Month: January 2024

Court of Appeals grants DeBordieu right to intervene in Baruch litigation

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The Belle W. Baruch Foundation (Baruch) owns approximately 8,000 acres of high ground in Georgetown County. Baruch brought a declaratory judgment action* against the State of South Carolina, claiming it also holds title to 8,000 acres of adjoining marshland.

The State answered, asserting its status as the presumptive titleholder of all marshlands, and counterclaimed that the public holds a presumptive easement over the marshlands. Alternatively, the State claimed that the property had been dedicated to the public.

DeBordieu is an upscale private coastal community which shares a boundary with the disputed marshlands.

Anyone familiar with Georgetown County history knows that Belle Baruch was the daughter of Bernard Baruch, a wealthy landowner and statesman who advised President Wilson during World War I and President Roosevelt during World War II.

Baruch owned Hobcaw Barony, a former rice plantation, and surrounding real estate. President Roosevelt famously convalesced during one of his illnesses at the property. Belle Baruch inherited much of the property and donated it to the Foundation as a nature and research preserve.

Hobcaw has relationships with the University of South Carolina and Clemson University for the purposes of conservation and other research. The property is also the location for delightful Lowcountry tours and events like oyster roasts and holiday parties. I learned on one of these tours that Belle Baruch was interested in preserving the real estate, but not the buildings. The funds she left were not intended for the upkeep of the buildings. The Foundation raises money for that purpose.

I highly recommend that locals and tourists take the time to visit Hobcaw. It’s a beautiful property that reminds me of George Washington’s Mount Vernon. If funds had been left to preserve the buildings, Hobcaw would likely be as impressive as Mount Vernon.

According to the lawsuit, DeBordieu’s members have a history of using the marshland for shellfish harvesting, crabbing, wade fishing and similar recreational activities. In the early 1970’s, DeBordieu created a system of creeks and canals allowing its members access to the marshland and to the Atlantic Ocean. DeBordieu has periodically dredged its canals to maintain its access to the marshland.

DeBordieu sought intervention as a matter of right or, alternatively, permissive intervention. The circuit court denied intervention under both theories.

The Court of Appeals reversed, stating that precedent and Rule 24(a) of the South Carolina Rules of Civil Procedure set a liberal standard for intervention. Although the State and DeBordieu similarly claim that if Baruch owns the disputed property, the marshlands are encumbered by the States and/or DeBordieu’s easements, it is not accurate to classify those easement claims as the same interest in the property.

The State’s and DeBordieu’s claims are independent of each other and require different proof, according to the Court.

The Court also addressed the practical effect of denying the motion to intervene. A declaratory judgment must name all parties having a claim or interest in the matter and must not prejudice the rights of persons who are not parties to the proceeding. The Court concluded that a judgment valid against the State but not against others claiming an interest in the marshlands would not be an efficient use of judicial resources.

DeBordieu is allowed to intervene, and the litigation will proceed. We will keep you posted.

*The Belle W. Baruch Foundation v. The State of South Carolina, South Carolina Court of Appeals Opinion 6043 (January 17, 2024.)

CFPB proposes overdraft fee limitation

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This news is only real estate adjacent, but it should be of interest to all of us who represent consumer clients who attempt to qualify for loans.

The Consumer Financial Protection Bureau issued a press release on January 17 proposing to rein in excessive overdraft fees charged by large financial institutions. The agency estimates this rule change would save consumers $3.5 billion or more per year.

You can read the press release here. The press release includes relevant attachments that include the rule, a fact sheet and other documents that should provide the information you need on this topic.

The Truth in Lending Act, enacted in 1968, generally requires lending institutions to disclose the cost of credit to consumer borrowers. But the Federal Reserve Board created an exemption for banks honoring checks when their depositor “inadvertently” overdrew their account.

Originally, overdrafts were infrequent, and overdraft fees were modest. In the 1990s and 2000s, with the rise of debit cards, large banks began raising fees and using the exemption to generate overdraft loans, creating quite the income stream.

The proposed rule would require large financial institutions to treat overdraft loans like credit cards, with all the related disclosure requirements. Alternatively, banks may charge a small fee in line with their costs. The CFPB suggests these fees may be as low as $3.

According to the press release, the agency took action in 2022 against three of the largest financial institutions to curb these fees. As a result, many banks began to voluntarily revise their overdraft policies. This proposed rule is a continuation of the agency’s efforts to control junk fees.

The CFPB is accepting comments on the proposed rule through April 1.

Professor Whitman provides update on legislative restrictions on foreign ownership of real estate

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This blog has discussed legislation limiting the purchase of real estate by some foreigners twice. Remember the Chinese surveillance balloon the United States shot down off the coast of the Palmetto State last February?

That incident and other rising tensions between our government and China over several issues (the war in Ukraine, recognition of Taiwan, to name only two) have resulted in politicians proposing to broaden state law bans on foreign ownership of real estate.

Professor Whitman of the DIRT listserv has provided a New Year’s update on the legislation across the country. He said one of the most significant developments of 2023 in the real estate arena was the noticeable increase in restrictions on foreign acquisitions of US property.

Chicago Title published an Underwriting Memorandum on April 5 entitled “Foreign Ownership of Property in South Carolina” to advise agents of the pending legislation in our state.

For your information, here is a link to Professor Whitman’s email. He gives credit for some of the list to Womble Bond Dixon. And I, as always, recommend and give credit to the listserv. Professor Whitman and his colleagues attempt to keep all of us up to speed on real estate law and trends across the country.

If you encounter potential foreign purchasers in your transactions, consult your friendly and intelligent underwriting counsel.