Golf membership traps property owners at Callawassie, lawsuit says

On Callawassie Island, you can buy land any time you like.

But you can never leave.

At least that's what some island property owners claim in a federal lawsuit filed last month.

About 45 owners have sued the island's private golf club for requiring them to become members and refusing to let them resign their membership.

They argue the requirement that every property owner be a member is illegal.

That requirement has caused a ripple effect that has decimated property values to the point that some cannot sell their lots even for $1, according to the lawsuit. Others have filed for bankruptcy because they couldn't pay the fees, the lawsuit says.

An attorney for the club and the property owners association, which also is being sued, declined to comment Wednesday.

In court filings, the club said the owners signed a contract that laid out the terms they are now protesting. The club also argues that three state judges have ruled in its favor in lawsuits making similar claims.

Owners "now seek relief in a new forum in hopes of turning the tide of (the club's) success in Circuit Court," the club's attorney says in a motion to dismiss the federal case.

'THEY WOULDN'T LET PEOPLE OUT'

Started in the mid-1980s, the Callawassie development was intended to be a lower-cost alternative to the more upscale golf course communities in Beaufort County.

Middle managers and military veterans retired to the island, which is between Beaufort and Bluffton. Initially, membership to the country club was optional, says Homer Knearl, a retired patent lawyer who has owned property on Callawassie since 1991.

But as interest in golf has waned and golf-centered communities folded across the U.S., the country club continued to expand and sink into debt, said former lot owner Bill Hobson.

Soon the club needed cash, he said.

In 2001, the club required new property owners to become members and pay dues. It was approved by the owners association, according to the lawsuit.

"That's when the problems started," said Knearl. "They transformed membership from voluntary to mandatory, and they wouldn't let people out."Lolita Trifiletti bought Callawassie land in 2005 with hopes of retiring there.

At first, the Charlotte resident paid $100 a month, along with a $15,000 initiation fee to the club in case she decided to forgo her membership, she said.

But fees increased when the club paid for a $4 million renovation in 2008.

Now she's paying $640 a month for a golf club she hasn't visited in seven years, she said.

When she tried to resign, she was told she couldn't leave until she paid $38,000 in dues and found someone else to take her membership. She and the club are battling in state court over the dues.

"How can you not resign?" she asked. "It's a club. Think about it -- a club."

SINKING PROPERTY VALUES

Trifiletti is among the owners suing in federal court to cancel memberships.

Their lawsuit argues, in part, that since the golf club is a nonprofit company, state law allows members to leave at any time and forgo their dues.

But that argument hasn't worked in state court, according to filings.

In one lawsuit in which the club sought delinquent fees, Beaufort County Circuit Court Judge Carmen Mullen ruled that the owners must pay their dues because state law says that when a member resigns from a nonprofit it "does not relieve the member from any obligations."

"These provisions plainly demonstrate that a member may not void a contractual undertaking simply by leaving a club," Mullen wrote in her decision.

The owners' contract also says they must pass on their membership to the next property owner before leaving the club.

That's been tricky for some.

The membership requirement has scared away potential buyers and killed property values, the owners say.

Trifiletti's property has been on the market for years. She even tried to give it away, but neither Habitat for Humanity nor Wounded Warriors would take it because of the membership requirement, she said.

The owners' point is supported by a private memorandum that was circulated among golf-club board members in 2008.

"The most important 'unanticipated' reality is that all of the golf memberships will NEVER sell, and BOTH the developer and the golf club have a problem," according to the memo, which is quoted in the lawsuit.

Hobson, the former Callawassie owner, tracks properties sold in the development.

He estimated the average loss this year for the seller is $90,000.

"Nobody wants to buy a membership you can't get out of," said Trifiletti. "You're trapped."

Follow reporter Dan Burley at twitter.com/IPBG_Dan.

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• Ruins of Callawassie sugar mill recognized as historic site, Oct. 15, 2014
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This story was originally published November 29, 2014 at 7:26 PM with the headline "Golf membership traps property owners at Callawassie, lawsuit says."