 502,000 vacation homes last year, an increase of 7 percent from the year before.
And I have a theory, actually, that I have seen played out among my friends: people often buy second homes in lieu of a divorce to create a separation, so they don’t have to live together. Actually, it’s a whole lot cheaper than a divorce.
But if you DO split, vacation homes can add a tricky wrinkle to divorce finances, especially in a community property state such as Texas. Who gets the vacation home when a marriage ends? What if the home is in a non-community property state or even in a different country? Good questions, ones you should be aware of before you buy, no matter who you plan to tuck away in that bungalow!
I queried Marcus McCue, senior vice president of Guardian Mortgage Company, and family law attorney Carol Wilson from Carol A. Wilson Law to learn more about the special issues surrounding second shelters and the D-word, divorce.
Candy: Let’s start first with a primary residence – how does that usually get dealt with in a divorce?
Marcus: Generally, our customers either sell the house or refinance it. They want the other person’s name off of the title (ownership) of the property and released from the mortgage obligation. We usually hear from our customers early in the process because they want to know their options, which is an important step when they are working on the details of the divorce.
Getting an individual name removed from the title of the home is a much more straightforward process than removing a borrower from a loan. To remove a borrower who is obligated to a current loan, that loan must be refinanced into the sole obligation of the spouse retaining the home. Once we have discussed the logistics of their options and the estimated rates, costs, and future monthly payments, our clients will call us back later after the agreements are in place to proceed with the preferred option.
Carol: While every divorcing couple is different, the analysis process is the same with a primary residence. I help my clients think through whether or not they will be able to maintain the home after the divorce and keep up with the mortgage payments. Often there will be less money in the household after the divorce. If they can’t afford the home, then they have to sell.
Many families with children want to keep the family home for them until they are older and/or in college. In this case, I often see both parents cooperate and reach a settlement to make that possible. Sometimes one spouse will agree to wait to get the equity out of the house until after the children have left.
In Texas, a couple can have a special contract – an Owelty Lien Agreement – such that one spouse will own the house, but the other will still retain rights to equity that was present in the house at the time of the divorce. This gives the first spouse the right to make improvements and to own the home, but the second spouse will get his or her share of the equity later when the kids are grown or the market improves or whatever reason the couple has chosen to wait. It is a win-win because the owner-spouse gets the benefit of all improvements and equity growth in the meantime, but the other spouse still gets the benefit of all the years of contributing to the equity when they were married.
Candy: So how is a vacation home different?
Marcus: If we are talking about a beach house in Corpus Christi, then the matter is straight forward from our perspective. The couple sells or one person refinances the property in their name. As far as the mortgage company is concerned, any property acquired during the marriage is shared by both people. Whether one person paid for it with an inheritance or out of her own salary is an important difference.
Carol: Most of the drama is on my end! Obviously, people can feel emotional about their vacation homes and the sheltering of the children isn’t an issue here. so you see a lot more disagreements. Once the decisions have been made, however, it is straight-forward. According to Section 7.002 of the Texas Family Code, anywhere the State of Texas has jurisdiction over the couple, the judgment of the court holds sway. This is regardless of the family laws of that particular State or country that might be different from ours.
This means any State in the Union,Canada, Mexico and just about 75% of the world where the legal system is similar to ours will work like Texas. So your condo in St. Maarten is governed by the divorce decree as well as your mountain cabin in the Canadian Rockies. It is property to be divided, pure and simple.
Candy: You said about 75% of the world. Are there places where it is difficult to deal with property in a divorce?
Carol: Yes. Countries where the legal system is significantly different from ours can be impossible. In my practice, for example, I’ve worked with couples who had property in China and Taiwan. In those cases, there was no way to enforce the divorce decree and the property remained with one spouse. You’ll see this situation more with couples where one spouse has immigrated to the United States and has strong ties to the other country.
Also, some countries have strict laws against allowing money to leave their countries so even if you sell the property, the money can’t leave the country.
Candy: What else do couples with vacation homes need to think about?
Marcus: As always, there are key financial considerations to take into account when determining who gets the vacation house. The value of vacation homes is still falling. According to the National Association of Realtors, the median sales price of vacation homes fell to $121,300 in 2011. That’s down 19 percent from 2010.
The spouse that gets the vacation home, then, might be gaining an asset that has lost value. And no one can predict how much more value this asset might lose in the future.
And even when vacation homes rise in value, they can cause financial problems to their new owners. Remember, vacation homes are not eligible for the capital gains tax exclusion that comes with primary residences. Homeowners filing joint returns don’t have to pay taxes on the first $500,000 in gains that their primary homes sales fetch.
Again, this exclusion goes away when it comes to vacation homes, meaning that their owners have to pay taxes on the entire amount of gains they realize upon selling. Say a couple purchased a vacation home for $250,000. At the time of the divorce, this property is now worth $500,000. (Hey, we used to see such gains in the past on real estate. They could happen again, right?) If the new owner sells the vacation property, he or she will have to pay capital gains tax on the full $250,000 in gains. That can significantly lower the real financial value of the investment.
Candy: In this economy, that’s a high class problem to have!
Carol: As with most issues related to divorce, there is no single best way to handle vacation homes. Divorcing couples must take a long look at their finances, and consider how important the second home is to each of them, when deciding whether to sell the home or keep it.
It can be difficult for divorcing couples to compromise – ha! they are divorcing for a reason, after all – but when it comes to second homes, compromise really is the best solution.
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