South Carolina

Can you be sure your real estate agent is not a serial killer?

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Maybe not! A recent South Carolina arrest brings this terrifying issue to light. Consumers visit houses accompanied only by real estate agents in South Carolina every day. Is this practice safe?

In November, Todd Kohlhepp was arrested in connection with the deaths of three individuals whose bodies were found on his property in Woodruff. Investigators were on his property near Wofford Road when they heard banging. They found a kidnap victim alive inside a large metal container “chained like a dog”. The victim had been missing for two months.

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Todd Kohlhepp – photo by myfox8.com

Kohlhepp was charged with three counts of murder, three counts of possession of a weapon during the commission of a violent crime, and one count of kidnapping. Kohlhepp is also alleged to be connected with four slayings in 2003 at Superbike Motorsports in Spartanburg.

Kohlhepp was a South Carolina licensed real estate agent. Real estate agents in South Carolina are licensed by the Department of Labor, Licensing and Regulation (LLR). A November 7 “Housing Wire” article asks how Kohlhepp got his license. The article quotes a prior article in “FOX Carolina” to the effect that LLR had stated Kohlhepp applied for a real estate license in 2006.

A background check was not required for the application. LLR’s website indicates an applicant who has been convicted or a crime must reveal that fact on the application and that the Real Estate Commission may review the application and conduct an investigation which may result in a delay in processing.

Kohlhepp had, in fact, been convicted of a 1986 kidnapping and rape in Arizona and had served 15 years in prison. But on his LLR application, according to FOX Carolina, he explained:

“I entered into a verbal agreement with my girlfriend who was also 15 at the time. I was charged with felony kidnapping due to the fact that I did have a firearm on me.”

He obtained the license and eventually established a firm of twelve agents and a reputation for being successful, professional, out-going and hard working. He was called a great salesman. He looked the part! He dressed well. He drove expensive cars.

What’s the lesson here? Consumers should eunderstand that a real estate agent’s license is no indication that the person who shows a home is honest and trustworthy.  Paying proper respect to the many, many wonderful real estate agents I know, however, it should be noted that we have seen cases in other parts of the country where real estate agents were harmed by their clients.

Unfortunately, for both sides of this equation, caution should be exercised in these situations of one-on-one contact with strangers in confined locations. Ask your friends for referrals. Do some on-line digging about the person you are about to meet. Take a business associate. Take a friend. Take your scary-looking cousin. Shoot, take your whole family. Schedule meetings during daylight hours. Let your business associates, friends and family know where you are, who you are with and how long you should be there. Keep your cell phone in your hand.

The good news is that this particular former real estate agent, who has confessed to the crimes, is likely to be off the streets permanently.

A little mundane, but useful, information for your New Year

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paperwork-stacks

York County’s Register of Deeds office recently informed local dirt lawyers that it will begin using a new system on January 23. The new system will require labels containing recording information to be attached to recorded documents.

This County will require a three-inch margin at the top or bottom of the front page of each recorded document. Documents that do not meet the margin requirement may be rejected because the label may conceal a portion of the document.

I am confident York County lawyers are informed of this development but wanted to get the word out to the remainder of the state to benefit lawyers who may handle a transaction in that County from time to time.

SC residential tax breaks are “two ships in the night”

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“Ships that pass in the night, and speak each other in passing, only a signal shown, and a distant voice in the darkness”  – Longfellow

Tax cases can be complicated, but this one seems relatively simple. The South Carolina Court of Appeals held in late December that the homestead exemption and the primary residence (4%) classification are two entirely separate matters*.

The taxpayer, Frank Mead, turned sixty-five in 2004 and received the homestead exemption from 2005 to 2010 on his home located in beautiful Hilton Head Island. In 2011, he had a brilliant idea and rented his home for 138 days during which he traveled part of the time and stayed in a rental apartment the remainder of the time.

The Beaufort County Tax Assessor didn’t approve of Mr. Mead’s brilliant idea. She revoked the homestead exemption for 2011 on the theory that he no longer qualified because he rented his home for more than fourteen days.  Mr. Mead believed the fourteen-day limitation applied only to the primary residence (4%) classification and appealed to the Beaufort County Tax Equalization Board.

He lost in that forum but then appealed to the Administrative Law Court. The ALC found for Mr. Mead and determined that the homestead exemption and the primary residence classification are “two ships in the night” with different requirements. The Tax Assessor appealed to the Court of Appeals.  The issue was whether the homestead exemption under §12-37-250 of the South Carolina Code is available only to property that also qualifies for the preferential residential assessment ration set out in §12-43-220(c).

Section 12-37-250 provides for a homestead exemption for a person sixty-five or older when that person has been a resident of South Carolina for at least one year. Section 12-43-220(c) provides for a special property tax assessment ratio of 4% (as opposed to the normal 6%) for owner occupied legal residences.

To make the matter a little more complicated, but more advantageous to the taxpayer, the assessment ratio statute further provides that the owner-occupant of a legal residence is not disqualified from receiving the 4% classification if the requirements of Internal Revenue Code §280A(f)[2] as defined in section 12-6-40 (A), meaning the property may be rented for less than fifteen days.

The Court of Appeals noted that nothing in the homestead exemption statute makes reference to the primary residence classification statute and that the 14-day rule applies only to the four percent assessment ratio. Simple, right? Not quite so simple: interestingly, the Department of Revenue had taken the same position in a 1997 memorandum that the Tax Assessor in this case took, but withdrew that memorandum two years later.

For now, the rules are separate and distinct, and the taxpayer wins!

Goodbye old friend

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And hello 2017!

I bought a car on the first business day of 2017.

For most folks, buying a car is not a big deal, but I am definitely not a car person!  I drove my mother’s last car for almost eleven years after her death in 2006 and was embarrassed to shed a few tears at the dealership when I sentimentally traded it in on January 2. That car has 200,000 miles on its odometer! It’s still in great running condition, and I hope it finds a good home with someone, maybe a teenager, who needs safe and inexpensive transportation. Before my mother’s car, I drove a car I bought from a deceased friend’s estate. Are you detecting a pattern in my vehicular history?  Until this week, no car dealership had made a dime on me in the past 15 years!

My colleague and friend, Tom Dunlop, on the other hand, is definitely a car person. He currently drives a bright red late model Mercedes which he will upgrade this spring for the mere reason that two years have passed. His dealership loves him! In addition to trading every two years, Tom takes donuts to the staff when his car is serviced. What a nice guy! We’ve enjoyed that shiny red Mercedes as our lunch vehicle and can’t wait to see what Tom decides will be our new fancy ride in the spring.

new-year-new-startWhy is this car talk relevant to dirt law in 2017? It’s relevant because our success in the housing industry this year may depend on whether Americans and specifically South Carolinians are really home ownership people.

There are some reasons for concern. Interest rates are climbing. The mortgage interest rate deduction is under attack in Congress. The future of the CFPB may be precarious under the new administration and because of pending litigation challenging its constitutionality.  Some financial advisers are recommending renting as a better economic alternative for many Americans. Some retirees are being advised to sell the large homes where they raised their families in exchange for nifty, low-maintenance town homes, condominiums and even rental apartments.

But unlike my personal lack of thirst for new cars, I believe many Americans and many South Carolinians have an enduring thirst for new and upgraded residences. And I believe their thirst is most often quenched only by purchasing those residences. We have been taught that home ownership is an excellent investment vehicle coupled with a tax advantage. This advice goes back several generations. This wisdom is so ingrained that the counsel to retirees to rent shocked me! I had to read it from several sources to believe it was serious and sound advice for some folks.

And, thankfully, the economy is continuing to improve. Zillow is reporting that the U.S. housing market has regained all the value it lost during the housing crisis. South Carolina is particularly poised for success. Charleston is one of the fastest growing markets in the country. Hilton Head is digging out and rebuilding from Hurricane Matthew. The Rock Hill/Fort Mill area is growing toward Charlotte rapidly. It is impossible to ride around Myrtle Beach, Greenville and even Columbia without dodging construction activity. My own office’s numbers have improved during 2016, and I budgeted up for 2017. I suspect most South Carolina dirt lawyers are looking for a better year in 2017 than in 2016 assuming they can maintain their momentum and sustain the excellent staffing that momentum requires.

I am optimistic!  Here’s hoping Americans and South Carolinians continue to be home ownership people. And here’s hoping 2017 is a healthy, happy and prosperous year for you!