Real Estate

Owner of Folly Beach lots loses takings case in SC Supreme Court

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Braden’s Folly, LLC v. City of Folly Beach* involves two small, contiguous developed residential coastal properties on the northeast end of Folly Beach. The City of Folly Beach amended an ordinance to require certain contiguous properties under common ownership, like the properties in question, to be merged into a single, larger property.

The ordinance did not impact the existing uses of the contiguous lots as vacation rental properties, but Braden’s Folly challenged the ordinance, claiming it had planned to sell one of the developed properties, and that the merger ordinance interfered with its investment-backed expectation under the Penn Central** test, which states that in regulatory takings cases, courts must examine the economic impact of the regulation on the property owner’s investment-backed expectations, as well as the character of the government action.

Folly Beach denied the claim of an unconstitutional regulatory taking, and pursuant to cross-motions for summary judgment, the circuit court agreed with Braden’s Folly. Folly Beach appealed to the South Carolina Supreme Court, which reversed and remanded the case for entry of judgment in favor of Folly Beach.

The Court stressed that underlying its applicability of the Penn Central test was the distinct fragility of Folly Beach’s coastline, which was subject to such extreme erosion that the General Assembly exempted Folly Beach from parts of the South Carolina Beachfront Management Act. The exemption empowered the City to act instead of the State in protecting the beach.

A portion of the northeast end of Folly beach has a double row of properties. The “A lots” are directly adjacent to the ocean-side of East Ashley Avenue, and the “B lots”—also known as “super-beachfront” lots—are closer to the ocean. There is no road between the A and B lots, so the B lots are accessible only through the A lots. Between beach renourishments, the B lots could be surrounded by the ocean on three sides. Braden’s Folly owns adjacent lots (Lot A and Lot B) on East Ashley Avenue. Both lots are very small.

Braden’s Folly contended that it had always intended to keep one of the lots and sell the other—whichever received the highest offer—to pay for the construction of a house on each lot. When the merger ordinance passed, the City sent a letter to Braden’s Folly requesting it stop marketing the lots separately. In response, Braden’s Folly filed the subject lawsuit.

The Supreme Court found that some facts weighed in favor of finding Braden’s Folly’s investment-backed expectation was reasonable and some facts weighed in favor of finding its expectation unreasonable. The Penn Central balancing test did not weigh in favor of either party, according to the Court.

Folly Beach and its witnesses set out the advantages to local beachfront property owners and the public at large of unwinding the super-beachfront development. The most important of the benefits to local property owners is the continued existence of federal funding for beach renourishment which in turn (1) protects A and B lots—particularly given that all the lots would be underwater if it were not for the continual renourishment; and (2) avoids property owners paying higher taxes if federal funding is extinguished.

The Court held that the merger ordinance was not a taking but responsible land use policy. Braden’s Folly retains, according to the Court, a near-full “bundle of sticks” incident to its ownership of the lots.

*South Carolina Supreme Court Opinion 28148 (April 5, 2023)

**Penn Cent. Transp. Co. v. City of N.Y., 438 U.S. 104 (1978)

SC Supreme Court upholds Myrtle Beach’s “family friendly” zoning overlay district

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In Ani Creation, Inc. v. City of Myrtle Beach, * the South Carolina Supreme Court upheld an ordinance that imposed a zoning overlay district intended to bolster the “family friendly” nature of Myrtle Beach’s historic downtown area. The ordinance targeted smoke shops and tobacco stores and the merchandizing of tobacco paraphernalia, products containing CBD, and sexually oriented material.

The opinion begins, “The City of Myrtle Beach (the city) is a town economically driven and funded by tourism.” The facts indicate that the city received frequent criticism from tourists and residents that the proliferation of smoke shops and tobacco stores repelled families from the area. The city passed a comprehensive plan that aimed at increasing tourism and concluded that all businesses needed to encourage and support a “family beach image”.  The city passed an ordinance which created a zoning overlay district known as the Ocean Boulevard Entertainment Overlay District that encompassed the historic downtown area.

The prohibited uses in the district were declared immediately nonconforming when the ordinance was passed on August 14, 2018, but an amortization period was allowed which gave affected businesses until December 31, 2019, to cease the nonconforming portions of their businesses.

The zoning administrator issued citations to the nonconforming businesses. Nine of the 25 affected stories appealed to the Board of Zoning Appeals which found (1) it did not have jurisdiction to declare the ordinance unconstitutional; (2) it could not grant a use variance because it would allow the continuation of a use not otherwise allowed in the district; and (3) the businesses were engaged in one or more of the prohibited uses. On appeal, the circuit court affirmed the Board’s opinion, finding the appellants’ 25 grounds for challenging the ordinance meritless. The businesses appealed directly to the South Carolina Supreme Court.

The appellants raised a “host” of constitutional and procedural challenges, all of which fell on deaf ears at the Supreme Court. The Court held that the ordinance was a valid exercise of the city’s police powers. According to the Court, municipal governing bodies clothed with authority to determine residential and industrial districts are better qualified by their knowledge of the situation to act upon such matters than are the courts, and they will not be interfered with in the exercise of their police power to accomplish their desired end unless there is a pain violation of the constitutional rights of the citizens.

A comment on the Dirt Listserv said, “S. Carolina is OK with cancel culture after all.”  A store selling sexually oriented materials was removed from Garners Ferry Road in Columbia (about three miles from my house) using similar legal arguments. I was delighted to see that store torn down before I had to explain it to my grandchildren! But I do understand the “cancel culture” argument. What do you think?

*South Carolina Supreme Court Opinion 28151 (April 19, 2023)

Virginia court holds HOA assessment invalid

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Dirt lawyers hear stories of dysfunctional homeowners’ associations routinely. I have one for you!

My husband and I built a second home at the beach in a relatively modest subdivision in 2011. Many of the houses are owner occupied, but many are on rental plans. My twenty-something daughter met a neighbor who asked her two questions, (1) “Is this your family’s first vacation home?” and (2) Your parents aren’t going to rent this house, are they?” It wasn’t a good start to our relationship.

We had several issues with ARB approvals during the building process, which were handled by our builder. At one point, he threw his hands in the air in frustration and said, “These people need to understand this isn’t DeBordieu.” In other words, the ARB seemed to believe the subdivision is much more affluent than it is.

When we attended our first (and only as it turns out) annual meeting of the owners, the president of the board promptly threw one of our neighbors out of the meeting for asking a question!  It was during the first five minutes of the meeting. We were shocked and vowed to steer clear of those meetings.

During our first winter, we received a very nasty letter telling us we had a dead tree that must be removed immediately. We were in Columbia, didn’t know about the dead tree, and even when we investigated, we decided the tree didn’t look any worse than the other winter trees. But we quickly took it down! We heard another neighbor received a similar letter telling him his mailbox was dirty and needed to be cleaned immediately.

We decided that we were going to be good neighbors and properly maintain our house and yard, but we would enjoy the beach and the gatherings of our growing family (including the four grandchildren we’ve been blessed with since we built the house) without getting involved with the neighbors.

Believe it or not, this story has a happy ending. Apparently, all the problems were caused by one homeowner who managed to get herself elected to the board and the ARB. She roamed the streets looking for rules violations and wrote the letters herself.  About the time we figured out the problem, she and her husband, thankfully, moved. The trouble among the neighbors immediately improved. Now, we have delightful neighborhood parties and enjoy getting to know our neighbors. And it seems everyone has a story about the bad neighbor. We stand around drinking beer and telling stories.

My guess is that our earlier bad HOA is like the one described in Buckholder v. Palisades Park Owners Ass’n, Inc.*, a Virginia case where the HOA imposed an assessment on all owners to fund the cost of inspecting each property for the purpose of finding violations of the HOA rules. Homeowners sued to have the assessment declared invalid.

Virginia has a statute that provides, “(e)xcept as expressly authorized by the Act, the declaration or as otherwise provided by law, no association shall…make an assessment or impose a charge against a lot owner unless the charge is a fee for services provided or related to use of the common area.”

The court invalided the assessment and remanded the case to the lower court.

I read about this interesting case on the DIRT listserv that I recommend routinely. You won’t be sorry if you sign up for the emails!

Professor Dale Whitman who moderates the listserv commented that this is the sort of thing that gives HOAs a bad name. He also commented, “While most states won’t have a statute exactly like Virginia’s, the lesson of the case remains applicable. If an HOA or condo board is going to impose an assessment to be used on anything other than the common areas (or reserves that will ultimately benefit the common areas), it needs to be certain that it has the legal power to do so, either by virtue of an applicable statute or its own declaration. This is particularly true if the assessment is almost certain to irritate and raise the hackles of some owners, as this one was.”

Several lawyers commented about the nature of folks who like to serve on HOA boards. Read the comments if you need a good laugh. The listserv is searchable.

I think I’ll share the case with my neighbors at the beach.

*76 Va. App. 577, 882 S.E.2d 906 (2023)

Foreign ownership of real estate has become a political issue

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Pending legislation in South Carolina may affect your transactions

Remember the Chinese surveillance balloon the United States shot down off the coast of the Palmetto State in February? That incident and other rising tensions between our government and China over several issues (the war in Ukraine, recognition of Taiwan, to name only two) have resulted in politicians proposing to broaden state law bans on foreign ownership of real estate.

According to a New York Times article dated February 7, entitled “How U.S-China Tensions Could Affect Who Buys the House Next Door”, legislation in Texas was proposed after a Chinese billionaire with plans to create a wind farm bought more than 130,000 acres of land near a U.S. Air Force base.

Proposed legislation is also pending in Florida, California and now South Carolina to restrict ownership of real estate by “hostile nations” or “foreign adversaries.” Some have suggested that such bills may run afoul of due process and equal protection issues.

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

You may recall that we have an existing statute (S.C. Code §27-13-30) prohibiting any “alien” or corporation controlled by an “alien” from owning or controlling more than 500,000 acres of land in South Carolina. Recently, the South Carolina Senate passed Senate Bill 576 that amends the existing statute by expressly prohibiting any citizen of a foreign adversary or corporation controlled by a foreign adversary from acquiring any interest in South Carolina property.  The proposed legislation will now be considered by the House.

The term “foreign adversary” is defined in the bill as “any foreign government or nongovernment person determined by the United States Secretary of Commerce to have engaged in a long-term pattern or serious instances of conduct significantly adverse to the national security of the United States or the security and safety of United States citizens.”

And there are other bills pending along the same lines.

Senate Bill 392 would amend our existing statute to reduce the amount of property allowed to be owned by an “alien” to 1,000 acres. House Bill 3566 would add a statute to reduce to 1,000 acres the amount of land that can be owned or controlled by China, the Chinese Communist Party, or an entity whose principal place of business is located within China.  House Bill 3118 would prohibit any company owned or controlled by China or the Chinese Communist Party or that has a principal place of business in China from owning, leasing, possessing, or exercising any control over real estate located within 50 miles of a state or federal military base for the purpose of installing or erecting any type of telecommunications or broadcasting tower.

All dirt lawyers will know immediately that all versions of the proposed legislation will create uncertainty in our market. I have only two pieces of advice at this point. First, let’s all monitor the proposed legislation. And, second, let’s pay attention to guidance provided by our excellent title insurance underwriters.

Does real estate “wholesaling” work in our market?

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Maybe, but real estate practitioners should be careful!

A recent discussion on South Carolina Bar’s real estate section listserv surrounded whether and how to close “double closings” vs. “assignments of contracts”.  This is not a novel topic in our market. In the very hot market that preceded the crash beginning in 2007, one of the biggest traps for real estate attorneys was closing flip transactions. Title insurance lawyers fielded questions involving flips on an hourly basis!

Flips have never been illegal per se. Buying low and selling high or buying low and making substantial improvements before selling high are great ways to make substantial profits in real estate.  

Back in the day, we suggested that in situations where there were two contracts, the ultimate buyer and lender had to know the property was closing twice and the first closing had to stand on its own as to funding. In other words, the money from the second closing could not be used to fund the first closing. (Think: informed consent confirmed in writing!)

Where assignments of contracts were used, we suggested that the closing statements clearly reflect the cost and payee of the assignment.

The term real estate investors are using these days to define buying low and selling high is “wholesaling”.  A quick Google search reveals many sites defining and educating (for a price, of course) the process of wholesaling. This is a paraphrase of a telling quote I found from one site:

If you’re looking for a simple way to get started in real estate without a lot of money, real estate wholesaling could be a viable option. Real estate wholesaling involves finding discounted properties and putting the properties under contract for a third-party buyer. Before closing, the wholesaler sells their interest in the property to a real estate investor or cash buyer.

One of the smart lawyers on our listserv, Ladson H. Beach, Jr., suggested that there does not appear to be a consensus among practitioners about how to close these transactions. He suggested reviewing several ethics cases* that set out fact-specific scenarios that may result in ethical issues for closing attorneys.

In addition to the ethics issues, Mr. Beach suggested there may be a licensing issue where an assignor is not a licensed broker or agent. A newsletter from South Carolina Real Estate Commission dated May 2022 which you can read in its entirety here addresses this issue. The article, entitled “License Law Spotlight: Wholesaling and License Law” begins:

“The practice of individuals or companies entering into assignable contracts to purchase a home from an owner, then marketing the contract for the purchase of the home to the public has become a hot topic, nationwide in the real estate industry in recent years. This is usually referred to as ‘wholesaling’. The question is often, “is wholesaling legal?’ The answer depends upon the specific laws of the state in which the marketing is occurring. In South Carolina, the practice may require licensure and compliance with South Carolina’s real estate licensing law.”

The article suggests that the Real Estate Commission has interpreted that the advertising of real property belonging to another with the expectation of compensation falls under the statutory definition of “broker” in S.C. Code §40-57-30(3) and requires licensure. Further, the newsletter suggests S.C. Code §40-57-240(1) sets up an exception; licensing is not required if an unlicensed owner is selling that owner’s property. The Commission has interpreted, according to this article, that having an equitable interest is not equivalent to a legal interest for the purpose of licensing. In other words, a person having an equitable interest acquired by a contract is not the property’s owner and has no legal interest in the property for the purposes of this licensing exemption.

So real estate practitioners have several concerns about closing transactions of this type. Be very careful out there and consult your friendly title insurance underwriter and perhaps your friendly ethics lawyer if you have concerns as these situations arise in your practice.

*In re Barbare (2004), In re Fayssoux (2009), In re Brown (2004) and In re Newton (2007)

South Carolina has another builder arbitration case

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Real estate law never bores me, but our cases may seem particularly mundane considering the Murdaugh prosecution that has gripped our state for more than a month. You may want to put this blog aside until the jury returns its verdict. I’ve seen so many photos on social media of groups of lawyers watching the case together that I am confident real estate is not top of mind!

Huskins v. Mungo Homes, LLC* is a South Carolina Court of Appeals case which was originally issued June 1, 2022, then withdrawn, substituted and refiled February 15, 2023.

The Huskins signed a Purchase Agreement with Mungo in June 2015 for a home in Westcott Ridge subdivision in Irmo. The document consisted of three pages. The first page contained a statutory notice of arbitration, the second page included a paragraph entitled “LIMITED WARRANTY”, and the third page included a paragraph entitled “ARBITRATION AND CLAIMS.”

In 2017, the Huskins filed an action against Mungo alleging the Purchase Agreement violated South Carolina law by disclaiming implied warranties without providing for a price reduction or other benefit to the purchaser for relinquishing those rights. The causes of action included: (1) breach of contract and the implied covenant of good faith and fair dealing; (2) unjust enrichment; (3) violation of the South Carolina Unfair Trade Practices Act, and (4) declaratory relief regarding the validity of the waiver and release of warranty rights and the validity of Mungo’s purported transfer of all remaining warranty obligations to a third party.

Mungo filed a motion to dismiss and compel arbitration. The Huskins’ responsive memorandum argued that the arbitration clause was unconscionable and unenforceable. They asserted that the limitation of warranties provision should be considered as a part of the agreement to arbitrate. The Circuit Court issued an order granting the motion to dismiss and compelling arbitration. In ruling the arbitration clause was not one-sided and unconscionable, the Circuit Court found that (1) the limited warranty provision must be read in isolation from the arbitration clause; and (2) terms in the arbitration clause pertaining to a 90-day time limit were not one-sided and oppressive because they did not waive any rights or remedies otherwise available by law.

The Court of Appeals initially held that the Circuit Court’s order was immediately appealable, stating that our state procedural rules, rather than the Federal Arbitration Act, govern appealability of arbitration orders. While arbitration orders are not typically immediately appealable under South Carolina law, this order had granted Mungo’s Rule 12(b)(6) motion to dismiss, which is an appealable order.

The Court next held that the arbitration clause must be considered separately from the limited warranty provision, citing cases to the effect that arbitration provisions are separable from the contracts in which they are imbedded. A prior D.R. Horton South Carolina Supreme Court case** considered the arbitration and warranty provisions together, in part because the title of the paragraph, “Warranties and Dispute Resolution” signaled that the provisions should be read as a whole. Since the Mungo paragraphs were separated, the Court of Appeals said they should be read separately. In addition, the two provisions did not contain cross references.

The Court next addressed the Huskins’ argument that the limitation of claims provision restricted the statutory limitations period from three years to 90 days and was therefore not severable from the arbitration clause. The Court agreed that the provision that limited the statute of limitations is one-sided and oppressive, but held that the arbitration clause is enforceable because the unconscionable provision is severable.

After concluding that the Huskins lacked a meaningful choice in entering the arbitration clause, the Court of Appeals held that the arbitration clause’s shortening of the statute of limitations violates South Carolina law and is therefore unconscionable and unenforceable.

The Circuit Court’s order was affirmed as modified.

Now …. back to the Murdaugh trial!

*South Carolina Court of Appeals Opinion 5916 (June 1, 2022, Withdrawn, Substituted and Refiled February 15, 2023.

**Smith v. D.R. Horton, Inc., 417 S.C. 42, 790 S.E.2d 1 (2016).

Facts of HOA-Developer dispute called “not for the weary”

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On February 8, the South Carolina Supreme Court issued an opinion* in a real estate case involving the I’On development in Charleston County. Justice Hearn’s opening sentence is revealing: “This case involves promises made and broken to homeowners by a developer and its affiliated entities.” The first sentence describing the facts is equally telling: “The facts of this case are complicated, and, (in the words of a prior Supreme Court opinion, citation omitted) are “not for the weary.”

I’On is described as a high-density residential development that comprises public squares, restaurants, shops, and homes designed to imitate historic urban housing, including a replica of downtown Charleston’s Rainbow Row. The opinion recites that after the Court rejected a referendum effort to restrict multi-use zoning, construction of I’On Phase II began around 2000.

In 2010 two individual homeowners sued the developer entities and individuals for various causes of action related to the nonconveyance of certain real property and community amenities within the neighborhood. A mistrial was ordered to realign the homeowner’s association as a plaintiff. A subsequent trial resulted in a jury verdict in favor of the HOA in the amount of $1.75 million for breach of fiduciary duty and in favor of an individual owner in the amount of $20,000 for negligent misrepresentation.

The history of the development includes a 1998 Property Report filed with the U.S. Department of Housing and Urban Development to comply with the Interstate Land Sales Full Disclosure Act. The report contained a paragraph in all caps promising that “recreational facilities” would be conveyed to the HOA upon completion of construction. But the report warned that certain recreational facilities may be owned and operated by persons other than the HOA.

The Court recited that shortly after the Report was issues, the developers began a pattern of conduct altering their initial promise to convey ownership of the disputed properties to the HOA. Later, an easement agreement was executed and signed by the same person in three different roles, as manager of the I’On Club, as president of the HOA, and as general manager of the I’On Company. A property owner expressed the concern that this agreement was “sort of shaking hands with yourself.”

The Court of Appeals waffled, first upholding the lower’s court’s verdicts, then, on rehearing, practically nullifying the verdicts.

I am not going to get down into the weeds on the complex facts, but I do want to make a couple of points for your information.

First, the statute of limitations issues were thorny, and the Supreme Court upheld the Circuit Court’s submission of these issues to the jury and stated that the facts supported the jury’s determination of the question of when the statute of limitations began to run.

Second, please pay attention to footnote 7. It states that the developer conceded on appeal that one individual owner’s contract to purchase his lot was a sealed instrument and thus has a twenty-year statute of limitations under S.C. Code §15-3-520. Please pay particular attention to whether your clients signed “sealed instruments” because liability under those instruments may be much longer than anticipated.

Otherwise, the Court was adamant that the verdicts were appropriate because of the “plethora of evidence presented of the Developers’ bad faith, broken promises, and self-dealing.”

Represent your developer clients well, dirt lawyers, to avoid losing cases like this one.  Read this case carefully and share it with your developer clients as an excellent lesson of what not to do!

*Walbeck v. The I’On Company, LLC, South Carolina Supreme Court Opinion 28134 (February 8, 2023)

FinCEN warns that Russian bad actors seek to invest in U.S. commercial real estate

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Financial institutions have reporting obligations under the Bank Secrecy Act, and Financial Crimes Enforcement Network (FinCEN) published an alert on January 25 warning financial institutions to be alert to potential investments in commercial real estate by sanctioned Russian elites, oligarchs, their family members, and the entities through which they act.  Commercial real estate lawyers should also be alert to these dangers.

You can read the Alert in its entirety here.

Use this link for a list of sanctioned Russian elites and their proxies.

Commercial real estate transactions are particularly vulnerable to exploitation by bad actors because of the complex financing methods and opaque ownership vehicles routinely employed. Because commercial properties are so high in value, buyers and sellers seek to use these methods and vehicles to limit their legal, tax and financial liability. In addition, foreign investors are common in commercial real estate.

The Alert points to the following types of transactions and vehicles that are so common that protection against invasion into them by bad actors would be difficult at best. The green, italicized words are mine:

  • The use of pooled investment vehicles, including offshore funds, to avoid due diligence and beneficial ownership protocols established by financial institutions. In other words, a bad actor may attempt to reduce its ownership percentage in a property to avoid normal due diligence for owners with higher percentages.
  • The use of shell companies and trusts to conceal ownership interests.
  • Involvement of third parties to invest in behalf of a criminal or corrupt actor.
  • Inconspicuous investments that provide stable returns. The properties may not be high end. They may be multi-family housing, retail, office, industrial or hotels in small and mid-size urban areas.

Thankfully, FinCEN’s Alert provides several red flags to assist in these difficult determinations.

  • The use of a private investment vehicle that is based offshore to purchase commercial real estate and that includes politically exposed persons or other foreign nationals (particularly family members or close associates of sanctioned Russian elites and their proxies) as investors. I had to Google the term “politically exposed person”. It means a person who has been entrusted with a prominent public function. These individuals generally represent a higher risk for potential involvement in bribery and corruption by virtue of their positions and influence.
  • When asked questions about the ultimate beneficial owners or controllers of a legal entity or arrangement, customers decline to provide information. In my former life in which I represented developers, when I asked questions about the identity of the beneficial owners, I got answers. It is a red flag if you are unable to obtain those answers.
  • Multiple limited liability companies, corporations, partnerships, or trusts are involved in a transaction with ties to sanctioned Russian elites and their proxies, and the entities have slight name variations.
  • The use of legal entities or arrangements, such as trusts, to purchase commercial real estate that involves friends, associates, family members, or others with close connection to sanctioned Russian elites and their proxies.
  • Ownership of commercial real estate through legal entities in multiple jurisdictions (often involving a trust based outside the United States) without a clear business purpose. Again, if you can’t get good answers to your questions, this is a red flag.
  • Transfers of assets from a politically exposed person or Russian elite to a family member, business associate, or associated trust in close temporal proximity to a legal event such as an arrest or an OFAC designation of that person. Remember that we check the OFAC (Office of Foreign Assets Control) list for individuals in our transactions using links provided by title companies. If you have questions about how to perform this function, call your friendly title insurance company underwriter. You can use this link.
  • Implementation of legal instruments that are intended to transfer an interest in commercial real estate from a politically exposed person or Russian elite to a family member, business associate or associated trust following a legal event such as an arrest or an OFAC designation of that person.
  • Private investment funds or other companies that submit revised ownership disclosures to financial institutions showing sanctioned individuals or politically exposed persons that previously owned more than 50 percent of a fund changing their ownership to less than 50 percent.
  • There is a limited discernable business value in the investment, or the investment is outside of the client’s normal business operations.

This is the fourth FinCEN alert on potential Russian illicit activity since Russia’s invasion of Ukraine. The Federal government is serious about policing these activities. I recommend that you contact your favorite title insurance underwriter any time you determine that sanctioned persons or their proxies involved in your transactions. Be careful out there!

Texas Attorney General investigating Home Title Lock

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Several years ago, a prominent Myrtle Beach real estate lawyer called me to suggest that our (title insurance) company should develop a product like Home Title Lock. That company advertises that it alerts homeowners if fraudulent or forged deeds are recorded in their chains of title. I contacted corporate leaders to explore this idea, and it was quickly decided that the product was virtually meaningless.

Last week, another prominent Myrtle Beach-area lawyer emailed me with news that the Attorney General for Texas is investigating the company. Here the South Carolina dirt lawyer’s direct quote, “After the number of older clients I have had who come into a transaction confused and scared by the talking heads on conservative media who have been schilling for this company, I am glad to see law enforcement taking an interest.”

Ken Paxton, the Attorney General, apparently agrees. He issued a press release on January 24, stating, “I won’t tolerate false, misleading, or deceptive advertisements targeted to any Texas consumers—especially Texas seniors. If Home Title Lock is misrepresenting its services or the need for its services I will put a stop to its unlawful behavior.”

The AG announced an investigation of this company for potentially violating the Texas Deceptive Trade Practices Act by misleading consumers with deceptive statements concerning the prevalence of home title theft and the need for this company’s services.

The press release states that Home Title Lock is a California-based entity that claims to provide 24/7 monitoring of a consumer’s home title. (How could that even be done?) The press release states that the company has received scrutiny in recent months over questionable advertisements, including its claim that the FBI calls home title theft “one of the fastest growing white-collar cyber-crimes in America.” Apparently, Home Title Lock admits that it markets to “older customers.”                      

The Texas AG’s office issued a Civil Investigative Demand on December 15 ordering the company to make documents available substantiating the following, among other matters:

  • Any home title theft resolution services;
  • Representative samples of customer contracts;
  • The claim that the Company monitors the title of consumers 24/7;
  • The claim that the Company provides nationwide monitoring;
  • The claim that like other white-collar crimes, title fraud remains under reported with losses totaling more than $5 million in 2015;”
  • The claim that a victim is responsible for payments incurred due to a fraudulent home equity loan. (“Now thieves take out massive loans using your home’s equity-leaving you with the payments and mountains of legal bills;”) and
  • The claim that the company offers “complete protection – including up to $250,000 in legal fees and expense coverage.”

I’m so glad to see this investigation is starting, and I hope other states follow.

Will 2023 be a “normal” year in real estate?

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The “Greenville Business Magazine” published an article on January 27 that should interest all dirt lawyers. The article, written by David Caraviello, is entitled, “Leaving the Frenzy Behind: Could 2023 Be a More ‘Normal’ Year in South Carolina’s Real Estate Market?” You can read the article in its entirety here.

The article outlines the frenzy of the 2022 real estate market in South Carolina which culminated in an acute inventory shortage. While industry leaders budgeted for 2023, they wondered whether home prices would plummet because of rising interest rates. The national picture may be bleak because of these factors, but the article points out that experts do not foresee a gloom-and-doom scenario for South Carolina.

I’ve seen several news sources recently, including this one, pointing out that South Carolina is a primary destination for consumers looking for milder winters and following jobs at BMW, Volvo, and other companies. The market does not look dismal for us.

Please take a minute to read the article. To some real estate professionals, it says, the scenario entering 2023 sounds “refreshingly normal,” although we may have forgotten what normal is.

Perhaps 2023 will return to the ordinary seasonal ebbs and flows to which law firms can adapt from a staffing and other cost standpoint. Maybe everyone will be able to take a vacation this year. Let’s hope so! Good luck out there!