South Carolina

Rock Hill residential real estate lawyer gets five years in jail

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Thankfully, it has been ten years or more since we’ve heard word “defalcation” used in connection with a South Carolina real estate lawyer. Sadly, we have to use that word in 2020 because a Rock Hill lawyer was arrested in 2019 after funds allegedly went missing from a residential closing.

That lawyer, Thomas Givens, was suspended by the South Carolina Supreme Court on September 25, 2019. Earlier this month, the 67-year old pled guilty for breach of trust and was sentenced to five years in prison, five years’ probation, and restitution. 

The closing took place on July 15, 2019 but the $166,000 mortgage payoff was never made. Two months later, Givens was arrested and charged with breach of trust over $10,000. The arrest warrant reads that Givens failed to make the mortgage payoff and does not have the funds.

We usually do not experience defalcations when the economy is good. With the economic downturn that began in 2007, we learned the difficult lesson that attorneys who are prone to dip into their trust accounts often manage to keep the balls in the air as long as closings continue to occur. They typically steal from one closing to fund another. They rob Peter to pay Paul.

Like a game of musical chairs, when the music (and closings) stop, bad actor attorneys no longer have closings to provide funds for prior transgressions, and the thefts come to light.

This time, the economy was good. There are simply no excuses. It is a very sad commentary, and one I hoped not to see again.

Are you up for some haunted entertainment?

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…or do you think 2020 has been frightening enough?

“It’s got great curb appeal!”

This article entitled “Would You Buy a Haunted House?” by Amanda Farrell at PropLogix caught my eye this morning. A real estate lawyer might face a challenge or two closing a haunted house!

And it’s Halloween week! Let’s entertain ourselves.

If you and your kids are up for some in-person creepy places, try Sweet Dreams Scare House in Easley, Madworld Haunted Attraction in Piedmont, Dark Castle Haunted Attraction in Elgin, Nightmare Haunted House in Myrtle Beach or Ripley’s Haunted Adventure in Myrtle Beach.

If your family prefers to check-out real haunted sites in South Carolina, check out this article.  Even the names of “Greenville Tuberculosis Hospital” and “South Carolina Lunatic Asylum” are menacing!

I grew up in the Low Country (otherwise known as “God’s Country), and the story of Alice Flagg, a ghost in Murrells Inlet, is considered fact.

The story, according to this article, is that in 1849, a wealthy doctor named Allard Flagg moved into The Hermitage and invited his beautiful sister, Alice, to live with him. (They’re always beautiful.) Alice, of course, falls hopelessly in love with an unsuitable man, who is sent away by her brother.

Alice continued to see her suitor secretly. When her brother discovered the assignations continued, he sent sweet Alice off to a boarding school in Charleston. She contracted malaria, and just before she died, her brother brought her home. After her death, he found an engagement ring on a ribbon around her neck and furiously threw it into the marsh. Beautiful Alice has spent the last 150+ years clutching her chest while walking around All Saints Cemetery. 

I bet that story would scare your kids, especially if you tell it after dark in the cemetery!

If you’re like me, though, 2020 has been scary enough. “Casper, The Friendly Ghost” is pretty much the most my family can handle this year. I wish you and your family more treats than tricks this weekend. Stay safe and Happy Halloween!

Boeing to move all Dreamliner production to North Charleston

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This is the time of the year when many of us are feverously working on budgets. My own crystal ball is particularly murky this year as COVID-19 has created more uncertainty than usual about the future of the real estate market in South Carolina.

Our state received excellent economic news on October 1, however, when Boeing issued a press release announcing the company will consolidate the production of its widebody jet in North Charleston.  Our gain is Washington State’s loss.  This move seeks to improve efficiencies during the market downturn caused by the pandemic to position the company for recovery and long-term growth.

The change won’t happen immediately. The press release indicated Boeing will continue to manufacture its 787-8 and 787-9 jets in Everette, Washington until it reaches its previously announced rate cut to six jets per month, which will probably occur sometime in mid-2021.

The release said that a company study confirmed the feasibility and efficiency gains created by consolidation will enable the company to accelerate improvements and target investments to better support customers. The North Charleston plant has lower production costs because labor is less expensive in South Carolina, and it’s a non-union plant.

Anyone who has driven from Columbia to Charleston has witnessed the extensive growth in the North Charleston area of not only Boeing, but the industries and housing developments that support Boeing. This is excellent news for us at a time when we need it!

How does the rest of 2020 look in South Carolina housing?

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We have had an incredible year in real estate in South Carolina!

Mortgage rates are at historic lows resulting in a refinance boom. Home sales have also been strong. We have seen a steady stream of migrations to our beautiful state from less desirable locations. We have seen folks tire of being stuck inside their homes by COVID looking for larger and more modern residences. And the low interest rates have assisted in those moves, too.

And commercial real estate has remained strong for us. We’ve seen the due diligence periods of some commercial projects slowed by COVID uncertainty, but these transactions appear to be closing, even if later than expected.

Real estate closing attorneys and their staff members have worked at a frenzied pace this year! They have tried to keep up with the whirlwind of activity while sanitizing between closings, performing closings on porches, in tents and in parking lots. They’ve worn masks and given away the used pens. It has taken a great deal of innovation to run a closing law firm in this environment, and they have succeeded!

It’s almost October, and we haven’t yet seen a slowdown. I point you to this article, however, written by Warren L. Wise for Charleston’s Post and Courier newspaper. The article points to a slip in the numbers of real estate sales in August as compared to August of 2019. Sales seem to have been slowed by inventory. We are still experiencing a desire for new and improved housing, but the houses aren’t available. It’s a true seller’s market.

I doubt these numbers will result in a huge slow-down between now and the end of the year. Perhaps we will see something akin to the seasonal slowdowns we have historically seen toward year-end. And if things go well, spring will give us the typical increase we are accustomed to in housing sales. Hang on for the ride!

Newberry land-transaction dispute replete with equitable issues

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We don’t often see current land-transaction dispute cases among South Carolina’s appellate court decisions, but the Court of Appeals handed down an opinion on September 16 that covers the gamut of equitable issues. Not uncommon, though, is that the facts in this equitable case involving real estate, like most, are quite interesting.

The use of the property in the case, Shirey v. Bishop*, is interesting in itself. Mr. and Mrs. Bishop operated a grave digging and burial vault business on the property for more than 30 years. Mr. Bishop died in 2010, leaving his wife to run the business by herself. Mrs. Bishop suffered from depression and anxiety and ultimately determined that she did not want to continue operating the business.

In 2012, Mrs. Bishop entered into a contract to sell the property to her niece, Cassandra Robinson. Although the bank wasn’t consulted, Robinson agreed to assume the mortgage and make the monthly payments until the mortgage was satisfied.

In 2014, however, Mrs. Bishop approached Shirey about purchasing the property, and a contract was signed in 2015 to sell the property to Shirey for $125,000. (Apparently Robinson was late on many mortgage payments.) The closing was to occur between August 3 and August 12, 2015. Time was stated to be of the essence.

On August 12, 2015, Shirey attempted to close by tendering funds to his attorney. After it became apparent that Mrs. Bishop was not going to appear, Shirey’s attorney called Bishop to ask if the closing period could be extended to August 13. Bishop agreed.

On August 13, Shirey arrived at his attorney’s office, but Bishop again failed to appear. Bishop’s doctor sent a note to Shirey’s attorney asking that Bishop be excused from the closing. (I’ve never seen a doctor’s excuse for a closing!) However, that afternoon, Bishop entered into a second contract with Robinson. This contract added a provision that Bishop would indemnify Robinson against “any and all issues of illegality or fraud concerning the transaction.” Bishop executed a deed conveying the property to Robinson, and Robinson recorded the deed the same day.

This lawsuit followed. The special referee ordered specific performance in favor of Shirey and further determined that Shirey was a bona fide purchaser who took free of any interest of Robinson, that Robinson and Bishop were in a confidential relationship, that the phone call from Shirey’s attorney to Bishop was tantamount to an extension of the contract, and that Bishop’s entering into the 2015 contract with Robinson demonstrated an intention to hold Robinson in default of the 2012 contract.

The Court of Appeals affirmed and made the following points:

  1.  Bishop and Robinson waived their statute of frauds argument by failing to plead it or argue it in the lower court.
  2.  Robinson was not entitled to the property under the 2012 contract because the 2015 contract held her in default.
  3.  The equities in the situation favored Shirey.
  4.  Bishop and Robinson were in a confidential relationship, not only because of their familial relationship, which is not sufficient standing alone, but because the facts indicated Bishop trusted Robinson and failed to seek legal advice. Additionally, Robinson drafted her second contract, and Bishop testified she didn’t understand what she was signing.
  5.  Shirey partially performed by tendering funds.
  6.  Shirey was a bona fide purchaser because he did not have notice of Robinson’s claim at the time he attempted to close. The Court held he had the “best right to” the title to the property.
  7.  Shirey was entitled to attorney’s fees because he prevailed under his contract, which provided for the award of attorney’s fees to the successful party.

All these issues are discussed in detail, and I recommend this case to any lawyer who seeks a refresher on equitable questions involving real estate under South Carolina law.

*South Carolina Court of Appeals Opinion 5718 (September 16, 2020).

Court of Appeals decides same-sex common law marriage case

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In a same-sex common law marriage case, our Court of Appeals recently weighed in on the applicability in South Carolina of Obergefell v. Hodges*, the 2015 United States Supreme Court case that held same-sex couples may exercise the fundamental right to marry and that state laws challenged in that case were invalid to the extent they exclude same-sex couples from civil marriage on the same terms and conditions as opposite-sex couples.

In an appeal from the family court’s dismissal of Cathy Swicegood’s complaint alleging the existence of a common-law marriage with her same-sex partner, Polly Thompson, Swicegood argued the family court erred by dismissing the case for lack of subject matter jurisdiction**.

The family court case was filed in 2014. While Swicegood’s appeal was pending, the Supreme Court of the United States decided Obergefell.

The case sought an order recognizing the existence of a common-law marriage, a decree of separate support and maintenance, alimony, equitable division of marital property and related relief. Swicegood alleged she and Thompson cohabited as sole domestic partners for over thirteen years, until December 10, 2013, agreed to be married and held themselves out as a married couple. She also alleged the couple exchanged and wore wedding rings, co-owned property as joint tenants with the right of survivorship and included each other as devisees in their wills. She also alleged they shared a joint bank account and that Thompson listed her as a “domestic partner/qualified beneficiary” on Thompson’s health insurance and as a beneficiary on her retirement account.

Thompson moved to dismiss the action, alleging the family court lacked subject matter jurisdiction over Swicegood’s complaint because the parties were not married and lacked the capacity to marry.

Swicegood submitted the affidavits of two individuals who each attested they witnessed a wedding ceremony between Swicegood and Thompson in Las Vegas on February 12, 2011.

Thompson submitted a memorandum and several exhibits in support of her motion to dismiss. She argued that in August 2012 and September 2013, she and Swicegood signed affidavits of domestic partnership in which they acknowledged they had “a close personal relationship in lieu of a lawful marriage,” were “unmarried” and “not married to anyone.”

Thompson contended these documents indicated the parties did not hold themselves out as a married couple. In her affidavit, Thompson attested Swicegood knew they were not married. She stated she and Swicegood participated in a “commitment ceremony” in Las Vegas “on a lark,” but they knew it was not a wedding and that they could not legally marry in Nevada. Thompson attested she gave Swicegood several rings during their relationship, but she intended none of these to signify they were married. She stated she was not and never had been married to Swicegood: “We both knew that if we wanted to get married, we could go to a state that allowed same-sex marriage. It was not our intent to enter into marriage, and we did not”.

The family court dismissed Swicegood’s complaint, concluding it lacked subject matter jurisdiction to adjudicate the issues because a common-law marriage was not legally possible pursuant to section 20-1-15 of the South Carolina Code (2014), which was still in force at the time. That statute read: “A marriage between persons of the same sex is void ab initio and against the public policy of this State.”

The Court of Appeals issued an unpublished opinion remanding the case to the family court with instructions to “consider the implications of Obergefell on its subject matter jurisdiction.” The family court again concluded it lacked subject matter jurisdiction, finding that although Obergefell applied to common-law marriages, it could not retroactively create a common-law marriage between the parties.

The court concluded Obergefell could not “logically be read to exclude common-law marriages,” and so long as South Carolina continued to recognize the validity of common-law marriages for opposite-sex couples, it had “a constitutionally mandated duty to recognize the validity of common-law marriages for same-sex couples.” The court did not expressly resolve the question of whether Obergefell applied retroactively, but it concluded the couple could not have formed a common-law marriage because section 20-1-15 was in place throughout the couple’s thirteen-year period of cohabitation, and they believed they lacked the legal right to be a married couple.

The Court of Appeals applied Obergefell retroactively, but held that retroactive application of the decision did not require them to ignore the fact a state statute operated as an impediment to the formation of a common-law marriage between same-sex couples when it was still in force. Our state law concerning impediments to marriage was held to be “a pre-existing, separate, independent rule of state law, having nothing to do with retroactivity,” which formed an “independent legal basis” for the family court’s dismissal of Swicegood’s complaint.

 

*135 United States Supreme Court 2584 (2015).

**Swicegood v. Thompson, South Carolina Court of Appeals Opinion 5725 (July 1, 2020)

South Carolina is one of three states without remote online notarization

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This HousingWire article really caught my attention this morning. South Carolina is one of only three states without an online notarization option.

Efforts have been in progress to pass Remote Online Notarization (RON) legislation here for a couple of years, but the Council of the Bar’s Real Estate Section opposed the legislation on the theory that RON would challenge the control South Carolina licensed lawyers currently enjoy. Many other lawyers disagree with that position, but the legislation stalled.

Other states have used a variety of permanent and temporary solutions to allow for remote online notarization during the COVID-19 crisis. But, at this moment, California, Oregon and South Carolina are the only states with no solution.

What’s your opinion, South Carolina real estate lawyers? Would RON be a good solution to facilitate closings in South Carolina or would it erode your control? The legislation is likely going to be discussed in the next legislative session. Your opinion matters!

The Episcopal Church property saga continues

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We have a new circuit court order

This is my third blog about the controversy surrounding the properties of various Episcopal churches in South Carolina. I previously said I am thankful to be a real estate lawyer as I attempt to decipher these issues.

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St. Philip’s and St. Michael’s Episcopal Churches, Downtown Charleston, SC 

In August of 2017, the South Carolina Supreme Court issued a 77-page opinion in this litigation. We now have a new circuit court order, and I am confident we will hear more at a later date.

I don’t have to solve the mystery of the rights of gays in churches. I don’t have to ascertain whether the “liberal mainline” members or the “ultra-conservative breakaway” members make up the real Episcopal Church.  I don’t have to delve into the depths of neutral principles of law vs. ecclesiastical law. I don’t have to figure out who will own the name “Episcopal Diocese of South Carolina.”

The real estate issues are sufficiently thorny to occupy our collective real estate lawyer brains. The South Carolina Supreme Court seemed to indicate that the 29 breakaway churches had to return their properties to the national church under the “Dennis Canon”. But the Supreme Court left open the possibility that the lower court might clarify the position, and clarify Circuit Court Judge Edgar Dickson did.

He wrote that state law, not church law, requires the transfer of real property by deed. He said that no parish expressly acceded to the Dennis Canon. He said, “This is a property case. A decision on property ownership is usually governed by the title to real estate—the deed. In this case, all the plaintiff parishes hold title to their property in fee simple absolute.”

News articles refer to the properties as being valued at hundreds of millions of dollars. The historic value of the properties, including St. Michael’s and St. Philip’s of Charleston, is also quite significant. Future appeals are almost guaranteed. Nothing is settled at this point. Let’s not try to insure these titles anytime soon.

The controversy began more than five years ago when local parishes in eastern South Carolina left the Episcopal Church over, among other issues, the rights of gays in church. Since then, the two sides have been involved in a battle over the church’s name, leadership and real estate.

Interestingly, the national church had offered a settlement to the breakaway parishes that would have allowed them to retain their properties if they gave up the name and leadership issues. That settlement offer was apparently summarily rejected.

The South Carolina Supreme Court’s ruling upheld the Episcopal Church’s position that it is a hierarchal church rather than a congregational church in which the vote of church membership can determine the fate of real property. The new circuit court order begs to differ.

I continue to be thankful that I am a real estate lawyer!

*The Protestant Episcopal Church in the Diocese of South Carolina v. The Episcopal Church, South Carolina Supreme Court Opinion 27731, August 2, 2017.

Is it ethical to buy a competitor’s name as a search engine “keyword”?

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Most South Carolina dirt lawyers don’t do much direct advertising, but some make use of Internet keyword advertising. For that reason, I wanted to make sure you noticed the recently issued Ethics Advisory Opinion 20-01, which you can read here.

South Carolina’s Ethics Advisory Committee was asked the following question:  “May a lawyer bid on and use the names of other lawyers and law firms as a part of a competitive keyword advertising strategy?” In other words, it is ethical for a lawyer to pay an internet search engine to insert his or her ads when a searcher types a competitor’s name into the search engine?

In some search engines, the resulting advertisements appear on the right side of the page. In other search engines, they may appear marked as an “ad” or “sponsored” above the organic search results.

The Committee pointed out that competitive keyword advertising is different from search engine optimization (SEO). SEO is the process of increasing the visibility of a web page by users of a search engine and is directed at optimizing unpaid placement organic results. This opinion addresses only keyword advertising.

The Committee followed the lead of New Jersey, Texas and Wisconsin and opined that a lawyer may purchase an internet competitive advertising keyword that is the name of another lawyer or law firm in order to display a “sponsored” website advertisement.

The Committee stressed that lawyers should be mindful to comply with all advertising rules and should use care to ensure that no derogatory or uncivil message is conveyed. The Committee also pointed out that surreptitious redirection from a competitor’s website to a lawyer’s own website via hyperlink is prohibited under our Rules.

What do you think?