real estate closings

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)

Georgia Real Estate Investor Fined for Violating OFAC Sanctions

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Imagine that you have a real estate investor client who purchased a big house in a gated community at a foreclosure sale. The client then took out a mortgage on the house, paid to make significant repairs and renovations, and ultimately signed a contract to sell it on to a third party. Then, all of a sudden, the Federal government sends your client a cease and desist order, a subpoena, and eventually fines him $4,677,552.00 for violating OFAC (Office of Foreign Asset Control, an agency of U.S. Treasury) sanctions against a family member of a Russian oligarch. Does that sound fun to anybody? Unfortunately, that is more or less what happened to one real estate investor in Atlanta who unknowingly bought a house which was, in fact, owned by a person who was on the OFAC sanctions list.  

This particular person whose name appeared on OFAC’s sanctions list is now known as Karina Rotenberg. She is a family member of a Russian oligarch who was identified for US financial sanctions after Russia invaded Ukraine. For a time in the early 2000’s, she lived and worked and owned homes in Atlanta. At the time, her name was Karina Fox. Guess which last name her Atlanta home is owned under? That’s right – it’s Fox.

Well, it just so happened that, after it added her to the sanctions list, OFAC figured out that Ms. Fox/Rotenberg owned property in Atlanta. This means that her property could not be sold, mortgaged, or otherwise transferred, since doing so would be a violation of the sanctions. OFAC sent a notice to the Fulton County Clerk of Court specifically mentioning the property’s address, and listing several names by which Ms. Fox/Rotenberg was known (including both “Fox” and “Rotenberg”), and asked the Clerk to file the notice in the county records to let the public know that the OFAC sanctions existed. And the Clerk of Court did file that notice. Unfortunately, for reasons which are not clear, the Clerk appears to have only indexed the notice under the name Rotenberg. So, a title searcher who did not know that Karina Fox and Karina Rotenberg are the same person would not necessarily know that this home was owned by a person on the OFAC sanctions list.

Now, here comes our local real estate investor, by all accounts an entrepreneurial fellow who had immigrated from India and worked to further his education and succeed in this county. He operated his real estate deals through an LLC: King Holdings LLC. Most of his past deals had been smaller single-family homes that he had bought in distress, improved, and flipped for a profit. This home would be bigger than most of his past projects. But it was being sold at foreclosure and seemed like a bargain. King Holdings buys the home at foreclosure sale in January 2023.

Around April of 2023, OFAC learns about the foreclosure, and tracks our investor down. He says that an OFAC investigator called him on his cell phone and told him that he should not be doing anything with the home, due to the sanctions. In our investor’s version of the story, the caller seemed sketchy, and he says he wondered at the time if it was a scammer trying to scare him into giving up some personal information.  

Our investor goes ahead and mortgages the property to have funds to begin renovations. The law firm which closed the mortgage says it searched title to the home and did not find the OFAC notice (which, again was indexed in a different name, Rotenberg).

By December, 2023 our investor has learned that this home has significantly more repair/maintenance problems than he’d bargained for. He is beginning to think it was not such a great deal. He signs a contract with a third party to sell the home. After initially listing the property for $2.5M, he finally signs a contract to sell it for $1.4M.

In February 2024, OFAC issues a cease-and-desist order and administrative subpoena to our investor, restating the sanctions and requiring that he immediately stop doing anything with the home. The subpoena also demands information on all dealings involving the property since January 2023. It seems that our investor certified the accuracy of a response that disclosed the renovation work but did not say anything about the property’s listing and pending sale.

In March 2024, our investor closed the $1.4 million sale of the property to the third party buyer.

OFAC took the position that pretty much everything our investor did violated OFAC’s regulations/sanctions. (I also get the sense that they were pretty mad about him not disclosing the sale, and then going ahead with the sale to the third party, after OFAC had issued their cease-and-desist order.) So, as punishment, OFAC imposed the $4,677,552.00 fine on him personally.

It is really disappointing that the Clerk of Court did not index the OFAC notice under all the names that OFAC had listed. Another possible way this could have been avoided is if our investor had checked the OFAC sanctions list before proceeding. This is a great tool that all our CTIC agents should be using too – it could even help you save a client from ending up like our Atlanta investor!

Appeals Court Upholds Ruling Nullifying Transfer of Common Elements

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The SC Court of Appeals released a new decision this week confirming that a Developer of a Horizontal Property Regime (HPR) may not remove common elements from the regime once the right to the common elements has vested in the individual unit owner. 

The facts are somewhat complicated, but I will try and simplify it as best as I can. The Developer of the fully constructed Mariner’s Cay Marina in Charleston committed the property to a HPR in 2006.  

The Marina consisted of individual boat slips, a fuel dock with a wastewater pumping station, and a two-story Ship Store. The 88 individual boat slips were converted to separate units or apartments with a designated ownership percentage of the common elements. The first and second floors of the Ship Store were designated Commercial Units 1-A and 1-B respectively. The fuel pump and the attendant wastewater pumping station were designated as Commercial Unit 2. The Master Deed stated that the Commercial Units were “common elements or limited common elements [of the Regime].”    

However, the Master Deed also provided that the Developer retained a right to “unilaterally amend the declaration for any purpose” for the earlier of 18 months or the point where it sold 90% of the unit, but not in such a way as to “adversely affect the title to any Unit unless the Owner shall consent in writing.”

In 2007, during its “unilateral” rights period, Developer amended the Master Deed by removing the language that designated the the Commercial Units as common elements or limited common elements.  At the time of the Amendment, at least 39 individual units (slips) had been sold. 

Shortly after recording the amendment to the Master Deed, Developer sold the Commercial Units to a third party, who in turn sold the property to another entity. This down the line entity borrowed money for construction at the Store, which it secured by a mortgage on the Commercial Units.  

It would not make for a good story unless the mortgage went into default. Lender filed a foreclosure action naming the HPR as a defendant by virtue of its liens for assessments. The Court indicates that the HPR participated in the proceedings without contesting the foreclosure or the right of the Developer to have transferred these units in the first place. In February 2015 the property was sold at public auction. It eventually was sold again to the two LLCs that are the defendants in the ensuing litigation.

It appears that between 2006 and 2015, the slip owners had enjoyed free use of the waste-water pumping station on the fuel docks and of the restrooms in the Ship Store. However, the new Commercial Unit owners changed quite a few things after taking possession of the units. The Commercial Unit owners took action to bar the slip owners from the use of the pumping stations, forced the dock master to vacate the Ship Store where his office had been located, and denied access to the restrooms.  

In response, several individual unit owners filed suit alleging that the Commercial Units were common elements of the HPR and that Developer did not have authority to change that status when it recorded the amendment to the Master Deed. In defense, the Commercial Unit owners argued that the Master Deed gave the Developer unilateral authority to amend the Master Deed and that the HPR waived the right (of all unit owners) to contest the Developer’s action when it acquiesced to the foreclosure proceedings. 

The Court of Appeal focused its holding on its prior ruling in  Vista Del Mar Condo. Ass’n v. Vista Del Mar Condos., LLC, 441 S.C. 223 (Ct App. 2023). In Vista Del Mar, a Developer originally committed a tract of land to a HPR pursuant to a multi-phase development plan. After construction of the initial phase, the Vista Developer changed its plan of development and determined that a portion of the undeveloped property committed to the HPR was no longer necessary to its intentions. The Master Deed had language giving the Vista Developer a unilateral authority to add or remove property from the regime on behalf of itself and as the agent for the individual unit owners.

Unit owners sued the Vista Developer arguing that common elements could not be conveyed. In issuing its opinion, the Court concluded that the Vista Developer had authority to convey the property because the unit owner’s rights in the particular property as common elements had not yet vested in the unimproved portion of the property, because the property was not scheduled to be a common element for recreation and the contemplated construction on the unimproved portion had not been commenced or completed. 

In the current opinion, the Court found that the rights of the slip owners in the common elements at Mariner’s Cay had fully vested. Once the vesting occurred, Developer’s authority to remove common elements ended regardless of the provisions of the Master Deed. The Court ruled that the Master was correct in finding the Commercial Unit owners “wrongfully held title.”

The Court was not impressed with the argument that the HPR’s participation had waived the rights of individual unit owners to contest the transfer of the common elements. The Court ruled that the individual units were not parties to the foreclosure action. Not being parties, they could not be estopped by any failure of the HPR to assert defenses in the foreclosure hearing.  Attorneys that litigate all kinds of cases against HPRs should take heed that the HPR Association does not necessarily have authority to bind individual unit owners.

While this new ruling is confirmation of prior standard concerning the vested rights of unit owners in common elements, practitioners may find that the devil is in the details concerning the point at which such rights vest. The Court was not exceptionally clear in laying out specific for determining whether a right to a common element vests, but it seems that it was important to the Court that the common elements were fully constructed, in active use by the slip owners. Perhaps too that fuel docks and pumping stations and restrooms have more obvious correlation to the expectation of slip owners in a Marina than unimproved property slated for future development might have had to unit owners in Vista Del Mar. Yet another distinction between the two case may have been what seems like much more explicit language in the Vista Del Mar Master Deed concerning the authority of the Developer in adding and subtracting property for use in future phases.

Attorney Opinion Letters – Worth the Risk?

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Have you ever been asked to provide a title opinion in connection with a real estate transaction? What does that mean? To me, it means that the client asks you to give your legal opinion as to the legal and factual validity of title ownership for a particular piece of land, and to note any matters of record that impact the title. That raises the question: Do you want to be personally responsible for that opinion?  More importantly, do you want to be personally responsible to the client or a third party if that opinion is incorrect?

What if the records are incomplete or inaccurate? Will you search title yourself or are you going to rely on a title abstractor? Will the abstractor have sufficient E&O coverage to protect you if they make a mistake?  Are you comfortable taking the risk that the abstractor did not miss anything in title? Lastly, why would you want to bear that risk when there is a national industry offering title insurance to protect parties from the same types of title risks that would be covered by a title opinion?

I think buyers and lenders look at these opinions as a guaranty that the opinion is correct. As a lawyer, you would never guarantee the outcome of litigation or settlement negotiations because there are too many factors that are outside of your control. In a perfect world, real estate or public records would contain no errors and no mis-indexing and there would be no forgery, fraud or people attempting to take advantage of the system. But we, our systems and our abstractors are not infallible. However, when lenders and buyers close a real estate transaction, they want certainty. 

In recent years there has been a push, especially with refinances and home equity mortgages, for lenders to accept an attorney opinion letter (commonly referred to as an “AOL”) in lieu of a title insurance policy.  At first, this may seem like an additional stream of revenue for your office, but you must weigh the benefits against the potential harm. 

A legal opinion is an analysis by an attorney subject to a promise of care, not an insurance contract.  If the legal opinion is wrong, the remedy is a claim of legal malpractice or negligence on the part of the attorney. 

In comparison, a title insurance policy is a contract of indemnity in which the title insurance company has certain obligations to its insureds pursuant to the terms of the policy. Coverage depends upon satisfaction of the commitment requirements and is subject to the specific exceptions as well as the conditions and exclusions of the policy jacket.   

While the perception may be that AOLs are faster and less expensive and appropriate where risk is considered low (refinances and HELOCs), The American Land Title Association (ALTA) and other industry leaders caution that an AOL does not provide the same level of protection as title insurance products. 

For attorneys, loss resulting from an inaccurate AOL could negatively impact a practice’s bottom line.  An attorney making a payout under an E&O policy may soon have an increased deductible or lose the policy altogether. A firm may see its reputation suffer in the community to a greater degree from a personal allegation of malpractice than from a claim against a title policy. 

There are companies that offer a variety of services which include AOL programs.  One such provider is Voxtur Analytics Corp.  Earlier this year Voxtur (and its 20+ affiliated entities) filed bankruptcy in Canada and has petitioned the U.S. Bankruptcy Court for the District of Delaware to be recognized and restructured under a Chapter 15 petition. According to online information, Voxtur has been suffering large losses for the last several years: $54.3 million in 2023, $73.6 million in 2024.  Reportedly, as of March 2025, its liabilities exceeded its assets by $33.2 million. 

Many lenders have relied on Voxtur’s AOL program and others like it in lieu of title insurance. The bankruptcy should cause these lenders and their servicers to question not only the reliability of such programs but also the longevity of the remedies available under such a program. As a result of the bankruptcy, parties that utilized Voxtur’s services must be questioning whether Voxtur will be able to satisfy any claims related to its AOL program. Voxtur should be a reminder to the industry that vendor insolvency is a real risk in the AOL model of risk allocation. 

So back to my original question: are AOLs worth the risk? Is it worth the risk to an attorney’s personal, professional liability or reputation to provide an opinion of title for a fee that may not match the potential risk? Is it worth the risk to fast-track a transaction or cut costs when the result may be to weaken the lending industry’s access to reliable protections in the event of title claims, especially for those matters which may be covered under certain title policies of insurance but would not be covered under an AOL?   

…Just a little food for thought as we digest all those holiday feasts. Cheers!

FNF challenges FinCEN Rule and ALTA concurs

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In our previous blog entry, Jennifer Stone did a great job of summarizing FinCEN’s new Anti-Money Laundering Rule that is scheduled to go into effect as of December 1, 2025. In short, the Rule will generally require South Carolina real estate attorneys to make reports to FinCEN concerning every residential (1-4 Family property) transaction where 1) the grantee is an entity or trust and 2) there is no financing provided by a lender that is subject to federal anti-money laundering reporting obligations. 

The closing attorney will be on the hook (under threat of civil and criminal liability) to collect extensive information from the parties to the transaction, including the names and addresses of every person or entity who has a beneficial interest in or control over the grantee entity. Generally speaking, the collection of information is well outside the scope of the usual real estate closing and places the burden on attorneys and title companies to collect information from third parties who may not be willing to share that information.

However, there is still the possibility that the Rule will not go into effect as scheduled in December. This past May, Fidelity National Financial, Inc. (“FNF”), the parent corporation of Chicago Title, filed suit in federal court challenging the Rule and thereby taking the lead role in speaking up on behalf of attorneys and title agents in advocating for more measured, less burdensome requirements and reporting.

In the lawsuit, FNF has requested an injunction suspending FinCEN’s enforcement of the Rule. A hearing is currently scheduled to be heard on September 30, 2025.

FNF also filed a Motion for Summary Judgment to which the American Land Title Association (ALTA) recently expressed its support by filing an amicus brief. ALTA, of course, is the most prominent trade association of title insurance companies and title agents in the United States.

While FinCEN asserts that the cost to the title industry (including closing attorneys) of meeting the reporting requirements could reach as high as $600 million annually, ALTA’s brief argues that FinCEN has significantly underestimated the training and collection time necessary to comply and that the true cost to the industry will be significantly higher. ALTA argues that the this significant burden cannot possibly be outweighed by the corresponding benefit to law enforcement. ALTA points out that FinCEN drastically reduced the scope of the reporting of Beneficial Ownership Information (BOI) under the Corporate Transparency Act (which we wrote about here) in part because the new administration believed that reporting on American formed entities was of limited value to law enforcement.

ALTA further argues that the reporting burden under the Rule will disproportionately fall on small businesses that are “ill equipped” to absorb the additional costs and regulatory burden of reporting in an industry with already thin margins. I think many South Carolina residential real attorneys with already thinly stretched teams would agree wholeheartedly with ALTA in that statement. 

Certainly, there are quite a few miles to go with this lawsuit before a final verdict is rendered concerning the new Rule. We will continue to keep an eye on the progress of this case, but for now South Carolina attorneys must continue to develop procedures for complying with this Rule when it goes lives on December 1. 

SC Supreme Court clarifies realtor liability under Disclosure Act

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Call me a little strange, but I am always interested to read about real estate contract disputes. An odd fact of my career is that my trial history is bookended by Magistrate Court-level trials involving real estate contract disputes. The first was a seriously thrilling fight (to a baby lawyer) over $1500 in earnest money on a flat fee that certainly did not reflect the legal hours expended. My final was in defense of a client’s failure to disclose “mold” around a leaky water heater. For the record, I am undefeated in Magistrate’s Court, despite it being the only Court a judge has ever demanded I produce my bar card. I was wearing a suit and had a briefcase and everything!   

The Supreme Court recently issued an opinion that may be interesting to real estate attorneys and litigators concerning the liability of real estate agents. The Court’s opinion in Isaacs v Onions held that there is no right of private action against a seller’s real estate agent under the South Carolina Residential Property Condition Disclosure Act for the seller’s failure to disclose a property defect. The Court also made a finding that the buyer could not have reasonably relied upon general statements made by the seller’s agent concerning the findings of a prior CL-100. 

The facts of the case were as follows: The Onionses (“Sellers”) listed their home in Litchfield Plantation with the Selling Agent (“Agent”), and filled out a Residential Property Condition Disclosure denying any “present wood problems caused by termites, insects, wood destroying organisms, dry rot[,] or fungus.” The property was listed and promptly came under contract. During the course of the due diligence, the first contract buyers obtained an inspection report revealing the absence of a vapor barrier in the crawl space in some areas and noted damp soil conditions. That report recommended further inspection.

In response to the buyers’ inspection, the Oniones retained a pest control company to inspect the crawlspace.  The company issued a report finding elevated moisture readings, wood destroying fungi, and some moisture damage. They recommended installation of vapor barrier, a dehumidifier, and coverage of the outside vents, and treatment for mold, for an estimate of $4,595.00. Instead, the Sellers retained a handyman to address the vapor barrier, replace insulation, remove debris, and install a crawl space fan for $706.00. The first buyers had separately commissioned a CL-100 which showed lesser moisture readings, no active wood destroying fungi, but recommended a fan.

The first contract ultimately fell through, the property was re-listed, and the Isaacs became interest in the property ultimately entering into a contract to purchase it. Early in the transaction, Agent provided copies of the Property Condition Disclosure Form, the prior inspection reports, disclosed the scope of repairs.  Agent sent an email to the Isaacs sharing that the first buyers “CL-100 was done yesterday and from what I understood it was good, but I can obtain the report if/when necessary as the sellers paid for it.”  

The Isaacs declined to request a copy of the prior CL-100 as they intended to commission their own CL-100. The Isaac’s CL-100 revealed significantly diminished moisture levels and no evidence of any issues.  The Isaacs proceeded to closing.

Two days after closing, the crawl space flooded after heavy rains.  A week later inspection reports revealed standing water, very high moisture readings, and active fungi. The Isaacs filed suit against the Sellers, Agent, and their CL-100 inspector. They specifically alleged fraud and misrepresentation against Agent, as well as violations with regard to misinformation on the Property Condition Disclosure Form.

The Court found that while the South Carolina Residential Property Condition Disclosure Act creates a private right of action against the sellers for violations, it does not create a private right of action against real estate agents. The Court pointed out that there would be other causes of action available to the buyer in that situation.

The Court also noted that the Isaacs had been provided reports that provided ample evidence of a possible issue in the crawl space and that the real estate agent’s statement that she had heard that the CL-100 was “good” could not have been something that the Isaacs reasonably relied upon in their decision to purchase the home. In fact, the Isaacs testified that they did not request the prior CL-100 because they intended to obtain their own. 

The Court’s ruling seems to resolve (for now) that real estate agents are not subject to suit under the Act and that vaguely encouraging comments from selling agents are not to be relied upon by buyers, particularly when there is evidence of potential issues with the property. Perhaps the Isaacs faired better against the Sellers in this action on better facts.

Charleston County finally agrees to implement an e-filing system

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For many years, Charleston County’s Register of Deeds Office has refused to join the growing list of South Carolina counties that offer electronic filing for land records. Dirt lawyers have scratched their heads wondering when this large county will implement a system that has proved in other counties to be efficient and economically advantageous.

Finally, Charleston ROD has announced that it has entered into a contract with a vendor to implement an electronic filing system. Initial projections are that the new system will be in place in late 2025.

Charleston has also announced that it will provide property owners the opportunity to sign up for fraud prevention services that will notify owner of any filings that may affect their properties. Similar services have been offered by national companies at a price. Other counties in South Carolina have offered similar services free of charge.

Register of Deeds Karen Hollings said in a press release that the electronic filing system will make the Register of Deeds office better organized and more efficient for the people of Charleston County.

Merry Christmas to all!

Court grants nationwide injunction against enforcement of CTA

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The Corporate Transparency Act, which went into effect January 1, 2024, requires many companies to report beneficial ownership information to the United States Treasury Financial Crimes Enforcement Network (FinCEN). Beneficial ownership information is defined as identifying information about the individuals who directly or indirectly own or control a company. The deadline for entities created before January 1, 2024 is January 1, 2025.

Lawyers have been scrambling to grasp the intricacies of the new law and to assist their corporate clients, including homeowners’ associations, in compliance.

But we have a huge development.

On December 3, the United District Court for the Eastern District of Texas granted a nationwide preliminary injunction that prohibits the federal government from enforcing the new law.

Six plaintiffs filed the lawsuit in May challenging the constitutionality of the law. The decision is based on the Commerce Clause, and the statute is based on national security and aimed at enforcing laws against money laundering. This case will surely go to the Supreme Court, and we will have to wait to see how that Court reacts. It is possible that the rationale for the legislation holds for some but not all entities. Homeowners’ associations seem to be likely candidates to dodge this particular bullet.

Department of Justice takes last-minute action against NAR Settlement

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On November 24, just 48 hours before the National Association of Realtors’ settlement agreement headed to final approval, the Department of Justice filed a statement of interest in the lawsuit.

The filing indicated that the DOJ did not participate in the underlying litigation, but it challenged the settlement’s provision that requires buyers and buyers’ agents to enter into a written agreement before touring a home. This provision raises concerns under antitrust laws that could be addressed in multiple ways, according to the DOJ’s statement.

The DOJ suggested rectifying the issue by eliminating the buyer broker agreement requirement or to disclaim that the settlement creates any immunity or defense under the antitrust laws. Otherwise, the court could clarify that the settlement approval affords no immunity or defense for the buyer-agreement provision. The DOJ believes the settlement could limit the ways buyer brokers compete for clients.

The final hearing is scheduled for November 26 in Missouri. The NAR said in a statement that it will advocate for a final settlement that day. The statement suggested that the settlement is not what the NAR wants, but that it is preferable to continued litigation and the uncertainty of a jury verdict.

We’ll see lots of news on this topic this week and next week!

In the meantime, Happy Thanksgiving wishes for you and your family!

Secret Service issues new Advisory

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Real estate impersonation scams have “evolved”, it says

In September, the United States Secret Service issued an update to its “Real Estate Scam – Vacant Properties” Advisory (v. 1.1) The original Advisory was issued in Spring of 2022.

The current Advisory warns that the Secret Service has become aware of an increase of instances where criminals are impersonating title companies to steal real estate funds. Remember that “title companies” actually close transactions in many states. In South Carolina, the bad actors would impersonate law firms and banks.

Now more than ever, it is important for everyone involved in a real estate transaction to validate wires before they are sent. The last thing you need is for your law firm to have to provide funds to replace lost closing proceeds!

Often, the perpetrator impersonates the title holder and negotiates to sell unoccupied property to an unsuspecting buyer. Once the contract is signed, the criminal directs the buyer or realtor to the criminal’s account, impersonating a title company or law firm. The perpetrator impersonates the closing office by purchasing fake domains, similar to the closing office’s domain. (Such as me@lawfiirm.com vs. me@lawfirm.com.)

Red flags are identified by the Advisory:

  • Communications are primarily by email and communications contain poor grammar.  (This is from me, not the advisory. If you ever seen the word “kindly”, such as “kindly wire the funds to….” Remember we don’t typically talk that way! Any twisted language or bad grammar may indicate the communication is coming from someone and some place with a first language other than English. Always use common sense!)
  • Wiring instructions are sent over standard email instead of a secure email platform.
  • The listing is below market value and the “seller” is looking for a cash buyer or quick closing.
  • The “seller” wants to use its preferred closing office.
  • The closing office is outside of the area where the real estate is located.

The Advisory suggests the following avenues of prevention:

  • Conduct an online independent search of the entity to which the funds are to be wires.
  • With a known phone number (from a trusted website or previous contact) CALL and verify the wiring instructions and names on accounts.
  • If possible, visit a local branch of the entity to which the funds are to be wired.
  • Obtain a government issued ID from each party, and evaluate IDs for abnormalities.
  • Consider a form of multi-factor authentication with your clients. For example, send an overnight letter to the mailing address on the tax bill asking the property owner to call you with a one-time code embedded within the letter.

To read more, visit http://www.secretservice.gov. And be careful out there!