In the Matter of Bush* resulted in a disbarment of a dirt lawyer who used a common “robbing Peter to pay Paul” scheme to steal from clients. The case involved three disciplinary complaints.
The first complaint revolved around the failure to wire $334,000 to a lender to pay off a mortgage in a real estate closing. The lawyer eventually admitted he used the money to replace funds he misappropriated from another closing.
The second complaint arose when the lawyer issued a closing protection letter and a title insurance commitment despite the fact that his title insurance company had suspended him as an agent and his title insurance agency license had expired. The lawyer received funds for this closing but, again, failed to satisfy the prior mortgage. The lawyer eventually admitted he used the funds to pay off the underlying mortgage for the closing described in the first complaint.
After the lawyer was placed in interim suspension by the Supreme Court, he responded to a third client whose mortgage had not been satisfied that, “I am going to plow back in to this and let me talk with some colleagues about a way to get a better resolution quickly.” The lawyer did not tell the third client that he had failed to satisfy her mortgage. Instead, he provided false information to the client regarding the status of the debt. The lawyer finally admitted that he had stolen the funds.
It’s amazing that a few bad apples continue to employ these deceptive techniques that eventually come to light. It is impossible to hide this type of scheme forever because the economy always ebbs and flows. Even a small economic downturn can result in the failure of the next closing to materialize. Without the funds from the next closing, the mortgage from the prior closing is never paid, and the house of cards falls quickly. In this case, the lawyer’s former title insurance company received a claim from one of the lenders who was not paid. A title insurance complaint will also cause the house of cards to fall quickly.
Lawyers, please read this case carefully as a model of what not to do! Be careful out there!
Late in 2023, this blog discussed multiple class action lawsuits across the United States attempting to hold brokerage companies responsible for conspiring to keep residential real estate commissions artificially high. We have a development.
A Federal judge in Missouri said on October 31 that he will approve a $110 million settlement with nine brokerage companies. In May, a similar $208 million settlement was approved. And two more orders are expected in November, when the same judge weighs a pair of settlements against the National Association of Realtors and HomeService of America.
This blog also discussed last November that a similar class action was brought in South Carolina. Dirt lawyers, I would love to know what you are seeing in your markets. Are commissions now being negotiated to avoid the potential liability? I’d love to hear what’s going on out there.
Chicago Title sent out a memorandum to its agents on September 27 that I want to bring to the attention of those who read this blog.
South Carolina’s Real Estate Commission has begun to send out enforcement letters to investors the Commission believes are participating in illegal “wholesaling.” One of those redacted letters is attached.
On May 21, Governor McMaster signed into law former bill HB 4754, which requires a real estate broker’s license for those engaging in wholesaling. The new law defines the term “wholesaling” as “having a contractual interest in purchasing residential real estate from a property owner, then marketing the property for sale to a different buyer prior to taking legal ownership of the property.” The definition further states that “wholesaling does not refer to the assigning or offering to assign a contractual right to purchase the real estate.”
The question has become whether an investor can avoid the technicalities of the statute by marketing an assignment of a contract rather than directly marketing the underlying real estate. Investors appear to be taking the position that this activity is not prohibited, but the Real Estate Commission appears to disagree.
Investors are apparently being reported to the Real Estate Commission for potential violations of the new statute, and the Real Estate Commission is purportedly sending out letters to enforce the statute.
It is likely that our courts will become involved in resolving this question.
Anyone who has been involved in attempting to pass legislation will understand that drafting, redrafting, and amending bills often leads to tricky language. My guess is that most dirt lawyers could have drafted a clearer statute, but the bargaining and back-and-forth nature of drafting legislation has likely resulted in the complicated language we have.
Stay tuned as the Real Estate Commission and our courts deal with this issue.
Williams v. Jeffcoat* involved real estate in Charleston owned by Bradford Jeffcoat and Sandra Perkins, a couple who had a roughly two-decade relationship but who never married. In April 2000, Jeffcoat bought a house and lot, and in July 2000, he executed a deed conveying the property to himself and Perkins “jointly with right of survivorship and not as tenants in common.” The two resided together at that location until 2015.
In 2009, Perkins developed dementia. Jeffcoat served as her sole caregiver until he hired an in-home aid. In the spring of 2015, Perkins’ health rapidly declined, and Jeffcoat asked Vanessa Williams, Perkins’ only child, to come to Charleston from her home in Alabama to help care for Perkins. Soon after Williams arrived in Charleston, her name was added to Perkins’ checking account. Williams used Perkins’ funds to pay for Perkins’ medical appointments, but also allegedly used Perkins’ funds to pay Williams’ personal expenses, including closing costs on a mobile home in Alabama, living expenses totaling around $2,200 per month, and Williams’ daughter’s college tuition.
During her five weeks in South Carolina, Williams helped care for Perkins. On June 16, 2015, Williams was scheduled to take Perkins to a doctor in Charleston. Instead, without telling Jeffcoat, Williams took Perkins to live with her in Alabama. Perkins resided with Williams until her death, later that year.
Jeffcoat said Williams shut Jeffcoat out of Perkins’ life and give him no information about her whereabouts or condition despite his repeated efforts to contact them.
Before Perkins’ death, Williams filed a petition for general guardianship and conservatorship in Alabama to “protect and manage the person, assets and financial affairs” of Perkins. The petition did not mention Jeffcoat. The Alabama court granted letters of guardianship and conservatorship. Williams then, acting as Perkins’ guardian and conservator, deeded Perkins’ interest in the Charleston property to herself, individually, for $10.00 and love and affection, thus allegedly severing the joint tenancy between Jeffcoat and Perkins and creating a tenancy in common between Jeffcoat and Williams.
Two days before Perkins’ death, Williams brought this action, individually and as Perkins’ guardian and conservator, against Jeffcoat, in Charleston County, asking the court to compel partition of the property. Jeffcoat answered, asserting affirmative defenses of failure to state a claim, unclean hands, and lack of standing, and counterclaims for fraud, breach of fiduciary duty and slander of title.
Williams amended her complaint to also appear as personal representative of Perkins’ estate. Williams moved for partial summary judgment, arguing a joint tenancy can be severed by a cotenant’s unilateral conveyance to a third party under South Carolina law and that Alabama law permits a conservator to collect, hold, and retain a ward’s property without prior court order. Jeffcoat also moved for summary judgment, arguing that a joint tenancy with right of survivorship cannot be unilaterally severed by conveyance to a third party and that the deed to herself individually was self-dealing contrary to South Carolina and Alabama law. He requested a deed in his name only.
The Master granted Williams’ motion, finding that a joint tenancy may be unilaterally severed without the consent of the other joint tenant and that the deed to herself was lawful. The Court of Appeals affirmed, and the Supreme Court granted Jeffcoat’s petition for a writ of certiorari.
I’m going to skip several issues to concentrate on the joint tenancy issue. The Supreme Court ultimately remands the case, concluding that there were issues of material fact with regard to the unclean hands issue.
As to the joint tenancy issue, Jeffcoat contended that the master erred in finding the joint tenancy could be unilaterally severed, arguing South Carolina Code §27-7-40 prohibits such severance. The Court held that it did not need to decide this issue because the deed was executed prior to the effective date of the statute, (August 17, 2000) and the statute should not be applied retroactively. Under common law, according to the Court, the joint tenancy could be unilaterally severed by conveyance by one joint tenant to a third party. Consequently, Jeffcoat and Perkins own the property as tenants in common, and the sole remaining issue is whether Jeffcoat’s defense of unclean hands will defeat Williams’ demand for partition.
Acting Justice Addy concurred, writing separately to bring attention to issues which may arise under §27-7-40.
The Court of Appeals had correctly stated, according to Justice Addy, that the General Assembly’s primary purpose in passing this statute was to delineate specific language which would conclusively create a joint tenancy with right of survivorship. Although the statute accomplishes that purpose, in light of the legislature history and the holding by the majority opinion, joint tenancies with right of survivorship which were created pursuant to the language of the statute may well remain subject to severance by unliteral conveyance of a joint tenant.
Addy noted that the original bill read: “The fee interest in real estate held in joint tenancy may not be encumbered or conveyed to a third party or parties by a joint tenant acting alone without the joinder of the other joint tenant or tenants in the encumbrance or conveyance. Prior to passage, however, the legislature removed the underlined language. Therefore, because the legislature elected to remove the language prohibiting conveyance by a joint tenant, the Court of Appeals’ holding that even joint tenancies created pursuant to the statute remain subject to severance under the common law may well prove prescient.”
In a footnote, Justice Addy said, “I am sympathetic to the common sense of Jeffcoat’s argument. It makes little logical sense to a unilateral encumbrance by a joint tenant is ineffective and void, but a unilateral conveyance acts to destroy a joint tenancy and create a tenancy in common. However, under a strict reading of the statute’s text and, considering its legislative history, this result appears to have been the intention of the General Assembly.”
I can’t tell you the number of times I’ve unsuccessfully tried to apply logic to this statute! I appreciate Justice Addy’s affirmation of my efforts!
The Concurrence’s other footnote is even more interesting. It reads: “The facts of this case present, at best, a cautionary tale and, at worst, a liability trap to the real estate practitioner. As the court of appeals noted, had the author of the deed in issue created a tenancy in common with right of survivorship pursuant to the language used in Smith v. Cutler, 366 S.C. 546, 551, 623 S.E.2d 664, 647 (2005), Williams’ unilateral conveyance would have been ineffective in severing the tenancy.” (Citation to the Court of Appeals omitted.)
Cautionary tale, indeed! Trap, indeed!
South Carolina Supreme Court Opinion 28236 (September 18, 2024)
In one of the saddest disciplinary cases I’ve read to date, the South Carolina Supreme Court disbarred a real estate practitioner for dipping into his trust account to support his gambling addiction.
In the Matter of Webb, * involved a real estate practitioner who had worked in a law firm for many years. The lawyer opened his own practice in 2020. He self-reported numerous instances of accessing his trust account for personal use in 2022.
When he left his law firm, the lawyer hired his long-time real estate paralegal and gave her access to his real estate trust account. Interestingly, no funds were misappropriated from this account. He subsequently opened another trust account, however, and used this account inappropriately. His paralegal offered to handle and reconcile this account, but he refused, and he never kept proper financial records for this account.
The improper transfers suggest the lawyer was attempting to merely borrow funds. For example, he received a wire of $114,352 to be held in escrow on May 10, 2021. On May 12, he transferred $4,000 of these funds to his operating account. On May 14, he made a cash deposit of $4,000 into the trust account, and on May 18, he transferred the full amount of $114,352 to his client. His records indicate he used some of the $4,000 for personal and business expenses and some to conduct online sports gambling.
Later, the lawyer began to repay funds he had borrowed from one client by using funds held in trust for another client. For example, on August 20, 2021, he received a wire in the amount of $284,150 to be held for a 1031 exchange. Over the course of the next seven months, he converted these funds for his personal use, including to fund gambling activities. When he disbursed the funds to his client in March of 2022, he did so, in part, by using $53,336 held in trust for another client. He delayed disbursement to the second client by three months, and he made that disbursement using funds held in trust for other clients.
He admitted he failed to keep client ledgers and “did a terrible job of keeping financial records.” The case lists funds misappropriated from numerous clients and, in addiction, lists an aggregate amount of more than $500,000.
The sad part of the case is the evidence the lawyer presented in mitigation. He explained that he had struggled with a gambling addiction since 1999, and that addiction escalated between 2014 and 2016, resulted in him taking out numerous mortgages and loans and eventually declaring bankruptcy in 2016. He then sought counselling and attended Gamblers Anonymous meetings, and “quit gambling for the most part” for approximately two years.
He explained that after he opened his own practice, the pressure of managing his business and personal finances triggered a gambling relapse. He was able to leverage assets and borrow additional funds from family members and friends to replace all but $126,000 belonging to five clients. After the self-reported his misconduct, he advised those five clients to file claims with the Lawyers’ Fund for Client Protection, which covered the full amount of losses for all but one client. The lawyer said he borrowed $35,000 from his parents to cover the funds owed to the fifth client.
Following his suspension, the lawyer enrolled in an in-patient gambling recovery program. After returning from that program, he explains he has prioritized healthy activities, including Bible study, church attendance, Gamblers’ Anonymous Meetings, maintaining contact with Lawyers Helping Lawyers, spending time with his children, working out, and working a full-time job and driving part-time for Uber.
The lawyer explained his “decisions and actions cost me my marriage, my law license, friendships, and significant time and experiences with my children.” The Court commended the lawyer for his extensive efforts to address and rehabilitate his gambling addiction, but said the mitigating circumstances in no way excuse the serious misconduct.
Dirt lawyers understand that South Carolina appellate courts will overturn tax sales on the flimsiest of technicalities. Our courts require strict compliance with the tax sale statutory requirements. In an August 21 Supreme Court case*, a tax sale was overturned because the tax collector failed to post the required conspicuous notice.
Alvetta Massenberg inherited a 2.54-acre undeveloped tract of land near the rural community of Alcola in Clarendon County in 1997. She paid taxes through 2015 but failed to pay taxes in 2016. The tax sale process began.
The property is densely forested and triangular in shape. One side faces a two-lane paved secondary road known as Plowden Mill Road. This road is marked with a double-yellow center line and solid white fog lines. The second side of the property faces a one-lane dirt road known as Robert Rees Durant Road. This road has very little shoulder area and the surrounding vegetation crowds the one lane of travel.
The tax collector sent the required “notice of delinquent property taxes” by regular mail to Massenberg’s permanent address in Charlotte and sent another notice by certified mail. The certified mail notice was returned, and the tax collector turned to the required alternative notice of South Carolina Code §12-51-40(c). That subsection requires the tax collector to “take exclusive physical possession of the property…by posting a notice at one or more conspicuous places on the premises.”
The tax collector hired a private contractor to post the notice, but gave the contractor no instruction and no guidance on how to—or ever whether to—post the notice in a “conspicuous” place. The contractor posted a “Notice of Levy” printed on an 8.5 x 11-inch sheet of paper on a tree facing the one-lane road.
Testimony indicated traffic on the paved road would be 100 times more than traffic on the dirt road.
The Master found the posting was appropriate. The Court of Appeals affirmed.
On appeal, the Supreme Court focused on the very narrow question before it, that is, whether the notice was posted in a conspicuous place. The Court stated that the statute does not require that the notice be posted in the most conspicuous place, only that it be posted at “one or more conspicuous places.”
The Court held that the process of selecting a conspicuous place is necessarily comparative and a judgment call. The Court found it critical that the Clarendon County tax collector exercised no judgment at all. Rather, she entrusted the responsibility to a private contractor without instruction. And there was no evidence that the contractor even knew of the “conspicuous place” requirement.
The Court held that the posting was clearly not in a conspicuous place.
*Massenberg v. Clarendon County Treasurer, South Carolina Supreme Court Opinion 28234 (August 21, 2024).
Rule changes resulting from NAR class action settlement discussed
South Carolina real estate lawyers were invited to an excellent Zoom meeting on August 20 sponsored by South Carolina Realtors. The meeting was advertised on the South Carolina Bar’s Real Estate section listserv. Nick Kremydas of that organization and Gary Pickren, founding member of Blair Cato Law Firm, addressed the changes residential real estate lawyers should expect as a result of the National Association of Realtors class action settlement. South Carolina dirt lawyers owe a huge thank you to these two well-informed lawyers who, in addition to speaking and answering questions on the topic, offered their email addresses for the purposes of fielding further questions. *
According to the settlement, as of August 17, NAR affiliated residential multiple listing services can no longer accept listings that indicate the amount or percentage of the seller’s commission that will be paid to the buyer’s broker. There is no requirement that a buyer be represented by a separate broker, and for many years, buyers typically had no representation. But in recent years, buyers’ agents have routinely been employed, and it is clear that some other method must be worked out for their payment.
The speakers initially stated that the MLS entities in South Carolina have complied with the August 17 deadline, but there was a brief mention that Hilton Head may be an exception. Some brokers are drafting “showing agreements” or “touring agreements” to comply with the rule that a buyer must agree to commissions prior to seeing houses.
The implementation of the changes in practice has fallen to the state level, which makes sense because state laws are not consistent on the related issues. Gary Pickren said implementation may be somewhat of a moving target as the market begins to dictate what will occur. It is important to remember, he said, that only sixty percent of real estate agents are NAR-affiliated Realtors, so all agents are not currently required to comply. As a practical matter, however, agents will have to comply because they use the MLS services. In addition, according to Gary, future lawsuits are always a possibility, so that threat will encourage compliance by everyone in the marketplace.
Gary pointed to three ways buyers’ agents may be compensated:
Direct Payment: The seller will pay the seller’s agent and the buyer will pay the buyer’s agent. Gary sees this method being applicable with higher-priced homes. Settlement Statements will simply reflect a charge for the seller and a charge for the buyer.
SC Realtor Form 120: This form is a compensation agreement. The seller will enter into an agreement with the listing agent to pay $X to the listing agent and to authorize the listing agent to pay $Y to the buyer’s agent. The Settlement Statement will reflect both charges to the seller, exactly as we have shown these charges in recent years.
Contract Concessions: In addition to the normal concessions for closing costs, sellers may make concessions for commissions. Settlement Agreements will reflect the seller’s charge for the listing agent’s commission, the buyer’s charge for the buyer’s agent commission, and a credit from the seller to the buyer for the concession. There may be some concern here with regard to appraisals and lender limitations on concessions. Closing attorneys will have pay particular attention to these issues.
In addition to these three methods, some brokers are drafting their own documents to handle commissions in different ways.
Gary questioned how the new rules will be policed and indicated closing attorneys may have additional liability in this regard with no additional payment. We have all seen that our Supreme Court seems to place the liability for the accuracy of closing statements directly on the shoulders of closing attorneys. He said he does not feel closing attorneys will have to review MLS listings, but they may ask to see the Forms 120 and they require have the parties sign separate documents addressing the accuracy of the commissions reflected on the Settlement Statement.
Gary indicated the Real Estate Commission has no jurisdiction to police these issues, but the MLS services and the local Realtor Associations may implement rules with fines, commission forfeitures and even suspensions and bans from using the MLS services.
I want to personally thank Nick and Gary for providing this service for all of us. It appears to me that their thinking and their willingness to educate the Bar may place South Carolina lawyers ahead of lawyers in other states. Based on the reading I’ve done from a national standpoint, it appears the answers to these issues are still very mysterious in some locations.
*I won’t offer up the email addresses, but lawyers know how to find each other!
Chandelle Property Owners Association v. Armstrong* is a South Carolina Court of Appeals case stemming from several disputes within the Chandelle subdivision, a residential aviation community in Spartanburg County.
Appellant lot owners contend the Circuit Court erred in granting Chandelle Property Owners Association’s (the POA) motion for summary judgment. They assert the subdivision’s formation documents prohibited the POA from borrowing more than $50,000 without a vote of the lot owners. They also assert that assessments can only be used for maintenance.
The formation documents are a bit unusual. In 1997, CSC Developers, LLC and James P. Brockman, Sr. agreed to develop approximately thirteen acres of Brockman’s land into a new subdivision. The original restrictive covenants referred to Lots 1-26. The original document envisioned and authorized additional properties being subjected to the restrictions, and the developer continued to expand the subdivision by recording new plats and annexing the new lots by recorded documents.
No real estate lawyer should be surprised that several disputes and questions arose surrounding the development given the confusing nature of the various sets of documents. The POA brought this quiet title action, in part to remove any uncertainty as to which properties were subject to the restrictive covenants.
The POA filed amended complaints adding a cause of action addressing negative reciprocal easements. Simply stated, that cause of action would have alleged that whether or not certain lots were technically subjected to the restrictions, the lots were included within the subdivision because the sales program and recorded documents would have put all buyers on notice that the lots were a part of the subdivision. (This is my explanation, not the Court’s.)
In the interest of simplicity and discussing only the real estate issues, this discussion eliminates bankruptcy issues and certain counterclaims and third-party claims.
The Court of Appeals held that the Circuit Court had properly granted partial summary judgment to the POA. The Court discussed the nature of restrictive covenants, including the fact that they are contractual in nature and must be interpreted to give legal effect to the parties’ intention as determined by the language of the documents.
The documents did, in fact, include a provision limiting the borrowing power of the board of the POA to $50,000 without prior approval of a majority of the lot owners. The Circuit Court did not reach the merits of whether this provision had been violated, stating that such a violation would not relieve the lot owners of their obligation to pay assessments. The Circuit Court said that if the lot owners’ argument were accepted, it would mean that if the POA borrowed more than $50,000 without member approval, then the POA could never assess the lot owners to pay off that loan, forcing the POA to default on the loan.
The Court of Appeals agreed, stating that because lot owners may not exempt themselves from assessments, the lot owners’ obligation to pay their assessments exists independently of their disagreement with the POA board’s use of the assessment funds, its business judgment, or incurring more than $50,000 in debt. Perhaps more importantly, according to the Court of Appeals, the POA has the right and likely the duty to bring legal action against owners for delinquent assessments.
The board of the POA may at some point be held responsible for the alleged violation of the loan limitation, but assessments are nevertheless obligatory, particularly for the purposes of this summary judgment posture.
It is an interesting concept and probably necessary for the proper governance of residential subdivisions.
*South Carolina Court of Appeals Opinion 6078 (August 7, 2024)
In Maybank 2754, LLC v. Zurlo, * South Carolina’s Court of Appeals dealt with issues surrounding whether an easement was created and, if so, whether that easement was wiped out through a foreclosure.
The lawsuit centers around two properties located along Maybank Highway in Charleston County. The dominant estate, owned by Maybank, is occupied by an office building containing leased office spaces. The servient estate, containing sixty acres, was purchased by Penny Creek Associates, a company owned equally by Michael LaPlante and Respondent Zurlo Trust.
Initially, Penny Creek owned all of Maybank’s membership interests. In 2013, those membership interests were transferred to the LaPlante family. Shortly after that transfer, Zurlo Trust and others commenced a derivative and judicial dissolution action against Penny Creek. That matter settled in 2016 with an agreement for Penny Creek to wind up its business, sell its real estate, and terminate its LLC status.
The LaPlante family currently retains all membership interests in Maybank. In its complaint, Maybank alleged that as a part of the transfer of the membership interests, Penny Creek granted the LaPlante family a thirty-foot easement, and that the LaPlante family assigned that easement to Maybank. Zurlo Trust and Michael LaPlante each owned fifty-percent of Penny Creek at the time of the transfer.
In 2017, the servient estate was sold as a part of a foreclosure action Wells Fargo brought against Penny Creek. Respondent 1776, LLC, an entity Maybank alleges is owned entirely by Zurlo Trust, bought the property at the foreclosure sale and sold the portion of the property over which the alleged easement runs to Respondent Beach Fenwick, LLC.
In January 2020, Maybank brought the subject action seeking a declaratory judgment that it has an easement, or, in the alternative, that the private right-of-way is a restrictive covenant. The lawsuit also alleged civil conspiracy and requested a temporary injunction to stop development on the easement.
Respondents filed a motion to refer the 2020 action to the Master on the theory that the Master had retained jurisdiction after the foreclosure. Maybank objected on the grounds that it has requested a jury trial. Maybank also argued that it had not been a party in the foreclosure and, therefore, its rights could not have been extinguished by the foreclosure.
The matter was referred to the Master, and Maybank appealed. The Master held a status conference while that appeal was pending. Maybank objected. The Master sent the matter back to the Circuit Court, and the Respondents filed motions for summary judgment. Maybank filed a motion to amend the Complaint. Respondents then filed a motion with the Court of Appeals to dismiss the appeal.
The Circuit Court held a hearing on the motions for summary judgment, and Maybank filed a Rule 59 (e) motion that the Circuit Court denied. This appeal followed. The Court of Appeals then issued an order denying Respondents’ motion to dismiss the first appeal.
Please refer to the 25-page case for the complicated procedural trial and appeal issues. The Court of Appeals held, for example, that Maybank was entitled to a jury trial. I’d like to simply make a couple of points involving real estate law.
At the heart of the complaint is the alleged creation of an easement. In 2013, Penny Creek was Maybank’s then sole member. Zurlo Trust and Michael LaPlante executed a Resolution of Sole Shareholder that memorialized Penny Creek’s approval of a sale, transfer and conveyance of Penny Creek’s membership interest in Maybank to the LaPlante family.
The Resolution contained language to the effect that Penny Creek agreed to grant to the LaPlante family, their successors and assigns, a thirty-foot easement for pedestrian and vehicular access, the location and condition of which shall be mutually agreed upon at the completion of a roadway known as Pitch Fork Road. The Resolution was never recorded, and Pitch Fork Road has yet to be competed.
The Circuit Court concluded that the Resolution did not meet the essential elements required to create a property right because it lacked any identifiable location or condition, duration or scope. The Circuit Court concluded that the Resolution created only an agreement to agree. The Court also stated that, even if the Resolution created some form of an easement, it was never recorded, preventing a finding of actual or constructive notice of an easement. And if the easement did exist, it failed to survive the foreclosure.
The Court of Appeals reversed and remanded after Maybank successfully argued that the foreclosure did not affect its rights because it was not a party to that action. The Court of Appeals also agreed with Maybank that the Resolution clearly expressed the parties’ intention to create an easement.
The Court of Appeals discussed the character of the easement (appurtenant, in gross, or in gross commercial) agreeing with Maybank that parol evidence could be properly considered to determine the character to be an appurtenant easement. Summary judgment was held to be improper because the language of the Resolution is ambiguous as to the character of the easement.
Again, I am ignoring many trial and procedural issues. Please read the case! But one point of this litigation for real estate lawyers is the importance of careful drafting and recording documents to create interests in real estate. This case is an example of a real estate lawyer’s nightmare.
*South Carolina Court of Appeal Opinion 6081 (August 7, 2024)
Last week, this blog discussed a South Carolina Court of Appeals case involving the rule against perpetuities. This week, we look at the Court’s take on another basic real estate issue, King’s and sovereign grants. East Cherry Grove Co., LLC v. South Carolina* involves a dispute over dock permit over tidelands properties in North Myrtle Beach.
Matt Leonhard applied to DHEC for the permit over tidelands property adjacent to his property. East Cherry Grove Co., LLC and Ray & Nixon, LLC (collectively, Respondents) claimed they each owned a portion of the tidelands property, and the Circuit Court agreed.
The State of South Carolina appealed, making several legal arguments, including ownership by the State of navigable waterways, and the propriety of testimony by a real estate lawyer as to title even though he was not a surveyor.
At the Circuit Court’s bench trial, four King’s and sovereign grants were admitted into evidence. William Deschamps, a real estate lawyer, testified he searched the titles of the respective properties back to the grants. He testified he had no doubt that the properties were subject to the grants based on all the survey information and his review of the titles. On cross examination, he admitted he was not a surveyor and clarified that he was not rendering a surveying opinion but was basing his opinion on his title examinations after reviewing the grants in conjunction with the surveys.
A surveyor also testified and was asked if the property in question came from the grants. His response was, “There’s no other place it could have come from.”
The Circuit Court ruled that the Respondents met their burden of proof by a preponderance of the evidence that they owned their respective properties by virtue of the Grants. On appeal, the State argued that a clear and convincing standard should have been applied instead. The Court of Appeals agreed with the Circuit Court, stating that our case law provides that the State possesses presumptive title of tidelands property, and the person seeking to establish private ownership must present evidence to rebut the presumption.
The Court of Appeals agreed with the State, however, as to small portions of the East Cherry Grove tract that were outside of the grants.
The State argued that the titles should have been based on a particular plat rather than the plats relied upon by the Respondents because of the specificity of the State’s preferred plat. The Court of Appeals concluded that the Circuit Court had not erred in weighing all the evidence of title.
For simplicity, I’m omitting other issues that were argued but failed. Please read the case in its entirety for an interesting discussion of testimony in a real estate case.
*South Carolina Court of Appeals Opinion 6068 (July 3, 2024)
Let's Talk Dirt 