Month: July 2024

“Mutual” will with third wife fails to defeat fourth wife’s omitted spouse claim

Standard

Early in my career, I practiced briefly in the area of estate planning. I attended week-long seminars and poured over tax laws. I even drafted a few irrevocable trusts for wealthy clients. But I was also representing real estate developers, and, at some point decided that I couldn’t keep up in both areas. So, I dropped estate planning in favor of real estate.

But real estate lawyers need to know enough about estate planning to figure out who gets the real estate at the death of the owner, so the two areas often overlap, and I was often thankful I had a background in estate planning.

I found a recent Court of Appeals case involving an omitted spouse claim by a fourth wife fascinating. Ward v. Ward* involved a mutual will and related documents between Stephen Ward and his third wife, Nancy.

The spouses generally intended that the death of one would cause their assets to “pour over” into a trust controlled by the other. After the death of the surviving spouse, any remaining assets would be disbursed among each spouse’s children and heirs as detailed in their wills and trust documents. Both parties agreed that they would not amend the documents after the death of the first spouse.

Those documents were executed in 2005. Nancy died in 2011. Later that year, Stephen began dating Mary, and they married in 2013. At the time of marriage, Stephen was 69 and Mary was 88. Stephen died in 2016.

After Stephen’s death, his children sought to probate his estate, and Mary filed a petition seeking to have herself declared an omitted spouse.

Several witnesses testified that Stephen’s intent when he executed the estate planning documents was to have those documents enforced as written, and that his estate plan would not be altered by a subsequent marriage.

The Court of Appeals agreed that a testator’s intention, as expressed in his will, governs the construction of the will if it does not conflict with law or public policy. But the Court held that the testator’s intent must fail when it conflicts with the probate codes’ protection of a surviving spouse.

Mary had only to prove that Stephen’s will was executed prior to their marriage and that it did not provide for her. Her claim to an omitted spouse’s share was affirmed.

Justice Geathers dissented, stating that the only evidence in the present case shows that years before he met Mary, Stephen made it clear that he meant to leave a subsequent spouse nothing.

Interesting case! I wonder whether our Supreme Court will have the chance to weigh in.

*South Carolina Court of Appeals Opinion 6073 (July 24, 2024).

Court of Appeals tackles basic real estate issue

Standard

Last week, this blog discussed a South Carolina Court of Appeals case involving the rule against perpetuities. This week, we look at the Court’s take on another basic real estate issue, King’s and sovereign grants. East Cherry Grove Co., LLC v. South Carolina* involves a dispute over dock permit over tidelands properties in North Myrtle Beach.

Matt Leonhard applied to DHEC for the permit over tidelands property adjacent to his property. East Cherry Grove Co., LLC and Ray & Nixon, LLC (collectively, Respondents) claimed they each owned a portion of the tidelands property, and the Circuit Court agreed.

The State of South Carolina appealed, making several legal arguments, including ownership by the State of navigable waterways, and the propriety of testimony by a real estate lawyer as to title even though he was not a surveyor.

At the Circuit Court’s bench trial, four King’s and sovereign grants were admitted into evidence. William Deschamps, a real estate lawyer, testified he searched the titles of the respective properties back to the grants. He testified he had no doubt that the properties were subject to the grants based on all the survey information and his review of the titles. On cross examination, he admitted he was not a surveyor and clarified that he was not rendering a surveying opinion but was basing his opinion on his title examinations after reviewing the grants in conjunction with the surveys.

A surveyor also testified and was asked if the property in question came from the grants. His response was, “There’s no other place it could have come from.” 

The Circuit Court ruled that the Respondents met their burden of proof by a preponderance of the evidence that they owned their respective properties by virtue of the Grants. On appeal, the State argued that a clear and convincing standard should have been applied instead. The Court of Appeals agreed with the Circuit Court, stating that our case law provides that the State possesses presumptive title of tidelands property, and the person seeking to establish private ownership must present evidence to rebut the presumption.

The Court of Appeals agreed with the State, however, as to small portions of the East Cherry Grove tract that were outside of the grants.

The State argued that the titles should have been based on a particular plat rather than the plats relied upon by the Respondents because of the specificity of the State’s preferred plat. The Court of Appeals concluded that the Circuit Court had not erred in weighing all the evidence of title.

For simplicity, I’m omitting other issues that were argued but failed. Please read the case in its entirety for an interesting discussion of testimony in a real estate case.

*South Carolina Court of Appeals Opinion 6068 (July 3, 2024)

We have a new rule against perpetuities case!

Standard

Dirt lawyers have been known to joke that after decades of successfully practicing real estate law, they have never encountered a true rule against perpetuities situation. Here is one such situation that arose in Columbia and made it to our Court of Appeals this year.

Spring Valley Interests, LLC v. The Best for Last, LLC* involved a perpetual option to purchase a 74.425% undivided co-tenancy interest in real estate located in Columbia.

In 2017, Spring Valley’s predecessor, White Interests Limited Partnership, entered into an agreement with Best through which White loaned Best $800,000. Best used the loan proceeds to purchase the property. As a part of the consideration for the loan, Best granted White the freely assignable perpetual option. The language of the option contains no termination date other than a statement that Best would exercise the option at its sole discretion by delivery of a written notice no later than thirty days before the intended closing.

White assigned the option to Spring Valley, and in 2019, Spring Valley sent Best a letter exercising the option. Best objected to the purchase of the undivided co-tenancy interest and, instead, insisted that Spring Valley exercise the option by becoming a member of Best. The parties negotiated and nearly came to an agreement except for Spring Valley’s insistence on certain attorneys’ fees.

Spring Valley filed a complaint seeking specific performance of the option. Best filed an answer asserting defenses including that the option was void because it violated the common law rule against perpetuities. Spring Valley asserted that our common law rule was preempted by our statutory rule against perpetuities (S.C. Code § 27-6-10, et seq.), which became effective in 2007.

The common law rule mandates that any interest not certain to vest within a life in being plus 21 years is void. The statutory construction provides for a ninety-year wait-and-see period that would likely save otherwise violative transfers. The statutory construction states that it supersedes the common law rule, but also states that it does not apply to nonvested property interests arising out of nondonative transfers.

Best eventually filed a motion for summary judgment, which the circuit court granted, stating that the statute does not apply to nondonative transfers and, therefore, cannot replace the common law; thus the common law is the appropriate legal standard to conclude that the option is unenforceable. The Court of Appeals affirmed.

The Court of Appeals stated that most states that have adopted a form of the uniform rule seem to conclude that such adoption removes commercial transactions from the common law rule and the uniform rule. But South Carolina was the first state to adopt a form of the uniform act, and the Court said it cannot say with certainty that the abolishment of the common law rule was the legislature’s intent at the time.

Also, according to the Court, the complete abolition of the common law rule without some provision for limitations in commercial transactions risks putting two legal principles at odds—freedom to contract and restrictions on alienability.

Since the Court believed it could construe the statutory construction in a manner that preserved the common law, it affirmed the lower court’s ruling finding the option void under the common law.

I would not be surprised to see this case go to our Supreme Court.

*South Carolina Court of Appeals Opinion 6070 (July 10, 2024).

The State reports Zillow is suing Richland County

Standard

The State newspaper reported on July 2 that the home-buying site Zillow is suing Richland County. The claim is that the County is violating public records laws by failure to reply to a Freedom of Information (FOIA) request for property tax data.

The article reports that in May, Zillow requested property assessment data from Richland County by submitting multiple FOIA requests. The County first responded that it did not have any records matching the request. Then, the County denied the request because the requested information is available online and argued that state law does not require the County to create new documents to fulfill a FOIA request.

Zillow argued, according to the article, that not all the assessment information for every parcel in the County is available online. Zillow had apparently requested an electronic copy of the assessment files for all the parcels instead of the option to search parcels one by one. The company apparently didn’t want to have to search titles in the manner of South Carolina real estate professionals.

Zillow also argued that it had received the requested information in prior years. Before 2022, the company said it had received the assessment date from the County each year in the format the company requested, which was an electronic file that contained all assessment information. The lawsuit claims the company paid about $8,800 per year for that information.

Zillow is now suing for the requested information and demanded that the County pay Zillow’s legal fees if the lawsuit is successful. We’ll see what happens with this one!