This blog has discussed the limits of fractional ownership before. Short-term rentals continue to be a subject of controversy in South Carolina, particularly in the communities surrounding Charleston. Recently, this blog discussed the Court of Appeals decision overturning a Sullivans Island zoning determination that fractional ownership structures violated the Town’s limitation on vacation rentals. Now, a Circuit Court judge in Charleston County has invalidated Folly Beach’s referendum enacted short-term rental cap.
The ordinance at issue originated in an unusual way. In 2022, Folly Beach City Council rejected a proposal that would have capped the number of short-term rentals within the city. Supporters of the proposal turned to South Carolina’s initiative and referendum process and eventually submitted a petition seeking adoption of substantially the same restrictions. After City Council declined to adopt the ordinance a second time, the matter was placed before the town’s voters and narrowly passed by referendum.
The ordinance placed a hard cap on the number of short-term rental licenses the town could issue to properties that were not the primary residence of the owners. Because property owners with existing licenses in good standing were grandfathered in under the ordinance, the effect of the ordinance was that no new licenses could be issued until the number of licenses dipped below the hard cap of 800.
The challenger to the statute was an owner with an existing license that the City determined was not in good standing to be renewed. The owner challenged the ordinance on the ground that the ordinance was unconstitutionally enacted through the referendum process.
Although the stated goal of the ordinance was to regulate the number of short-term rentals, the Circuit Judge found that the effect of the ordinance was to limit the City’s authority to issue short-term rental business licenses. Because a business license fee is treated under South Carolina law as a tax, the court concluded that the ordinance was not lawfully enacted, because South Carolina’s expressly prohibits initiatives that appropriate money or authorize the levy of taxes.
The court found that the ordinance defined when the City could issue business licenses and collect the corresponding business license taxes. Reasoning that giving voters the option to restrict the City’s ability to levy taxes and fees by referendum would undermine the ability of elected bodies to maintain control over municipal revenues. The Court therefore ruled that the short-term rental cap provisions are void.
The Town will appeal the Court’s ruling and separately has voted to place a six-month moratorium on the issuance of new short-term rental licenses while it studies the issue further and considers repealing and replacing the short-term rental ordinance with something new.
This case is another reminder of the difficulties faced by towns where there is a substantial tourism industry where it comes to short-term rentals. In most places, there is significant support behind both sides of the issue and while there seems to be a great deal of energy behind those citizens who would seek to limit the impact of short-term rentals on their communities, motivated investors and owners of vacation homes seem equally motivated to defend their property rights.
The controversy is a good reminder that restrictions on the use of property must be implemented through legally authorized governmental processes and that there is a perhaps equal number of motivated investor owners who will ask the courts to be the ultimate referee.
South Carolina’s 2025-2026 legislative session demonstrated that land use and zoning issues are becoming increasingly prominent in economic development, environmental regulation, and local governance. While relatively few zoning-related bills were enacted, several significant proposals and the ongoing Data Center litigation in Spartanburg County and the Silfab Solar controversy in York County reveal growing tension between economic growth initiatives and community oversight. For South Carolina real estate attorneys, these developments may foreshadow a more active and contentious zoning landscape in the years ahead.
Legislative Efforts to Expand Zoning Oversight
One of the most notable zoning bills introduced during the session was Senate Bill 530. The bill proposed adding Section 6-29-815 to the South Carolina Code and would have required development activity to cease immediately whenever a zoning authority determined that a property’s current or proposed use was not permitted under the applicable zoning classification. The legislation would have invalidated previously issued permits and suspended construction during administrative and judicial appeals unless a court ordered otherwise. Although the bill did not become law, it reflected increasing legislative concern regarding projects that proceed while zoning disputes remain unresolved.
For attorneys representing developers, lenders, and title insurers, S.530 is noteworthy because it would have significantly altered reliance interests associated with permits and approvals. The proposal suggests that lawmakers are closely watching disputes involving local zoning interpretations and vested rights.
The Rise of Data Center Regulation
A major emerging issue during the session was the regulation of data centers. South Carolina continues to attract technology and infrastructure investment, but lawmakers have begun grappling with the substantial impacts data centers can have on utilities, water resources, transportation infrastructure, and surrounding land uses.
Two significant bills were introduced:
S.867, the Data Center Development Act, would establish a state permitting framework administered through the Department of Environmental Services and require siting permits, infrastructure adequacy assessments, environmental impact reviews, water-efficiency standards, operational reporting, and coordination with local land-use planning.
S.902, the Data Center Siting Act, proposed a similar approach but would place substantial authority with the Public Service Commission, requiring certification before a data center could begin operations and establishing standards addressing infrastructure, environmental impacts, utility costs, buffers, and local planning considerations.
Neither bill became law during the session. However, both are significant because they recognize that traditional local zoning tools may be insufficient to address the statewide implications of large-scale data center development. The introduction of multiple bills targeting the same issue suggests a growing consensus that additional regulatory oversight is likely forthcoming.
For practitioners, future data center projects may require navigating both traditional zoning approvals and additional state-level review processes. Attorneys should anticipate increased scrutiny of utility capacity, water consumption, environmental impacts, and compatibility with surrounding land uses.
The Spartanburg County Data Center Litigation
Another development worth watching is the ongoing litigation involving the proposed Valara Holdings/NorthMark data center project in Spartanburg County. The dispute highlights many of the same issues that lawmakers attempted to address through the proposed data center legislation.
The approximately $3 billion project includes a large-scale data center campus and a proposed 450-megawatt natural gas-fired power generation facility intended to serve the development. Local residents and advocacy groups have challenged both the permitting process and the scope of regulatory review applied to the project.
One lawsuit, filed by the Southern Environmental Law Center on behalf of Concerned Citizens of Spartanburg County, alleges that the project was processed through permits typically used for minor land development rather than being subjected to the county’s major land development review procedures. Opponents contend that classifying the project in this manner limited opportunities for public participation and avoided the level of review ordinarily required for developments of comparable scale.
A separate proceeding before the South Carolina Public Service Commission has raised another significant question: whether the project’s proposed 450-megawatt power plant qualifies as a “major utility facility” subject to review under South Carolina’s Utility Facility Siting and Environmental Protection Act. Project opponents argue that the plain language of the statute requires PSC approval before construction can proceed, while the developer maintains that the generation facility is intended solely for private, on-site use and therefore falls outside the Act’s jurisdiction.
The litigation is particularly important because it reflects growing public concern regarding data centers’ impacts on electricity demand, water usage, noise, environmental resources, and local infrastructure. It also demonstrates that even where local zoning approvals have been obtained, affected citizens are increasingly willing to pursue administrative and judicial challenges when they believe regulatory oversight has been insufficient.
For real estate practitioners, the Spartanburg matter provides a practical example of why future data center developments may require more than conventional zoning and land-use analysis. Questions involving utility regulation, environmental permitting, public participation requirements, and state-level siting authority are increasingly becoming intertwined with local development approvals. Notably, many of the issues now being litigated mirror the concerns addressed in proposed legislation such as the Data Center Development Act (S.867) and the Data Center Siting Act (S.902), suggesting that future legislative efforts may be influenced by the outcome of these disputes.
The Silfab Solar Controversy: A Real-Time Zoning Lesson
My colleague, Vance Brabham provided a detailed description of the Silfab Solar chemical spill and zoning implications in a blog article in May, 2026. No recent South Carolina development has highlighted zoning challenges more vividly than the ongoing controversy surrounding the Silfab Solar facility in York County.
The dispute originated with York County’s determination that solar manufacturing was permitted within the facility’s light industrial zoning classification. A subsequent York County Board of Zoning Appeals decision concluded that solar panel manufacturing should instead be treated as a heavy industrial use. Litigation followed concerning the applicability of that determination to Silfab’s project.
The matter intensified in March 2026 when the facility experienced two separate chemical incidents, including releases involving potassium hydroxide and hydrofluoric acid. Following the incidents, the South Carolina Department of Environmental Services ordered the facility to cease operations pending further investigation of safety and chemical-handling protocols.
The response from state and local officials was particularly notable from a zoning perspective. Attorney General Alan Wilson publicly questioned the zoning and permitting process that allowed the facility to be located near Flint Hill Elementary and Middle Schools and demanded information from York County regarding the approvals issued to Silfab. The Attorney General also called for transparency regarding the project’s siting and safety reviews.
York County officials responded by defending the Planning Department’s actions, stating that all zoning approvals and permits were issued in accordance with applicable ordinances and that county staff had provided a zoning verification letter concluding that the use was permissible at the site. County officials further asserted that the county had followed established procedures throughout the approval process.
The Silfab matter demonstrates how zoning decisions can evolve from local administrative determinations into matters of statewide political and public concern, particularly when environmental and public safety issues arise.
What Does This Foreshadow for South Carolina Zoning?
Several themes emerge from the 2025-2026 session and the Silfab controversy.
First, state officials appear increasingly willing to scrutinize local zoning decisions when projects have significant environmental, infrastructure, or public safety implications.
Second, large-scale industrial and technology projects are likely to generate pressure for additional state-level permitting and siting requirements. The data center bills demonstrate that legislators are considering regulatory models that supplement local zoning rather than relying on it alone.
Third, the emphasis on permit validity, vested rights, and enforcement reflected in S.530 suggests that future legislation may seek to limit the ability of disputed projects to continue operating while zoning challenges remain pending.
Finally, the political attention surrounding Silfab indicates that land-use decisions involving schools, residential communities, environmental concerns, and industrial development will likely face heightened public scrutiny moving forward.
Although the 2025-2026 session did not produce sweeping zoning reform, it revealed an unmistakable trend: South Carolina is entering a period of increased attention to land-use regulation. The debates surrounding Silfab Solar in York County, the proposed data center legislation, and the ongoing Spartanburg County data center litigation all point toward greater scrutiny of large-scale projects whose impacts extend beyond traditional zoning considerations. Legislators, regulators, local governments, and courts are increasingly being asked to balance economic development with environmental protection, infrastructure capacity, public participation, and community compatibility. For South Carolina real estate attorneys, these developments suggest that future zoning disputes will involve not only local land-use ordinances but also broader questions of state oversight, permitting authority, and public accountability.
Sometimes my reaction to a court decision, even a Supreme Court decision, is just a sense of relief that the Court has reaffirmed that the law is what you have always thought it to be. The United States Supreme Court’s recent decision in Estate of Pung v. Isabella County is just that kind of decision.
While the specific facts of the case contain exactly the kind of bad facts and stubborn behavior that sometimes lead Courts to fashion equitable remedies that really muddy the playing field, the Court focused on bare procedure and historical precedent to arrive at their result essentially affirming 100 years of legal procedure, but leaving the door open to the lower courts to judge the particulars concerning due process.
Scott Pung owned and occupied the home that was the subject of the case, before passing away in 2004. Several years after his death, the tax assessor for Isabella County declined to continue taxing the Pung home as a primary residence because the estate (or its heirs) did not follow proper procedure (as the assessor saw it) to file an affidavit establishing that the heir living in the property still qualified for the partial tax exemption.
The Pung estate successfully challenged the assessor’s decision for the tax years 2007-2011 before a Michigan state tax tribunal. Despite Pung’s victory, the assessor apparently persisted in her position and denied the partial tax exemption for the 2012 assessment year.[1] The Pungs apparently failed to timely contest the tax assessor’s decision to deny the partial tax exemption again in 2012.
While the Pungs paid the 2012 tax bill assessing the home as a primary residence, but refused to pay the supplemental tax bill of $2,241.93.[2] The County began proceedings to collect the unpaid tax through sale of the property. While there may be some question as the sufficiency of notices, the Pungs ultimately did not pay the tax, redeem the property, or otherwise take action to stop the sale. The home sold at public auction to a third party for $76,008.00. The appraised tax value of the property was approximately $195,000.
The Pungs filed suit claiming that the tax sale did not realize the fair market value of the property. [3] The Pungs asserted that the 5th and 8th Amendments required the state to compensate them for the fair market value if it wished to take their property to meet their tax sale. Astonishingly, the Pungs argued that the County, and by extension any government entity conducting a public sale, must make up the difference between the realized tax sale price at the auction and the fair market value of the property under ideal sale conditions. To put it more clearly, the Pungs argued that the County must pay them the roughly $120,000 dollars difference in what the tax sale actually yielded and what the Pungs asserted was the true value of the property. Essentially, they argued the County should pay them $120,000 for the privilege of collecting their $2,000 deficient tax liability.
The Court unanimously rejected the Pung’s argument on both constitutional grounds. Citing the fact that the right of the state to liquidate property to pay tax debts dates back to colonial days and perhaps Magna Carta, the Court did not find anything compelling about the Pung’s arguments.
While a tax sale may inevitably be a distressed sale in most real estate markets, the Court reasoned that the Pungs and any taxpayer has an opportunity to avoid such an outcome. With significant equity in the property, the Court noted that the Pungs could have borrowed money to redeem the property by paying the tax and that they alternately had ample time to market it themselves for a fair price.
The Pungs may still have an opportunity upon remand to contest whether the County’s procedure was properly carried out and whether its actions were fair under the context of the previous litigation between the parties. But SC dirt lawyers and anxious title underwriters can rest easy knowing that what they understood was the rule forever will remain the rule going forward. Sometimes that’s a pretty good result.
[1] Justice Thomas’s concurring opinion stated that the County’s advocate could offer no explanation for why the Assessor persisted in denying the partial exemption after the Tribunals reversal as to the prior tax years, but it apparently stemmed from the Pungs continued refusal to submit an affidavit establishing primary residency.
[2] Whether you consider the Pungs apparent refusal to submit the affidavit of residency to the assessor or pay the assessed tax over the next two years to be strongly principled or head-scratchingly foolish might depend on your readings of the facts.
[3] It is the rare foreclosure or distress sale that returns fair market value of a sale conducted under ideal conditions. There are as we know a more limited pool of bidders and title problems associated with these kinds of sales.
There is yet another hot button zoning conflict in the Palmetto state that has attracted much public attention in Fort Mill, SC. It has spawned several lawsuits, an Attorney General inquiry, and legislators filing bills up at the State House that certainly would have major impact on S.C. dirt lawyers if they were to pass.
The controversy centers around Silfab Solar’s ongoing construction of a solar panel manufacturing factory near Fort Mill, SC. The company is renovating a warehouse in an existing industrial park there that is jointly operated by York and Chester counties. The industrial park is located near several residential developments, but most notable in recent press coverage is the elementary school located on the adjacent parcel to the proposed Silfab site.
In 2022, in connection with recruitment by the S.C. Department of Commerce, Silfab requested zoning verification from York County that its proposed operation would be in compliance with local zoning ordinances. The York County zoning staff ultimately determined that the manufacture of solar panels fit within the permitted use of “computer and electronic productions manufacturing” which was permitted in the “Light Industrial” zoning classification assigned to the industrial park. Notably, there was no appeal of the zoning verification.
With the zoning verification in hand, Silfab decided to move forward with the project and entered into a fee in lieu of tax (FILOT) Agreement with York County. The County passed an ordinance approving the FILOT agreement in September 2023, in effect ratifying the proposed project at its proposed location. Silfab thereafter obtained building and environmental permits and started construction at the site
But at some point in the process, the public became aware of the project and that hazardous gases and chemicals would be used as part of the manufacturing process of the panels. As concerns grew, a neighboring landowner filed a request for a zoning interpretation inquiring whether solar panel manufacturing was actually a permissible use under the zoning ordinance. In 2024, the York County Board of Zoning Appeals (BZA) found that solar panel manufacture is not permitted within the Light Industrial zoning classification, which effectively overruled the prior determination of the zoning staff.
Silfab appealed the BZA ruling but construction has continued under the existing zoning verification and permits. In response to growing public outcry, York County issued statements that its interpretation of state law and its ordinance is that BZA zoning interpretations only apply prospectively and that the County does not have authority to revoke previously given permits or to issue a stop work order.
But the controversy really expanded into an issue of statewide concern in March when Silfab reported two separate chemical leaks within a three day period. While the leaks were contained and were reportedly of no danger to the outside community, DHEC ordered Silfab to pause its use of previously permitted chemicals pending a review. Silfab has since entered into an agreement with DHEC not to bring any more dangerous chemicals into its site or proceed with manufacturing until the investigation is completed.
The leaks also drew the attention of Attorney General Alan Wilson who issued inquiries to York County concerning the propriety of the zoning approval and to Silfab concerning the cause and extend of the leaks. The gubernatorial candidate appears to be closely monitoring the situation as events unfold.
The South Carolina General Assembly is also involved in the debate. Local legislators have introduced proposed bills in the House and Senate that would amend the Code to give Counties the power to revoke permits and stop work on projects when the project is found to be in violation of zoning ordinances.
While these bills are unlikely to pass before the end of the current session, there have been a number of other bills advanced in the State House in recent years that have sought to give local authorities the ability to have something of a “do-over” concerning prior approvals of development. Often these bills have been provoked by growing public outrage over major projects that were passed by local authorities without much initial fanfare.
While the Court’s pending review of the BZA appeal may result in restoring the original zoning interpretation and making much of the present controversy moot, there is always the chance of additional appeals. Further, with the national debate over data centers expanding into South Carolina in recent months the salience of the Silfab controversy may impact future debates concerning whether government entities should be able to change their mind about prior zoning decisions even after property owner’s have formed plans and made investments relying upon them.
Now that Rory McElroy’s repeat victory at the Masters is in the books[1], the golfing world will turn its attention to scenic Hilton Head Island. It is there that the Harbour Town Golf Links at Sea Pines Resort will host the 58th edition of the RBC Heritage golf tournament later this week. For a long time, the Heritage was the only permanent PGA event in South Carolina[2] and quite a few South Carolina residents and golf fanatics from across the world make the trek down to Sea Pines to take in the action each year.
That makes today’s blog a particularly appropriate time to discuss the ongoing legal battle over public funding for the dredging of the waterways around Sea Pines Resort, which made news again this month. If you have ever worked or vacationed around Hilton Head Island, you are probably aware that boating culture is a significant part of overall appeal of the Island and it also figures nicely into the presentation of the televised golf tournament.
The controversy is somewhat simple. The physics of the waterways around the Harbour Town Yacht Basin and nearby Braddock Cove Creek are such that periodic dredging of the waters is necessary to allow navigation of the waters in all tides.
For a time, the cost of the dredging was born by the South Island Dredging Association (SIDA), a coalition of various Sea Pines owners’ associations, private slip owners, and marinas located in or near the local waterways. However, recent rounds of dredgings have become controversial both for the impact on the surrounding Calibogue Sound and the Town of Hilton Head’s decision in the last few rounds to start allocating public funds towards the project.
In 2022, resident Ryan McAvoy filed suit seeking to enjoin the Town from contributing $600,000 in public funds towards the next round of dredging. McAvoy claims that the Town’s allocation of the funds to the project violated the South Carolina Constitution because it allocated public funds primarily for the benefit of private gated communities, private owners of homes and boating slips, and private marinas from which the public is barred.
While there is no doubt that that the waterways in question are contiguous to the private communities contained within Sea Pines and contain private marinas that are restricted from public use, the Town of Hilton Head argues the waterways in question are navigable waters of the United States that are themselves open to the public and that the Town and its residents benefit from the use of the improved waterways and from the resulting tourism generated from the boating community being able to use the waters to access public areas.
In 2024, a Circuit Court judge granted the Town’s motion to dismiss McAvoy’s lawsuit on the ground that the waters to be dredged are public waterways. However, the breaking news from last week is that the Court of Appeals reversed the decision and ordered a new trial finding that the Circuit Court had mistakenly focused its decision on whether the waterways were public vs private. Instead, the trial court should have determined whether there is a public benefit to the Town’s action. The Court of Appeals found sufficient evidence in the record supporting McAvoy’s argument that the dredging primarily accrued to the benefit of private interests for the matter to continue towards a full trial.
This recent case is just the latest example of the controversy that can come from using public funds in support of what some in the community may see as providing limited or tangential benefit to the public at large. The balance between determining private vs public benefit can often be tricky to quantify. Similar arguments (and lawsuits) have erupted in the past over the public benefit of beach renourishment, government funding of infrastructure for private businesses, and is not so far removed from past controversies concerning government use of the power of eminent domain to further private redevelopment. Whenever the public perceives that the beneficiary of government action is a private entity or a group of private parties, you can bet that there will be drama and oftentimes litigation.
While we will have to wait and see the ultimate outcome for the boaters of Hilton Head, real estate professionals and developers alike must consider the possible implications of public opposition whenever it brings in the government for assistance in these kinds of projects.
[1] My children’s rooting interests died with Scottie Scheffler’s parade of “near miss” pars that fell just a swing stroke short. It has been an up and down month of sports fandom for our household.
[2] My colleague David Hicks reminds me that the third annual Myrtle Beach Classic will tee off in May.
We all know that South Carolina has some of the most beautiful natural scenery in the nation. As the weather gradually improves, and with Spring Break underway for many and the summer rental season right around the corner, tourists begin flocking to our beautiful beaches.
In February 2026, a legal dispute[1] on Sullivan’s Island quietly reshaped the conversation around property rights, zoning enforcement, and the future of residential ownership models in South Carolina’s coastal communities. At the center of the case was 2 SC Lighthouse, LLC, a property owner, and Pacaso, Inc., a company that facilitates fractional homeownership. On the other side stood the Town of Sullivan’s Island, determined to enforce its long‑standing restrictions on short‑term rentals. While the case involved a single property, its implications reach far beyond one address.
Sullivan’s Island has long maintained strict zoning rules designed to preserve its residential character. Among those rules are limits on short‑term vacation rentals, which town officials argue can disrupt neighborhoods and strain local infrastructure. As new real estate models have emerged, the town has taken a close look at how these arrangements fit within existing ordinances.
That scrutiny intensified when a home owned by 2 SC Lighthouse, LLC was used in partnership with Pacaso. Pacaso’s model allows multiple buyers to purchase fractional ownership interests (in this instance, one‑eighth shares) in a single property. Each owner receives scheduled access throughout the year, and Pacaso manages maintenance and logistics. However, unlike a true rental property, occupants do not pay nightly or weekly fees to stay in the home; they are staying in a property they legally own.
Town officials concluded that the arrangement functioned like a vacation rental in practice, even if it was structured differently on paper. The Town’s Zoning Administrator issued a violation, asserting that the property was being used as a prohibited short‑term rental under Sullivan’s Island zoning laws. That decision was upheld by the Town’s Board of Zoning Appeals (BZA).
2 SC Lighthouse and Pacaso appealed to the Charleston County Circuit Court. The court sided with the Town, effectively agreeing that the zoning authorities’ interpretation of the ordinance should stand.
The property owner and Pacaso appealed, arguing that a fractional ownership is not a rental, and that the Town was stretching the definition of “short‑term rental” beyond what its ordinance actually said.
On February 18, 2026, the South Carolina Court of Appeals reversed the circuit court’s decision, siding with 2 SC Lighthouse and Pacaso. The ruling turned on the critical distinction between ownership and renting. The court emphasized that the individuals staying in the home were owners, not tenants. Without a rental transaction (no landlord‑tenant relationship and no payment for temporary lodging), the court found that the town’s definition of a short‑term rental did not apply.
In making its ruling, the court clarified that interpreting a zoning ordinance is a question of law rather than a factual determination entitled to broad deference. While zoning boards are given leeway in applying ordinances, they cannot rewrite or expand those ordinances. If a municipality wants to regulate fractional ownership, it must do so explicitly.
Although the ruling is an unpublished opinion and is not binding precedent, its practical impact is significant. For Sullivan’s Island, the decision places limits on enforcement under current zoning language. The town may still regulate short‑term rentals aggressively, but it cannot treat fractional ownership arrangements as rentals unless its ordinances are amended to say so.
For other South Carolina coastal communities, the case serves as a warning and a roadmap. Many towns face similar tensions between preserving neighborhood character and responding to evolving real estate practices. The decision signals that courts will closely scrutinize attempts to regulate new ownership models using old definitions.
For property owners, the ruling reinforces a core principle of land‑use law: property rights cannot be curtailed by implication. Restrictions must be clearly stated, not inferred based on policy concerns alone.
The decision does not end the debate over fractional ownership on Sullivan’s Island or elsewhere. Municipalities may respond by revising zoning ordinances to directly address co‑ownership models. Developers and property owners, meanwhile, will likely continue testing the boundaries of traditional zoning frameworks.
This case highlights the broader reality that zoning laws written decades ago are being asked to govern a rapidly changing housing market. As ownership models evolve, so too must the rules that regulate them—through legislation, not interpretation.
For now, 2 SC Lighthouse, LLC’s victory stands as a reminder that in land‑use law, words matter, and towns must play by the rules they have written.
[1]Pacaso, Inc. & 2 SC Lighthouse, LLC v. Town of Sullivan’s Island, South Carolina, Appellate Case No. 2024‑000134, 2026‑UP‑078 (S.C. Ct. App. Feb. 18, 2026) (unpublished).
I struggle to think of any aspect of real estate ownership that stirs up stronger feelings than the Homeowner’s Associations (“HOAs”) and Covenants, Conditions, and Restrictions (“CCRs”). For many buyers, HOA governance signals stability. Communities governed by restrictive covenants often promise consistent architectural standards, minimum maintenance standards, access to common areas, and protection of long-term property values. From a real estate professional’s perspective, that predictability can be a strong selling point. Buyers frequently ask whether a neighborhood has an HOA, and in many markets, that answer affects both demand and price.
However, HOAs are not universally viewed as beneficial. Besides the financial impact of paying HOA dues, restrictions on property use can feel limiting, especially when buyers discover that “residential purposes” or architectural controls mean more than they expected. Disputes over enforcement can create tension within communities and occasionally result in litigation. For agents and brokers, misunderstandings about HOA authority can lead to unhappy clients long after closing.
When I was in private practice, I made sure to make my buyer clients aware of any restrictions that had been placed on the property they were buying. While most buyers understood the purpose of HOAs and that there would be general limitations on how they used their property, occasionally I would have a buyer reach out to make sure a particular use wasn’t prohibited before they went under contract. For example, one buyer was a dog breeder, so the client needed to make sure multiple dogs would be allowed. We reviewed several sets of restrictions for various properties before we finally found a neighborhood that would allow more than 2-3 dogs at one time.
On the non-transactional side of my practice, I handled several cases representing homeowners in disputes with their HOAs. In SC, the deck is usually stacked in favor of the HOA in disputes, so an overzealous HOA board member or homeowner can use the covenants to make life miserable for their neighbors. In each of the cases I handled, the main issue came down to personal disputes between various personalities spilling over into the “covenant enforcement” arena. One of my HOA cases essentially came down to one neighbor having a problem with blue-collar workers being able to afford a home in his upscale neighborhood. He filed repeated complaints against my client that were highly embellished while ignoring similar code issues on other nearby properties. Eventually, we were able to demonstrate to the HOA board that the complaints were more about harassing my client than enforcement of the covenants, and the board agreed to not pursue their enforcement action.
A recent South Carolina Court of Appeals decision, Hoffman v. Saad Holdings, LLC1[1], provides another example of tension between neighbors spilling into a covenant enforcement action. The parties to the litigation are property owners within a residential subdivision on Lake Hartwell in upstate South Carolina. The CCRs for the subdivision contained a use restriction that “No lot shall be used for other than residential purposes.” A subsequent amendment placed building setback lines for each lot as well.
Saad Holdings, LLC (“Saad”) purchased lots in the subdivision, but the shape of these particular lots made building a residence in compliance nearly impossible. However, Saad obtained permits to construct two docks on the lake and then ran electric and water lines across the lots to the docks. Saad also used the lots to access the docks by foot.
A group of homeowners (“Homeowners”) alleged that Saad was putting its properties to “recreational” use, which violated the CCRs restriction to use of the property for “residential purposes.” The homeowners sought an injunction against Saad using these lots to access the docks. In response, Saad argued that the lots were used for access to the docks, not recreation. Saad further argued that the Homeowners interpretation of the CCRs would harm Saad more than it would actually benefit the Homeowners.
Homeowners argued that picnics, camping, or even birdwatching on Saad’s lots were all prohibited by the CCRs. Homeowners further argued that Saad’s lots could not be put to any use at all except accessing the lots to maintain them. While the court didn’t opine on this argument, it seems awfully convenient that Homeowners were in favor of Saad maintaining the lots at the neighborhood standard, for their own benefit, but opposed any use that would benefit Saad.
The Court begins its analysis by noting that CCRs are contractual in nature, but that South Carolina law favors the unrestricted use of property. The Court states that when there are two equally capable interpretations for a restriction, the one that is least restrictive should be adopted.
In discussing the distinction between “residential” and “recreational” use, the Court notes that previous South Carolina cases have centered on the distinction between residential and commercial or business uses.
Expanding its search beyond South Carolina, the Court found a set of similar facts in the North Carolina case Villazon v. Osborne[2]. In Villazon, the property owner used her lake front lot to store kayaks and hold the occasional cook out. The Villazon court found that nothing in the subject CCRs required habitation in order to qualify as “residential use.” Since the Villazon interpretation of residential use was equally applicable and less restrictive than the interpretation proposed by Homeowners, the Court affirmed the trial court’s decision denying the injunction sought by Homeowners.
In my personal life, I have only purchased houses in neighborhoods with CCRs and HOAs, so I do not intend to scare anyone away from buying property in an HOA neighborhood. However, the Hoffman case highlights the importance of knowing what activities may be allowed or prohibited before buying a piece of property. Had the Court ruled in favor of Homeowners, Saad’s property values would have decreased significantly and perhaps become worthless. After my experience dealing with HOAs as an attorney, I do appreciate a case where common sense prevails.
Across rural South Carolina, data center proposals are generating increasing controversy as residents challenge whether counties are complying with zoning statutes, comprehensive plans, and public‑notice requirements.
In Colleton County, Council amended its zoning ordinance to add data centers as a permitted use and to create a special exception within residential districts – changes that paved the way for a proposed $6 billion facility near the environmentally protected ACE Basin. In January, neighboring landowners, represented by the Southern Environmental Law Center, filed suit alleging that the county enacted these amendments without adequate notice or transparency, that the changes conflict with the county’s comprehensive plan, and that allowing an industrial special exception within a rural district is inconsistent with existing zoning classifications.
Similar disputes continue to surface statewide. In Marion County, Council recently approved a $2.4 billion data center project and a fee‑in‑lieu‑of‑tax agreement. The project appeared on the agenda only under the code name “Project Liberty” and was covered by a nondisclosure agreement, leaving the public without meaningful information until the final reading. Aiken and Berkeley Counties have faced comparable challenges.
Opponents of data centers emphasize their extraordinary electrical demand, which has already strained power grids across the country. Some estimates now place data‑center consumption at roughly seven percent of U.S. electricity use, with projections continuing to rise. In the Colleton debate, residents expressed concern that utilities lack sufficient capacity to serve the proposed facility and that ratepayers – particularly Santee Cooper customers – may ultimately bear the cost of necessary upgrades.
Water usage presents a parallel problem. Data centers generate substantial heat and rely heavily on water‑based cooling. The volume required can impose real stress on local water systems, particularly in rural areas. While newer closed‑loop cooling technologies reduce consumption, they require additional energy and higher capital investment.
Other community impacts have also drawn scrutiny. Backup diesel generators – which data centers depend on for uninterrupted service – emit gases and particulates that may pose health risks. Residents in rural counties also cite noise, light pollution, and the visual intrusion of large industrial campuses as threats to the historic and environmental character of their communities.
Yet despite these concerns, the economic incentives remain significant. Proponents of the Marion County project note that the facility could generate nearly $28 million annually for a county operating on a $25 million budget. Construction phases typically span several years, providing a substantial economic boost. And although data centers require relatively few employees once operational, they nevertheless contribute positively to local employment and tax revenue. Moreover, the facilities are essential to the growth of artificial intelligence and advanced computing – technologies many policymakers liken to a modern “space race.”
The General Assembly has taken notice. Several bills addressing data‑center siting, utility impacts, and environmental standards have been introduced this session. Developments in the Colleton County litigation, along with potential legislative action, will likely shape future permitting and zoning practices statewide.
For South Carolina lawyers, these projects are becoming increasingly complicated to navigate to completion. Title insurers are increasingly view data centers as high‑risk properties due to their scale, public visibility, and susceptibility to challenge. Attorneys may be asked to perform extended title examinations, provide more detailed zoning analyses, and secure specialized endorsements requiring careful underwriting. As counties pursue these high‑value developments and as communities continue to push back, lawyers will as always be on the front lines.
Imagine that you have a real estate investor client who purchased a big house in a gated community at a foreclosure sale. The client then took out a mortgage on the house, paid to make significant repairs and renovations, and ultimately signed a contract to sell it on to a third party. Then, all of a sudden, the Federal government sends your client a cease and desist order, a subpoena, and eventually fines him $4,677,552.00 for violating OFAC (Office of Foreign Asset Control, an agency of U.S. Treasury) sanctions against a family member of a Russian oligarch. Does that sound fun to anybody? Unfortunately, that is more or less what happened to one real estate investor in Atlanta who unknowingly bought a house which was, in fact, owned by a person who was on the OFAC sanctions list.
This particular person whose name appeared on OFAC’s sanctions list is now known as Karina Rotenberg. She is a family member of a Russian oligarch who was identified for US financial sanctions after Russia invaded Ukraine. For a time in the early 2000’s, she lived and worked and owned homes in Atlanta. At the time, her name was Karina Fox. Guess which last name her Atlanta home is owned under? That’s right – it’s Fox.
Well, it just so happened that, after it added her to the sanctions list, OFAC figured out that Ms. Fox/Rotenberg owned property in Atlanta. This means that her property could not be sold, mortgaged, or otherwise transferred, since doing so would be a violation of the sanctions. OFAC sent a notice to the Fulton County Clerk of Court specifically mentioning the property’s address, and listing several names by which Ms. Fox/Rotenberg was known (including both “Fox” and “Rotenberg”), and asked the Clerk to file the notice in the county records to let the public know that the OFAC sanctions existed. And the Clerk of Court did file that notice. Unfortunately, for reasons which are not clear, the Clerk appears to have only indexed the notice under the name Rotenberg. So, a title searcher who did not know that Karina Fox and Karina Rotenberg are the same person would not necessarily know that this home was owned by a person on the OFAC sanctions list.
Now, here comes our local real estate investor, by all accounts an entrepreneurial fellow who had immigrated from India and worked to further his education and succeed in this county. He operated his real estate deals through an LLC: King Holdings LLC. Most of his past deals had been smaller single-family homes that he had bought in distress, improved, and flipped for a profit. This home would be bigger than most of his past projects. But it was being sold at foreclosure and seemed like a bargain. King Holdings buys the home at foreclosure sale in January 2023.
Around April of 2023, OFAC learns about the foreclosure, and tracks our investor down. He says that an OFAC investigator called him on his cell phone and told him that he should not be doing anything with the home, due to the sanctions. In our investor’s version of the story, the caller seemed sketchy, and he says he wondered at the time if it was a scammer trying to scare him into giving up some personal information.
Our investor goes ahead and mortgages the property to have funds to begin renovations. The law firm which closed the mortgage says it searched title to the home and did not find the OFAC notice (which, again was indexed in a different name, Rotenberg).
By December, 2023 our investor has learned that this home has significantly more repair/maintenance problems than he’d bargained for. He is beginning to think it was not such a great deal. He signs a contract with a third party to sell the home. After initially listing the property for $2.5M, he finally signs a contract to sell it for $1.4M.
In February 2024, OFAC issues a cease-and-desist order and administrative subpoena to our investor, restating the sanctions and requiring that he immediately stop doing anything with the home. The subpoena also demands information on all dealings involving the property since January 2023. It seems that our investor certified the accuracy of a response that disclosed the renovation work but did not say anything about the property’s listing and pending sale.
In March 2024, our investor closed the $1.4 million sale of the property to the third party buyer.
OFAC took the position that pretty much everything our investor did violated OFAC’s regulations/sanctions. (I also get the sense that they were pretty mad about him not disclosing the sale, and then going ahead with the sale to the third party, after OFAC had issued their cease-and-desist order.) So, as punishment, OFAC imposed the $4,677,552.00 fine on him personally.
It is really disappointing that the Clerk of Court did not index the OFAC notice under all the names that OFAC had listed. Another possible way this could have been avoided is if our investor had checked the OFAC sanctions list before proceeding. This is a great tool that all our CTIC agents should be using too – it could even help you save a client from ending up like our Atlanta investor!
The SC Court of Appeals released a new decision this week confirming that a Developer of a Horizontal Property Regime (HPR) may not remove common elements from the regime once the right to the common elements has vested in the individual unit owner.
The facts are somewhat complicated, but I will try and simplify it as best as I can. The Developer of the fully constructed Mariner’s Cay Marina in Charleston committed the property to a HPR in 2006.
The Marina consisted of individual boat slips, a fuel dock with a wastewater pumping station, and a two-story Ship Store. The 88 individual boat slips were converted to separate units or apartments with a designated ownership percentage of the common elements. The first and second floors of the Ship Store were designated Commercial Units 1-A and 1-B respectively. The fuel pump and the attendant wastewater pumping station were designated as Commercial Unit 2. The Master Deed stated that the Commercial Units were “common elements or limited common elements [of the Regime].”
However, the Master Deed also provided that the Developer retained a right to “unilaterally amend the declaration for any purpose” for the earlier of 18 months or the point where it sold 90% of the unit, but not in such a way as to “adversely affect the title to any Unit unless the Owner shall consent in writing.”
In 2007, during its “unilateral” rights period, Developer amended the Master Deed by removing the language that designated the the Commercial Units as common elements or limited common elements. At the time of the Amendment, at least 39 individual units (slips) had been sold.
Shortly after recording the amendment to the Master Deed, Developer sold the Commercial Units to a third party, who in turn sold the property to another entity. This down the line entity borrowed money for construction at the Store, which it secured by a mortgage on the Commercial Units.
It would not make for a good story unless the mortgage went into default. Lender filed a foreclosure action naming the HPR as a defendant by virtue of its liens for assessments. The Court indicates that the HPR participated in the proceedings without contesting the foreclosure or the right of the Developer to have transferred these units in the first place. In February 2015 the property was sold at public auction. It eventually was sold again to the two LLCs that are the defendants in the ensuing litigation.
It appears that between 2006 and 2015, the slip owners had enjoyed free use of the waste-water pumping station on the fuel docks and of the restrooms in the Ship Store. However, the new Commercial Unit owners changed quite a few things after taking possession of the units. The Commercial Unit owners took action to bar the slip owners from the use of the pumping stations, forced the dock master to vacate the Ship Store where his office had been located, and denied access to the restrooms.
In response, several individual unit owners filed suit alleging that the Commercial Units were common elements of the HPR and that Developer did not have authority to change that status when it recorded the amendment to the Master Deed. In defense, the Commercial Unit owners argued that the Master Deed gave the Developer unilateral authority to amend the Master Deed and that the HPR waived the right (of all unit owners) to contest the Developer’s action when it acquiesced to the foreclosure proceedings.
The Court of Appeal focused its holding on its prior ruling in Vista Del Mar Condo. Ass’n v. Vista Del Mar Condos., LLC, 441 S.C. 223 (Ct App. 2023). In Vista Del Mar, a Developer originally committed a tract of land to a HPR pursuant to a multi-phase development plan. After construction of the initial phase, the Vista Developer changed its plan of development and determined that a portion of the undeveloped property committed to the HPR was no longer necessary to its intentions. The Master Deed had language giving the Vista Developer a unilateral authority to add or remove property from the regime on behalf of itself and as the agent for the individual unit owners.
Unit owners sued the Vista Developer arguing that common elements could not be conveyed. In issuing its opinion, the Court concluded that the Vista Developer had authority to convey the property because the unit owner’s rights in the particular property as common elements had not yet vested in the unimproved portion of the property, because the property was not scheduled to be a common element for recreation and the contemplated construction on the unimproved portion had not been commenced or completed.
In the current opinion, the Court found that the rights of the slip owners in the common elements at Mariner’s Cay had fully vested. Once the vesting occurred, Developer’s authority to remove common elements ended regardless of the provisions of the Master Deed. The Court ruled that the Master was correct in finding the Commercial Unit owners “wrongfully held title.”
The Court was not impressed with the argument that the HPR’s participation had waived the rights of individual unit owners to contest the transfer of the common elements. The Court ruled that the individual units were not parties to the foreclosure action. Not being parties, they could not be estopped by any failure of the HPR to assert defenses in the foreclosure hearing. Attorneys that litigate all kinds of cases against HPRs should take heed that the HPR Association does not necessarily have authority to bind individual unit owners.
While this new ruling is confirmation of prior standard concerning the vested rights of unit owners in common elements, practitioners may find that the devil is in the details concerning the point at which such rights vest. The Court was not exceptionally clear in laying out specific for determining whether a right to a common element vests, but it seems that it was important to the Court that the common elements were fully constructed, in active use by the slip owners. Perhaps too that fuel docks and pumping stations and restrooms have more obvious correlation to the expectation of slip owners in a Marina than unimproved property slated for future development might have had to unit owners in Vista Del Mar. Yet another distinction between the two case may have been what seems like much more explicit language in the Vista Del Mar Master Deed concerning the authority of the Developer in adding and subtracting property for use in future phases.
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