Does Facebook’s move into real estate signify the end of the Realtor?

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Social media has long been involved in real state. Aren’t all your real estate agent contacts your “friends” on Facebook? Aren’t you connected with them on LinkedIn? Don’t you regularly see their listings on all your social media outlets?  But the plot thickens!

According to a November 13 story in HousingWire, Facebook announced last week that it is significantly expanding the real estate listings section on its Marketplace, which is Facebook’s attempt to take on Zillow, Trulia, Realtor.com, Redfin, Craigslist, eBay and other e-commerce platforms.

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The HousingWire story, which you can read here, reports that Facebook currently allows individual homeowners to list their homes for sale on Marketplace. The new development is that Facebook is significantly expanding the real estate listings section on Marketplace. The new feature is said to be “rolling out gradually” and is currently only available via the mobile app in the United States.

And, according to the same report, Facebook is going full force into rental listings via partnerships with Apartment List and Zumper.

Facebook plans to upgrade its platform to include custom filters for location, price, numbers of bedrooms and bathrooms, rental type, square footage and pet friendly designations. Also included will be the ability to upload 360-degree photos for individual rental listings. When the potential renter selects a property, he or she will complete s contact form on Marketplace, and the property manager or agent will contact him or her directly.

Facebook says it will not participate in any transactions. It will simply connect the parties. Real estate agents are probably safe for now, but it’s a brave new world out there as social media infiltrates all aspects of our professional and personal lives! Dirt lawyers who fail to embrace social media may be left behind sooner rather than later.

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A recorded power of attorney may not be necessary to establish agency where real estate is involved

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In a recent South Carolina Court of Appeals case*, a mother was held to be bound by the actions of her wheeler-dealer son who appeared to act in her behalf buying and selling properties in Laurens County.

Frank Lollis lived with and took care of his mother, Kathleen Lollis, and managed real estate transactions for the family. The attorney who handled these transactions testified that he saw Frank sign his mother’s name and that he thought he recalled Frank showing him a power of attorney.

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Lisa and Dennis Dutton, plaintiffs in this case, suing to enforce contracts Frank signed, testified that Frank had said he had a power of attorney. At trial, following Frank’s death, Mrs. Lollis denied the existence of the power of attorney.

Lisa Dutton testified that she had known Frank for nineteen years and had done a lot of real estate business with him and his family. She said that all of the locations where she had lived for the ten years prior to the trial were related to the Lollis family and every time she purchased property that was titled in Mrs. Lollis’ name, she dealt with Frank and his attorney. She said she “never had an issue” until she tried to obtain a deed to enforce a contract at issue in this case.

Frank’s attorney testified that Frank did a lot of his business in cash and always carried a lot of cash. Frank typically bought property in other individuals’ names and signed their names to documents, including not only his mother, but a former employee. The attorney signed an affidavit to the effect that Frank explained his “checkered past” required him to operate in the names of other individuals. The affidavit further stated that Mrs. Lollis knew Frank titled properties in her name.

Frank was diagnosed with cancer, and when he became increasingly ill, he asked his attorney to prepare a power of attorney for his mother naming his sister as the attorney-in-fact. After Frank’s death, the Duttons unsuccessfully attempted to obtain the deed to consummate the contract Frank had signed in his mother’s behalf. This lawsuit followed.

The case contains a detailed discussion of the law of agency in South Carolina. Real estate lawyers should know that their clients can become bound by their actions even in the absence of a recorded power of attorney because agency is a question of fact that does not necessarily depend upon an express appointment and acceptance.

An agency relationship is frequently implied or inferred from the words and conduct of the parties and the circumstances of the particular case. The Court of Appeals stated that agency may be proved circumstantially by the conduct of the purported agent exhibiting a pretense of authority with the knowledge of the principal.

The doctrine of apparent authority provides that the principal is bound by the acts of his agent when he has placed the agent in such a position that persons of ordinary prudence, reasonably knowledgeable with business usages and customs, are led to believe the agent has authority and they can deal with the agent based on that assumption.

This rule is based on public policy and convenience to provide safety for third parties.  In this case, the attorney testified that the mother was “fully aware that Frank was buying and selling property in her name” and was “transacting business in her name.” Lisa and her husband testified that Mrs. Lollis was present when they made some payments to Frank. Mrs. Lollis never objected and even retrieved the receipt book for Frank on a few occasions.

Lisa testified (1) Frank told her he had a power of attorney; (2) Lisa relied on Frank’s representation; and (3) she would not have entered into the contract and made payments had she known Mrs. Lollis would not acknowledge the existence of the contract. Dennis testified that (1) he believed Frank was acting on his mother’s behalf; (2) he relied on the course of dealing established in a number of transactions; and (3) if he had known Mrs. Lollis was not going to honor the contract, he would not have entered into it nor made payments.

The Court said that Mrs. Lollis’ knowledge that her son was buying and selling real estate in her name and her tacit acceptance of this practice placed Frank in such a position that the plaintiffs were led to believe he had the authority to act. The plaintiffs dealt with Frank based on that assumption. The preponderance of the evidence, according to the Court, shows an agency relationship between Mrs. Lollis and Frank as well as his apparent authority to sell. Frank’s actions were binding on his mother.

*Lollis v. Dutton, South Carolina Court of Appeals Opinion No. 5522 (November 1, 2017)

Day of the Dead: Director Cordray didn’t get his Halloween wish

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President Trump signed the legislation repealing the CFPB arbitration rule

As we discussed in this blog last week, the United States Senate recently voted to dispose of a Consumer Financial Protection Bureau (CFPB) rule that allowed consumers the right to bring class action lawsuits to resolve financial disputes. Under that rule, banks and credit card companies could not use mandatory pre-dispute arbitration clauses in the fine print of credit card and checking account agreements.

Day of the DeadThe vote was 51-50 with Vice President Pence casting the deciding vote. The vote in the Senate followed a previous vote with the same result in the House of Representatives, leaving only the stroke of President Trump’s pen to finalize the repeal.

After the Senate’s vote, CPBP director Richard Cordray released a statement stating the action was “a giant setback for every consumer in the country.” “Wall Street won”, he said, “and ordinary people lost.”  Interestingly, Director Cordray wrote a letter directly to President Trump on October 30 pleading with him to save the arbitration rule.

The letter said, “This rule is all about protecting people who simply want to be able to take action together to right the wrongs done to them.” It also appealed to President Trump’s support of veterans and lower income Americans by saying, “I think you really don’t like to see American families, including veterans and service members, get cheated out of their hard-earned money and be left helpless to fight back.”

The letter obviously had no effect. President Trump signed the law on November 1 to the delight of banking and business groups. Director Cordray said, “In signing this resolution, the President signed away consumers’ right to their day in court.”  The Trump administration, however, is clearly in favor of dismantling regulatory efforts it believes may put a damper on the free market in any way.

Trick or Treat!

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Senate votes to rescind CFPB class action rule

Is this action scary for consumers?

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The United States Senate voted last week to dispose of a Consumer Financial Protection Bureau (CFPB) rule that allowed banks and credit card companies to use mandatory pre-dispute arbitration clauses in the fine print of credit card and checking account agreements to deny consumers the right to bring class action lawsuits to resolve financial disputes.

The vote was 51-50 with Vice President Pence casting the deciding vote. Lindsey Graham voted against the repeal. The House of Representatives had already voted to rescind the rule, and President Trump is expected to sign the bill into law.

When the rule was passed last year, CFPB Director Richard Cordray said the purpose was aimed at giving consumers more power by discontinuing the abusive practice of banks inserting arbitration clauses into their contracts for consumer financial products and services and literally “with the stroke of a pen” blocking any group of consumers from filing class action lawsuits. He also said CFPB’s research indicated that these “gotcha” clauses force consumers to litigate over small amounts ($35 – $100) acting alone against some of the largest financial companies in the world. Consumers are forced, he said, to “give up or go it alone.”

After the Senate’s vote last week, Director Cordray released a statement stating the action was “a giant setback for every consumer in this country.”  “Wall Street won”, he said, “and ordinary people lost.”

HousingWire reported on October 30 that Director Cordray wrote a letter directly to President Trump pleading with him to save the arbitration rule. According to the HousingWire report, the letter said, “This rule is all about protecting people who simply want to be able to take action together to right the wrongs done to them.” It also said, “I think you really don’t like to see American families, including veterans and service members, get cheated out of their hard-earned month and be left helpless to fight back.”

Time will tell whether the President will listen to Director Cordray. But it is clear that the CFPB continues its efforts to shake up the market. It has also been clear up to this point Republicans are seeking to dismantle those efforts that they feel hurt the free market.

Is your client in the market for timber?

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Here’s what you’ll need to know to get started

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It’s always good to start with the law. In South Carolina, the case is, believe it or not, a 1938 grand larceny case.* It turns out that stealing standing timber is not grand larceny because standing timber is considered to be a fixture. The proper charge would be trespass.

Once the timber is severed from the real estate, however, it can be the subject of a grand larceny charge. What happens, you ask, if the criminal himself severs the timber and carries it away in a continuous act? That, my friends, is grand larceny. Even the South Carolina Supreme Court suggested this distinction may be subtle and illogical.

Now that we have exhausted my knowledge of subtle and illogical criminal law, let’s look at a few things dirt lawyers can understand. We draw from this case the proposition that standing timber is real estate in South Carolina.

Timber, like all real estate, should be conveyed by a deed. A seller might also reserve timber in a deed of the real estate to a third party. This would be similar to reserving an easement or reserving mineral rights.

The definition of “land” in a title insurance policy would include the timber growing on the land because the fee simple title holder owns all the physical elements (the “bundle of rights”, as we learned in law school) of the land. To insure land where the timber has been reserved, an exception would be taken for the timber.

From time to time, a title insurance company may be asked to insure timber. Only standing timber is insurable. Downed, fallen or cut trees would become personal property and no longer insurable in a title insurance policy. It might be problematic to insure future growth, trees seeded after a conveyance and timber sold expressly as “perpetual”. Consult your title insurance company before you get down into those weeds, so to speak.

Be careful about access issues. Timber roads are notoriously tricky, so pay careful attention to the description and ownership of real estate where the road is located. Often, GPS descriptions may be used to describe timber roads. Your client must be able to access the timber legally. The deed should grant the rights to cut and transport timber as well as the right of access.

Be careful about survey issues. You will typically not insure the acreage, and you may, again, face the problem of only having a GPS description. You might be the bad guy who has to require a survey.

You will typically take exception to the rights of others to use the land, as well as the terms and conditions of the timber deed.

Finally, determine whether a separate tax bill exists for the timber in order to prorate the correct tax amount.

You will likely want to involve your friendly title insurance company underwriter early and often if you become involved in a timber transaction.

 

 * State v. Collins, 288 S.C. 338, 199 S.E. 303 (1938).

SC Supreme Court tells Kentucky lawyer what she’s NOT gonna do….

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I’ve blogged before about Mike Goodwin, the “Bow Tie Comedian” based here in Columbia, who entertained us during lunch at Chicago Title’s seminar last year. I highly recommend Mike if you need a comedian suitable for a family audience. A joke that bubbled up through his very funny presentation was a line his mother used to keep him on the straight and narrow during his childhood, “what you NOT gonna do is…..”

 

For example, she would say, what you NOT gonna do is to stand there and hold that refrigerator door open while you try to decide what you want to eat. During one lull in the laughter, Mike said to us, “what you NOT gonna do is sit there and not laugh at my jokes.” (So we laughed.)

Mike’s tag line kept coming to me as I read In the Matter of McKeever, a September 20, 2017 South Carolina disciplinary case where a Kentucky lawyer was permanently debarred from seeking any form of admission to practice law (including pro hac vice admission) in South Carolina.

The Court clearly told McKeever what she’s NOT gonna do in the Palmetto State!

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McKeever engaged in several interesting and dangerous courses of action in South Carolina. One of the most damaging to her position seemed to be failing to respond to the disciplinary charges or to participate in the disciplinary proceedings in any way. The Court held this failure to be indicative of a disinterest in the law. No lawyer should ever be found to be disinterested in the law if she wants to continue to practice in this or any state!

Other activities were equally dangerous. McKeever and her husband left Kentucky in the midst of a foreclosure of their $1 million home loan. She arrived in Charleston and came into contact with Betty McMichael who owned two properties, 991 Governors Road where she resided, and 986 Governors Road, which she rented out.

McMichael faced foreclosure on both properties, and McKeever offered her legal representation despite not being licensed in South Carolina. McMichael repeatedly declined the offer but ultimately agreed to an arrangement, after repeated phone calls and visits, that allowed McKeever and her family to live at 986 Governors Road.

I hear the Supreme Court say, “what you’re NOT gonna do is to enter into an improper fee arrangement where the scope of the legal representation and the basis of the fee are not clearly explained to the client.) I also hear the Court say, “what you’re NOT gonna do is to create a conflict of interest by taking a possessory interest in property that is the subject of litigation.”

Later McKeever induced McMichael to execute a quitclaim deed in favor of Bondson Holdings, a “fictitious entity” owned by McKeever and her husband. (I can’t even put to paper the words the Court really wanted to use for this bit of deception.)

The saga continued with delay tactics, frivolous and meritless legal positions, false statements to courts, threatened civil actions and criminal prosecutions against opposing counsel, the presiding judge and the clerk of court. The Court was not amused and, in addition to the permanent debarment, reserved the right to void the deed after other proceedings involving the property are finally resolved.

I recommend the case as interesting reading in classic hutzpah and failing to follow any rules.

Development of precarious beach properties…

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Exciting for developers; problematic for environmentalists

A quick search the Internet for stories on “Captain Sam’s Spit” in Kiawah Island will reveal a treasure trove of news, opinion and case law involving the proposed development of a gorgeous but extremely precarious tract of pristine beach property on South Carolina’s coast. This link contains a picture.

The South Carolina Bar’s Real Estate Intensive seminar in July of 2016 included a field trip to view this property, from a distance at least. (And let me put in a plug for the same seminar to be held in July of 2018. Stay tuned! It will be great!)

Real estate development is my bread and butter, but one quick look told me that property should not be developed. A fellow field tripper, however, pointed out that the south end of Pawleys Island, which has been developed for many years, is just as precarious.

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Image by www.whereverimayroamblog.com

An entity that fights these cases in our state is the South Carolina Environmental Law Project located in Pawleys Island. A recent case* fought by this entity was decided by the South Carolina Court of Appeals on September 27. This case involves a 4.62 acre tract of beachfront property on Kiawah Island, not far from Captain Sam’s Spit.

Here are greatly simplified facts in a very complicated case: the developer and the community association entered into a development agreement in 1994. That agreement covered many issues, one of which was the proposed conveyance from the developer to the community association of a ten-mile strip of beachfront property, basically, the entire length of the island. A deed consummated that conveyance in 1995. All of the property conveyed was undevelopable because of the State’s jurisdictional lines.

I didn’t learn the following fact from the case, but I learned it from one of the lawyers who was kind enough to speak with me. When the jurisdictional lines were redrawn by the State, the 4.62 acre tract became developable. The developer then took the position that the 1994 development agreement and the 1995 deed resulted from a mutual mistake, and that the parties never intended to include that tract.

The Master-in-Equity and Court of Appeals did not see it that way. Both found that the agreement and deed were unambiguous and that parole evidence of the intent of the parties was not allowable.

Simple enough, right? As the football prognosticator, Lee Corso would say, “not so fast, my friends.” If the litigation history of Captain Sam’s Spit is a barometer, litigation may continue for years over the 4.62 acre tract. Captain Sam’s Spit has been argued in the South Carolina Supreme Court four times. I understand one of the justices used the term “weary” to describe the reaction of the court to the most recent round in the battle.

Count on a petition for rehearing and an appeal in this case, at least. I’ll keep you posted!

*Kiawah Resort Associates, L.P. v. Kiawah Island Community Association, South Carolina Court of Appeals Opinion 5517 (September 27, 2016)