Beaufort County offers fraud alert for property owners

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Allstate’s “Mayhem”

Do you know the name Dean Gerard Winters? He’s the actor who plays the character “Mayhem” in Allstate commercials. The character acts out cringe-worthy scenes involving car accidents, fires, falls and other calamities and advises us to buy insurance to protect against “Mayhem like me”.

I’ll never forget the name of a character who created mayhem in the midlands title world several years ago. That name is Matthew Cox.

A telephone call tipped us off that we had a serious mortgage fraud situation in Columbia. Representatives of several closing offices were recording mortgages describing the same two residential properties in Blythewood, as if the properties had been refinanced multiple times in the same day by different closing offices.

At first, we thought our company and our attorney agent were in the clear because our mortgage got to record first. South Carolina is a race notice state and getting to record first matters. Later, we learned that deeds to the so-called borrower were forged, so there was no safety for anyone involved in this seedy scenario. Thousands of dollars were lost.

Next, we learned about the two fraudsters who had moved to Columbia from Florida through Atlanta to work their mischief here. The two names were Matthew Cox and Rebecca Hauck. We heard that Cox had been in the mortgage lending business in Florida, where he got into trouble for faking loan documents. He had the guts to write a novel about his antics when he lost his brokerage license and needed funds, but the novel was never published. With funds running low, Cox and his girlfriend, Hauck, moved to Atlanta and then Columbia to continue their mortgage fraud efforts.

We didn’t hear more from the pair until several years later, when we heard they had thankfully been arrested and sent to federal prison.

How do you protect against Mayhem like Matthew Cox? Beaufort County has found a way. My friend and excellent dirt lawyer, Sarah Robertson, who practices with Burr Forman in Bluffton recently sent out an article to her clients advising that Beaufort County has set up a program to allow property owners to register at no charge to receive alerts from the ROD regarding possible fraudulent activity involving their properties. Sarah’s article indicates some other counties are beginning to offer this service.

This is a great service for clients that could be championed by real estate lawyers in other locations to protect against Mayhem like Matthew Cox!

Residential sellers must disclose sea level rise risk in Hawaii

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Like South Carolina, Hawaii has a mandatory seller disclosure form that must be completed by sellers of residential properties. Unlike South Carolina, Hawaii updated its legislation in 2021 to become the first state to require the disclosure of the risk of sea level rise to the property based on the 3.2-feet Sea Level Rise Exposure Area. The legislation went into effect on May 1 of this year.

Hawaii has developed a sea level rise viewer which you can check out here. To identify a property location relative to a sea level rise exposure, the street address or tax map key of the property must be entered into the viewer. The viewer is intended to provide map data depicting projections for future hazard exposure and assessing economic and other vulnerabilities resulting from rising sea levels.

The viewer was developed by the Pacific Islands Ocean Observing System (PacIOOS) at the University of Hawaii School of Ocean and Earth Science and Technology. Mapping is based on an upper-end projection of 3.2 feet of sea level rise by the year 2100.

Like the existing flood zone disclosure requirement, the sea level risk disclosure is intended to help home buyers better understand how the sea level risk will impact their properties. The disclosure requirement applies to oceanfront and near-oceanfront properties as well as properties near streams and other areas likely to flood in times of heavy rainfall.

Will we see similar legislation in South Carolina and other coastal states? My guess is that we probably will.

“Collapse” podcast focuses on legal issues of aging condominiums

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This blog has previously discussed the June 24, 2021 collapse of the 136-unit Champlain Towers South  project in Surfside, Florida and Fannie Mae’s response by issuing Lender Letter (LL-2021-14) which directs lenders to gather information from owners’ associations about potential unsafe conditions.

South Carolina has many aging condominium projects, particularly along our coast. And we have an earthquake fault line to consider. Do our local homeowners’ association boards face expensive repair and reserve dangers like those in Florida? Should condominium purchasers consider the financial impact of possible major assessments to address delayed repairs? Should legislation be proposed to address these issues?

My husband and I have considered downsizing to a condominium in Columbia, but after spending some time with this repair and reserve issue, I would have to spend extensive time with the financials of any project that might interest us. And the high-rise projects at the coast face more difficult repair issues than those in the midlands because of salt, sand, water, and wind.

I’d like to recommend a podcast episode to lawyers who may be interested in this topic. And I believe all dirt lawyers who represent owners’ associations and even condominium purchasers should be aware of the legal and financial concerns that were clearly brought to the surface by this tragedy.

The podcast is entitled “Collapse: Disaster in Surfside” produced by Treefort Media and the Miami Herald. The podcast series discusses the collapse, the personal experiences of escape and failure to escape, the media coverage, the legal maneuvers, the insurance issues, and many other matters. The heart wrenching conflict between the victims who lost family members and those who lost their homes was difficult to absorb. I won’t ask you to listen to all of that.

But Episode 8 summarizes the legal and financial issues, and I highly recommend that episode.

Our horizontal property regime legislation is deficient at best. Reserves for repairs are discussed in our  HPR legislation but not required.

Once these huge, often high-rise projects are completed, there is no legislative future inspection requirement. The county in South Florida where Champlain Towers was located has a requirement to inspect tower projects after forty years. Forty years is a long time! Champlain Towers’ forty-year inspection had found the potential problems, but there were no “teeth” requiring the repairs to be made. The property owners of Champlain Towers were aware of the need for extensive repairs, but they continued to kick the can down the road to avoid the expense.

After the collapse, Florida’s legislature considered an act which would have required reserves and inspections, but the effort failed because of the fear of chilling South Florida’s development frenzy. My guess is that South Carolina would face a similar roadblock.

Some condominium projects have served as affordable housing in certain geographic locations and as affordable second homes and rentals in resort areas. The podcast suggests that tacking on the annual cost of reasonable reserves may threaten this affordability. Think about elderly individuals who live in their dream coastal condominium. Taken to a logical conclusion, these projects, properly run, may become available only to the wealthiest among us.