South Carolina Law

South Carolina Court of Appeals Says Planning Commissions Must Show Their Work

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The South Carolina Court of Appeals recently issued another decision overturning a local zoning decision on procedural grounds.  In Lambert v. Aiken County Planning Commission, the Court reversed a zoning permit approval because the Commission failed to document the findings and reasoning supporting its decision.

The controversy began with the creation of a residential equestrian community known as Bluffwood East. The developer recorded a set of covenants and restrictions prohibiting commercial activities within the development.

Some years later, the developer acquired a separate parcel of land that was adjacent to Bluffwood East. The developer conveyed portions of this new property to Lambert and Beamish, the appellants in this case. Notably, the developer’s deeds into Lambert and Beamish expressly incorporated the Bluffwood East covenants and restrictions.1

However, the developer retained the remainder of this parcel and eventually conveyed it to a trust. The developer’s deed into the trust did not specifically reference or attach the Bluffwood East restrictions.

Years later, the trust entered into an agreement with a contractor of Verizon to construct and operate a wireless communications tower on the property.  When Verizon’s contractor sought a permit from the Aiken County Planning Commission, Lambert and Beamish, who were neighboring property owners, appeared and objected to the issuance of the permit.

Lambert and Beamish argued that the Bluffwood East covenants and restrictions prohibited any commercial activity within the subdivision and therefore barred the issuance of a permit for the cell tower. Verizon’s contractor argued that the cell tower parcel was never subjected to those covenants restrictions because it was not part of the original development and unlike the deeds into Lambert and Beamish, the deed into the trust did not incorporate the restrictions.

After several hearings, the attorney for the Commission wrote the parties acknowledging that South Carolina law generally prohibits a local planning agency from approving a project when it has actual notice that restrictive covenants prohibit the proposed use. However, the county attorney noted that planning authorities are not required to independently search the land records to determine whether these restrictions exist. The attorney asked that the parties submit additional information concerning the applicability of the covenants and restrictions so that the Commission could make its final decision as to whether the restrictions applied. 

Verizon’s contractor responded by providing copies of the deeds in its chain of title, noting that there was not any reference to restrictions in these deeds, and taking the position that the restrictions did not burden the tower parcel. The neighboring owners apparently did not submit any additional evidence supporting their contention that the covenants and restrictions applied to the tower parcel.

The Planning Commission subsequently approved the permit perhaps reasoning that Lambert and Beamish had the burden of showing that the restrictions applied.  However, the permit approval did not specifically address the restrictive covenant issue or explain how the Commission resolved the competing arguments. Lambert and Beamish appealed to circuit court, which affirmed the Planning Commission’s decision.  The circuit court concluded that the covenant issue had effectively been waived. The Court of Appeals disagreed.

The Court of Appeal’s primary concern was procedural. South Carolina requires planning commissions to maintain records of their findings and determinations. While the record contained the hearing transcripts and submissions of the parties, the Court found that the permit approval did not adequately explain the reasoning of the Planning Commission in resolving the contested issues. It found the Commission’s findings insufficient to support its ultimate approval of the permit and remanded the matter for additional proceedings. 

Further, the Court rejected the notion that the restrictive covenant issue had been waived. It found that the neighboring owners repeatedly raised the issue throughout the administrative process and on appeal. Whether the covenants ultimately applied was a separate question, but the Court concluded that the issue had been preserved and required consideration.

The immediate takeaway from the Court’s ruling is that local boards and commissions must be sure that their minutes, resolutions, and written determinations identify the facts found, the legal standards applied, and the rationale supporting the ultimate decision. If it was not clear before this ruling that Planning Commissions are subject to these standards, the Court has put local commissions on notice of it now.

The decision also offers guidance to local boards when considering restrictive covenants in the zoning context. Once a planning authority receives notice that restrictive covenants may prohibit the issuance of a permit, simply ignoring the issue is risky. Even if the authority ultimately concludes the restrictions do not apply, the reasoning behind that conclusion should be reflected in the record.

For the dirt lawyer in me, the unresolved covenant question may be the most interesting part of this opinion. There seems to be a good argument that the tower parcel was never subjected to the original Bluffwood East restrictions. The parcel came from a later-acquired tract, and unlike the deed to the neighboring owners, the deed conveying the tower parcel did not expressly incorporate the restrictions. The Court’s opinion does not reference any other evidence of a common development scheme incorporating the entire later-acquired property into the development, but perhaps there might be more evidence out there that was not discussed. In any event, Lambert continues a growing trend in South Carolina appellate decisions requiring administrative bodies to show their work. For zoning officials, the message is straightforward: make findings about all of the issues raised and incorporate them into the record. For attorneys and paralegals handling land-use disputes, the case underscores the value of developing and preserving issues at the administrative level. For the rest of us, it provides a useful reminder that restrictive covenant questions can arise in unexpected places and may emerge unexpectedly when

  1. A copy of the recorded covenants and restrictions was attached as an exhibit to the deeds.

What South Carolina Real Estate Attorneys and Paralegals Need to Know About the New Anti-Squatter Act

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South Carolina’s recently enacted “anti-squatter” law provides real estate practitioners with a valuable tool to help property owners quickly regain possession of residential property from certain unauthorized occupants. The legislation creates an expedited process for removing true squatters while preserving existing protections for legitimate tenants. It also strengthens landlords’ rights during eviction appeals. For reference, the text of the Act can be found here.

Why does this matter to real estate clients? Before this law, an owner who discovered an unauthorized occupant in what was supposed to be a vacant home often faced a lengthy and expensive court process to evict the occupant. Under the new statute, property owners may seek expedited relief through magistrate court when an individual occupies residential property without permission and has no legitimate tenancy rights. As long as the property owner can provide a verified (signed by the property owner on his or her own knowledge) petition to file, the new law authorizes a magistrate to order a quick (potentially as quickly as same-day) ex parte eviction of a true squatter – someone who has no legitimate right – such as a residential lease – to be in the property.

For South Carolina real estate attorneys and paralegals, this could open up opportunities to provide practical value to clients. For example:

• Assisting sellers who discover unauthorized occupants in their residential investment property.
• Helping purchasers of vacant homes, inherited property, foreclosed/REO houses, or investment properties, to evict unauthorized folks and obtain possession more quickly. Care still needs to be taken in investigating whether the occupant may have a legitimate lease agreement from the former owner.
• Advising landlords on whether an occupant is a true squatter or should instead be handled through traditional residential landlord-tenant eviction procedures.
• Lender’s counsel may want to discuss with their lender or servicer clients who could be dealing with vacant collateral residential properties.

Actual possession remains an important issue during underwriting and closing. Title agents should continue to ask about any occupants in possession at closing, and discuss with an underwriter if needed.

The new law also addresses an older existing issue in which tenants who were appealing an eviction could effectively “game” the system by staying in the property without paying rent while their appeal was pending. Now, tenants who have appealed an eviction order are required to sign an affidavit that they will continue paying rent, or face prompt eviction if they do not do so.

An additional provision of the new law applies to RV park operators and opens up more robust actions the operators may take to remove park guests who violate park rules, do not pay, use illegal drugs, or disturb other guests.

The bottom line is that the new law provides a faster and more practical path for removing unauthorized occupants and should be viewed as another tool in the real estate practitioner’s toolbox.  Attorneys and paralegals who understand the distinction between squatters and tenants, and who proactively educate clients about the new procedure, will be in a good position to  help protect real estate transactions, reduce delays, and strengthen long-term client relationships, while remaining mindful of the title and possession issues that may still arise.

Can an Attorney be Disciplined for Failing to Produce a Title Insurance Policy? 

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If you have ever practiced law, you’ve experienced that one crazy, busy week where so much was going on that an important, but not urgent, task got pushed to the back burner. Most of us have had such a task slip completely out of our consciousness for longer than we would care to admit.  These are the things that make us sit upright in bed at 2:00 A.M. Isn’t the practice of law fun? 

Real estate practice, perhaps more than any other area of the law, involves countless small but vital tasks that must be taken care of after the closing table has been left behind. Some of these tasks are obviously urgent such as timely recording documents and sending out disbursements. Other matters, such as pursuing releases or delivering the final title policy to the insured, may seem less urgent.  Well, the South Carolina Supreme Court recently issued a disciplinary opinion that should be a reminder that failing to follow through on the latter categories can still put a license at risk.   

According to the Court’s opinion, the attorney who was disciplined operated a solo law practice that handled at least some real estate closings. In connection with a commercial closing, the attorney collected $10,803.00 in title policy premium and attorney’s fees. During a particularly busy time, their practice forgot to issue the title policy following closing. As the attorney began closing the practice and moving to inactive status, the title policy remained outstanding and was never issued. However, her client did not forget.  The client’s attempts to contact the attorney about the status of the policy went unanswered.   The result was a complaint and the ensuing disciplinary action. 

In reviewing the case, the Court noted the attorney’s failure to produce the title policy and failure to respond to the client constituted violations of Rules:1.3 (diligence), 1.4 (communication), 1.15(a) (safekeeping of client property), 1.16(d) (return of client property), and Rules 8.4(a) and 8.4(d) of the Rules of Professional Conduct. 

This opinion reminds us that the title insurance premium in a real estate transaction comes from client funds. An attorney may serve as both the settlement agent and the title insurance agent in the same transaction. When that occurs, disbursing the title insurance premium before issuing the promised policy raises concerns about the attorney’s obligations to properly handle client funds and complete the representation. 

My experience working for a title insurance underwriter has been that most insureds are reasonably patient with the delivery of title policies, but that patience disappears when they do not receive timely responses from counsel. Lenders generally get very demanding when they realize that title policies are missing from their file at audit times, because FNMA/FHLMC guidelines may dictate financial consequences to the originating lender or servicer. A lender often contacts the attorney and then the title insurance company seeking production of the policy, but their next step is often the filing of a Bar complaint. 

In this disciplinary action, the Supreme Court publicly reprimanded the inactive attorney.   The Court required restitution be made to the client for the title premium and attorney’s fee and to reimburse ODC for its fees and costs. The Court further required that the attorney complete Ethics School before returning to active practice. 

For the full opinion, click here: 

https://www.sccourts.org/media/opinions/HTMLFiles/SC/28351.pdf

Folly Beach Short-Term Rental Cap Overturned, Highlighting Legal Limits on Local Regulation

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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.

What South Carolina’s 2025-2026 Legislative Session, the Spartanburg County Data Center Litigation and the Silfab Controversy Signal for Real Estate Attorneys

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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.

A Zoning Battle Ignites in Fort Mill over Silfab Solar

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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. 

Hilton Head Dredging and the Question of Public Benefit

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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.

Sullivan’s Island, Fractional Ownership, and the Limits of Zoning Law

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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).

At long last, a resolution for Captain Sam’s Spit?

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Another long‑running legal battle in South Carolina – this time over the future of Captain Sam’s Spit – may finally be drawing to a close. Developer Kiawah Partners, the Town of Kiawah Island, and several other interested parties entered into a $37 million settlement at the beginning of March that would transfer the entirety of the 170 acres of pristine coastline to the State of South Carolina and other local entities subject to a permanent conservation easement.

This blog has covered the unfolding controversy involving the Spit several times in the past. The Spit, which lay seaward of the DHEC critical line when originally conveyed in the 1980s, became the subject of numerous lawsuits after an adjustment of the critical line in the 1990s made the property developable. Following that adjustment, Kiawah Partners and the Town of Kiawah entered into a Development Agreement under which the developer planned to build more than 50 homes on certain highland areas of the Spit, while conveying and committing the remaining portions to be preserved in their natural state. However, in a series of lawsuits, appellate courts ultimately denied all the various applications to construct erosion‑control devices deemed necessary to support the proposed development plan.

Kiawah Partners has since pursued a pending lawsuit seeking compensation for what it views as a regulatory taking of its property rights, while the Town and local conservation groups have filed a separate action seeking to enforce the Development Agreement’s provisions concerning the preservation of the remainder of the land. The current settlement resolves both lawsuits.

Under the terms of the settlement, the State of South Carolina and the other participating groups agree to purchase the developer’s entire interest in the Spit for $37 million. The Spit would then be jointly managed by the State and local entities. Beachwalker Park, a popular destination for local beachgoers, is to be transferred to the Town of Kiawah Island and will remain open to the public under the management of Charleston County.

The settlement is contingent upon the General Assembly approving the State’s $32 million contribution, which may occur before the end of the current legislative session. If lawmakers do not balk, Captain Sam’s Spit will be permanently conserved for the enjoyment of the public—and for the 18 endangered species that call the area home.

To reside or not to reside, that is the question

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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.     

[1]Hoffman v. Saad Holdings, LLC, Op. No. 2026-UP-___ (S.C. Ct. App. Feb. 18, 2026) (unpublished)

[2]Villazon v. Osborne, 922 S.E.2d 498 (N.C. Ct. App. 2025)