The Law Firm of Your Dreams

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Say Goodbye to Your Boss, Say Hello to the Law Firm You’ve Always Dreamed of

JFisher Book 2Readers of this blog know I am prone to write a book report from time to time, but only about books that I think will benefit South Carolina real estate practitioners. I’ve blogged previously (twice!) about John Fisher’s The Power of a System; How to Build the Injury Law Practice of Your Dreams. John Fisher has a new book that I also recommend for dirt lawyers.

By the way, John was a speaker at our Chicago Title annual seminar on October 14, and he did not disappoint. If you missed him, I highly recommend that you begin following what he writes and that you seek out the opportunity to hear him speak.

His 2019 book is entitled The Law Firm of Your Dreams; Say Goodbye to Your Boss, Say Hello to the Law Firm You’ve Always Dreamed of.

In the formative days of his medical malpractice firm, Fisher wished for a step-by-step manual for running a profitable practice because, like the rest of us, he was not taught strategic planning, goal setting, business metrics, managing employees, managing clients, and marketing in law school. He later developed that manual for his firm, not just technical systems for running a business, but also the managerial and entrepreneurial principles to keep a constant stream of new cases and clients coming through the pipeline.

Those systems were covered in his first book, and numerous lawyers have said the book provides a roadmap for accurate and precise business development for any lawyer in any practice anywhere!

The 2019 book starts with the premise that the lawyer’s mindset is the most important aspect of creating the ideal law firm. Without the right mindset, the author says, the best policies and systems won’t do you much good. He recommends becoming a “specialist” even though that word is a “no no” under our ethical rules. John believes that if you don’t specialize in something, you will be marginal in everything.

I have a lawyer friend who has learned to specialize. He practices in the area of residential real estate closings in a coastal area. He is a sole practitioner, and he very narrowly defines the scope of his work. He seeks to make buyers, sellers, real estate agents, and lenders happy in connection with their closings. For that reason, he will not write what I call “nasty lawyer letters”. He refers that work to a friend. He will also not do any kind of work that will slow down the very well-oiled machine that keeps him churning out his closings in a timely and accurate fashion.

He may set up a simple LLC for a closing, but he refers out complicated entity formation, complicated trust formation and anything to do with estate planning. He may draft a simple set of restrictive covenants, but he refers out complicated subdivision development and commercial real estate closings of any type. His clients, lenders and real estate agents are happy and return again and again. Fellow lawyers love that he refers complicated work to them, and they refer residential closings to him in return. Win. Win. Win. John Fisher would approve of his system.

John Fisher recommends that a lawyer should delegate almost everything, both professionally and personally. He says, “your career (and life) will be chaos if you answer every phone call or email during your work day. You will never go home in time for dinner or attend your kids’ ball games if you insist on being everything for your clients. That’s why you have to delegate everything you can and do only those things you cannot delegate.”

And the best thing you can do for your career, according to this author, is to devote as much time and energy as you can to marketing and growing your law practice. A large part of both books is devoted to marketing.

I am a huge fan of the ideas and step-by-step instructions of this thoughtful lawyer and author. I invite you to read his books and follow his advice to improve your practice and your life!

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Holy Statute of Frauds

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Can text messages create binding real estate contracts?

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South Carolina real estate practitioners, do you remember that old case from law school where a contract was created on a napkin?  That case made me imagine drunken parties in a bar passing a napkin back and forth as drinks came quicker and caution evaporated.

That simple case is seen in a new light, however, as courts across the country struggle to apply the ancient statute of frauds to the evolving world of electronic communications. Telegrams, faxes and emails have all been found to satisfy the statute of frauds in some situations.

We haven’t seen a South Carolina case on the topic of text messages and binding contracts, but The Southern District of New York and a Massachusetts Land Court recently found that text messages may be sufficient to serve as evidence of the existence of binding agreements between negotiating parties.

In the New York case, the plaintiff real estate broker relied on a series of text messages to show the existence of a binding fee agreement. The court held that the text messages satisfied the writing requirement of the statute of frauds but failed to satisfy the signature requirement.

The Massachusetts court, on the other hand, found that a series of text messages did satisfy the signature requirement of the statute of frauds because a signature of a sort was included within multiple text messages between the parties. Some of the texts contained typed names of the parties beneath the substantive messages.

Real estate practitioners should caution their clients in the use of texts and other non-traditional means of communicating. Advise clients to refrain from typing their names under text messages. Better yet, advise clients to include disclaimers to the effect that no agreement involving the subject matter is final until wet signatures are applied to a physical document.

And even better than that, caution clients that texting and negotiating real estate contracts may be almost as dangerous as texting and driving.

While text messaging can’t be surpassed, at least in 2019, when it comes to speed and efficiency, a new and different level of caution may be needed when engaging in negotiations through such seemingly informal means of communicating.

Rock Hill residential real estate lawyer arrested

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Thankfully, it has been ten years or more since we’ve heard word “defalcation” used in connection with a South Carolina real estate lawyer. Sadly, we have to use that word in 2019 because a Rock Hill lawyer was arrested on September 13 after funds allegedly went missing from a residential closing. That lawyer, Thomas Givens, was suspended by the South Carolina Supreme Court on September 25.

The closing took place on July 15, but the $166,000 mortgage payoff was never made. Two months later, Givens was arrested and charged with breach of trust over $10,000. The arrest warrant reads that Givens failed to make the mortgage payoff and does not have the funds.

We usually do not experience defalcations when the economy is good. With the economic downturn that began in 2007, we learned the difficult lesson that attorneys who are prone to dip into their trust accounts often manage to keep the balls in the air as long as closings continue to occur. They typically steal from one closing to fund another. They rob Peter to pay Paul.

Like a game of musical chairs, when the music (and closings) stop, bad actor attorneys no longer have closings to provide funds for prior transgressions, and the thefts come to light.

It is a very sad commentary, and one I hoped not to see again.

Do you and your employees work remotely?

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Check out these network tips for remote employees

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Our office has been involved in workflow studies for the offices of our attorney agents, and one point that comes up often is that allowing employees to work at home increases employee satisfaction and retention. We’ve witnessed many paralegals permanently move to remote locations and successfully retain their jobs. Telecommuting seems to work successfully in many instances.

In our own office, all our employees have the capability to work remotely. We learned when our office building suffered a fire in 2012 that the ability to access our network from remote locations allowed us to continue our business without interruption. The day after the fire, we disbursed the funds for a large commercial transaction for an agent from my kitchen at home!

And since South Carolina routinely finds itself within the maze of the spaghetti models during hurricane season, the ability to work remotely is important if not necessary to maintain contact while taking care of school children and hunkering down at home.

American Land Title Association (ALTA) published an article on September 5 attaching The Center for Internet Security, Inc. (CIS) Telework and Small Office Network Security Guide.

This 25-page paper provides useful, up-to-date guidance on keeping your networks safe when employees are allowed remote access. The guide provides recommendations for buying equipment, setting up networks, setting up devices, securing home routers and protecting against digital threats.

The ALTA article refers to a Forbes study that found 38 percent of teleworkers lack the technological support they need to do their jobs. Securing devices and networks that allow telecommuting is critical. The guide includes a network security checklist and tells users how to map security configurations to provide cybersecurity protection at remote locations.

Thanks to ALTA for pointing us to this valuable resource, and thanks to CIS for publishing it!

A glimpse into the future of residential real estate sales

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Here’s what may happen when iBuyer companies enter our market place

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I read an interesting article from Forbes recently by John Wake entitled “The Surprising Way Real Estate Agents are Adapting to ‘iBuyers’ Buying Houses Directly From Sellers.” I invite you to read the article in its entirety here.

The article focuses on residential real estate sales in the Phoenix market which the author calls “ground zero for the iBuyer explosion.” What does he mean by that? Apparently, the largest iBuyer companies, Opendoor, OfferPad and Zillow Offers, either started their operations in Phoenix or concentrate their efforts there. He estimated five to six percent of houses that change hands in that market are sold to iBuyers.

The article focuses, as its title suggests, on how real estate agents are adapting to this disruption in their market. But I find the article instructive to South Carolinians on the topic of how these internet sales are orchestrated and how they might affect sellers in our market when this disruption migrates east to us.

The author says that a homeowner who seeks to sell a house via an internet company must first complete an online form. An offer is typically made within two or three days. If the homeowner accepts the offer, inspectors will be sent to the house and will come back with a list of repairs and estimated costs for the repairs that the buyer requests before the closing.

As in our current process, the seller can agree to make the repairs, to reduce the price of the house to cover the cost of the repairs, or to terminate the contract.

The author suggests that real estate agents commonly complain that iBuyers tend to offer less and to ask for more repairs than traditional buyers. In other words, the seller makes more money in traditional sales involving local real estate agents.

The flip side of that coin is, of course, that closing with one of the iBuyer companies is more convenient than the process in our marketplace. A seller doesn’t have to get the house ready to sell, stage it, keep it clean for showings, or leave home for showings and open houses. The closing date may be more flexible, and there probably will not be contingencies for appraisals and financing.

How are real estate agents in Phoenix adapting? According to Mr. Wake’s article, real estate agents are assisting sellers by obtaining multiple iBuyer offers, analyzing and explaining the offers, discussing the options of accepting one of the iBuyer offers or beginning to market the home in the traditional manner, and coordinating everything with the iBuyer or traditional buyer, including repairs.

In short, real estate agents are attempting to become iBuyer experts in addition to traditional home sale experts.

Real estate lawyers, we need to be ready for this disruption when it hits us. We will want to be able to explain the changes in the market to our clients as well as to educate our real estate agents on how to stay in the game. Let’s keep our eyes and ears open! I’ll help!

FCC Publishes Scam Glossary

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The Federal Communications Commission recently published a Scam Glossary, which you can access here. The glossary provides a helpful description robocalls, spoofing scams and related consumer fraud.

The FCC tracks these nefarious items through consumer complaints, news reports and notices from other governmental agencies, consumer groups and industry sources.

The glossary includes links to more detailed information posted in the FCC’s Consumer Help Center and trusted external sources.

Here are a few of my least favorite schemes from the glossary:

“Can You Hear Me” Scam: Scammers open by asking a yes-or-no question, such as: “Can you hear me?” or “Is this X?” Their goal is to record you saying “yes” in response. They then may use that recording to authorize charges over the phone.

Flood Insurance Scam: After floods, scammers may target hard hit areas with fake calls about flood insurance to steal private information or money. They may spoof a legitimate flood insurance company to appear more convincing.

Google Listing Scams: Some scammers claim that they can add or remove you or your business from Google searches or similar services. These callers, unaffiliated with Google, seek payment for services they can’t deliver.

Jury Duty Scams: Callers pose as local law enforcement, claiming they have a warrant for your arrest because you missed jury duty. They may instruct you to pay a fine by wiring money or using gift cards.

Porting: A scammer gets your name and phone number, then gathers other identifying information that can be used for identity theft. Pretending to be you, they then contact your mobile provider to report your phone as stolen or lost, and then ask for the number to be “ported” to another provider and device. They can use your number to gain access to your financial accounts and other services with two-factor authentication enabled.

Smishing: Short for “SMS phishing”, smishing often involves text messages claiming to be from your bank or another company. The message displays a phone number to call or a link to click, giving scammers the chance to trick you out of money or personal information.

Wangiri/One Ring Scam: When your phone rings only once, late at night, you may be tempted to call back. But the call may be from a foreign country with an area code the looks deceptively like it’s in the U.S. If you dial back, international calling fees may wind up on your bill. Such cons are known by the Japanese term “Wangiri”.

Check out this useful list, share it with your office and your family members. And be careful out there!

Seabrook Island drainage dispute leads to interesting case

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Owners’ association could not act unilaterally to terminate an easement

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The South Carolina Court of Appeals reversed an easement decision from the Charleston County Circuit Court last week and remanded the case for a new trial on compensatory and punitive damages in a controversy surrounding a drainage easement on Seabrook Island.*

The case involved a dispute between two couples, the Ralphs and the McLaughlins, who owned residential lots on Seabrook Island. In 1984, developer E.M. Seabrook, Jr. recorded a plat depicting blocks 32 and 33 of Seabook Island. To alleviate draining issues concerning several lots in block 32, the plat reflected a 20-foot drainage easement running between lots 21 and 22 and depicted a no-build area across the back of the lots.

The Ralphs bought lot 23 in 1997. The McLaughlins’ predecessors bought Lot 22 a year or so later and, in 2002, approached the Seabrook Island Property Owners Association (SIPOA) about eliminating the easement and no-build area on their lot. The SIPOA agreed and prepared a new plat entitled “Plat Showing Abandonment of an Existing 20’ Drainage Easement, Lot 22, Block 32”. The plat also indicated the no-build area was to be abandoned.

The McLaughlins bought Lot 22 later in 2002. In 2006, they approached SIPOA’s Architectural Review Board about building a house. The plans were approved with several stipulations, including the requirement that the McLaughlins assume the responsibility for the underground drainage line and the abandoned draining easement.

Over the course of the next year the McLaughlins sought financing for their construction. At some point, they received a call from the chair of the SIPOA legal committee indicating there were issues concerning the drainage pipe. A meeting was scheduled for the owners of lots 21 – 28 to discuss the easement, and several neighbors objected to the removal of the pipe because of the potential adverse effects on drainage.

The neighbors continued to express concerns, and on October 22, 2008, SIPOA sent a letter rescinding the resolution abandoning the easement. In December, the McLaughlins emailed the neighboring property owners asserting that there was no easement on their property, stating they had been patient with SIPOA, and they would begin constructing their home. They then authorized their contractor to remove the pipe. They built part of their home over the no-build area and the area formerly containing the pipe.

In 2011, the Ralphs filed a complaint seeking actual and punitive damages alleging the McLaughlins caused flooding and poor drainage on the Ralphs’ property. The McLaughlins filed an answer and a third-party complaint against SIPOA alleging reliance on representations. The McLaughlin’s case centered on the theory that they had justifiably relied on SIPOA and the purported abandonment of the easement in removing the pipe.

The circuit court granted SIPOA’s motion for summary judgment, finding there was no evidence to show SIPOA had made any promises to the McLaughlins and, as a matter of law, the McLaughlins could not have reasonably relied on SIPOA. The circuit court also directed a verdict in favor of the defendants on punitive damages because, he said, Mr. McLaughlin believed he had the right to remove the pipe.  At trial, the jury awarded the Ralphs $1,000 in damages for trespass.

The Ralphs argued on appeal that the circuit court failed to apply the findings of fact and conclusions of law in the grant of summary judgment to the SIPOA as the law of the case. The Court of Appeals agreed stating that since the defense was significantly based on the theory that the McLaughlins reasonably relied on SIPOA, the finding that this reliance wasn’t reasonable in the summary judgment motion should have applied to the controversy between the Ralphs and the McLaughlins.

The Court of Appeals also held that the directed verdict as to punitive damages was inappropriate because there was more than one reasonable inference that could be drawn from the evidence that the McLaughlins acted with reckless regard for the property rights of the Ralphs.

Significantly for dirt lawyers, the Court of Appeals held that the SIPOA could not have unilaterally abandoned the drainage easement because every lot owner had an ownership interest in the easement as a result of the plat that originally established the easement and the deeds in the respective chains of title that incorporated the plat by reference. The Court made the point that while it is well settled law that an owner of an easement may abandon the easement, it is also well settled that only easement owners are authorized to take such action.

Since the Ralphs had established an ownership interest in the easement as a matter of law, the Ralphs were entitled to enforce the easement, and the case was sent back to the lower court for a determination of damages by the jury.

Ralph v. McLaughlin, Court of Appeals Opinion 5681 (August 21, 2019)