CTIC SC

SC Supreme Court Decides Gulfstream Case

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Commercial real estate lawyers know that disputes over parking lot use are common. The long-running legal battle between the owners of Gulfstream Café and Marlin Quay Marina, recently addressed by the Supreme Court, nearly escalated into a literal parking lot showdown given its contentious history.

In 2022, this blog discussed the continuing legal saga in two installments that some of you may wish to check out. A fight over attorney’s fees! Criminal contempt for the malicious parking of a golf cart! The drama!        

To catch readers up to speed: In 1982, Georgetown County approved the Marlin Quay Planned Development, which contained two distinct businesses: the Gulfstream Café and its 17 parking spots; and the Marlin Quay Marina, which consisted of 60 boat slips, a marina store, a restaurant, and 62 parking spaces. 

The businesses operated in seeming harmony for many years. In 1986, the Marina owner even granted Gulfstream a right of ingress/egress over and the non-exclusive use of Marina’s parking lot and parking spaces, which seemed very neighborly indeed.  This easement implied in part: “[i]t is anticipated by the parties that while they will each have joint and non-exclusive use of the area covered by this easement that the Grantor will primarily utilize the premises during the daytime and [Gulfstream] will primarily use these premises in the evening.”

Things went downhill in 2016 when the Marina was sold to a new owner with a different vision for its property. The new owner wished to demolish the existing buildings at the Marina and build a new restaurant and store in its place. Making matters worse for Gulfstream, the new owner also intended on operating the new restaurant in the evenings, created direct competition for customers and for parking spaces at night.

The County Council approved Marina’s request to modify the Planned Development according to this initial set of plans over the objection of Gulfstream. However, the Marina withdrew its petition after it became known that the Marina’s architect, a Georgetown County Council member, failed to recuse himself from the deliberations and vote[1]. 

After the County approved the re-submitted plans, Gulfstream filed suit against the Marina alleging that the proposed expansion of the restaurant violated the terms of its existing easement.  After a full trial, the Circuit Court ruled that the Marina must revise its plan so that it did not exceed the footprint of the existing building with respect to the parking lot if it chose to move forward.

The Marina revised its plans to comply with the Court’s order. It chose to build a bigger vertical space with a larger outside seating area waterside. Gulfstream again objected and maintained that the increased square footage would make the difficult parking situation worse. The County eventually approved the revised plans over Gulfstream’s objection finding that the new construction would be in better condition, bring the Marina into compliance with current building codes, and be a net benefit to tourism and the community over the existing structure. 

Not backing down, Gulfstream then filed suit against the County alleging that it had violated its own parking requirements under the zoning ordinance by approving the new plans. Gulfstream asserted that the County’s approval violated its right to substantive and procedural due process and amounted to a taking of its rights under the easement, all of which substantially diminished the value of its property.   

The case ultimately reached the South Carolina Supreme Court, which found in favor of the County.  The Court agreed that Gulfstream’s easement created a property right, but found that Gulfstream did not have an exclusive right to the use of the Marina’s parking spaces in the evening.  Further, Gulfstream had exactly as many parking spaces available to its customers after the approval of the new plans as it did before. The Court was unconvinced by Gulfstream’s arguments that the approval of the additional square footage of seating had overburdened its easement rights and determined that the County had not deprived Gulfstream of any property interest.

The Court found that the General Assembly had given Counties the option to approve “planned developments” so that they could be flexible in adopting innovative planning solutions for benefit of their local communities.[2] The County complied with all hearing requirements for approving the amendment to the planned development and Gulfstream had a full opportunity to present its opposition to the plan.   Therefore, the County had not violated any substantive or procedural due process right. 

The Court also ruled against Gulfstream on its claim that the County had engaged in a “taking”.  The County had not engaged in a “per se” taking because Gulfstream had not been deprived of all economically or productive use of its easement. Gulfstream still retained the same non-exclusive right it had always enjoyed concerning the  parking spaces in the Court’s view.

Further, the County had not engaged in a regulatory taking under the Penn Central test.[3] The County approved the plans in its estimate of the best interest of the community. The County had not appropriated the parking to its own use. County approval of the plans did not prevent Gulfstream from continuing to do business as before. The Court further rejected Gulfstream’s offered expert testimony that valued the property based on the assumption that Gulfstream did not have any use of the easement parking[4]. Finally, the Court reasoned that because Gulfstream did not have an exclusive right in the use of the parking spaces that the County’s ruling could not have upset any investment backed expectation in the use of the parking spots at night.   

Finally, the Court majority declined to hold that the councilman’s participation in the initial approval of the plans invalidated the subsequent approvals that took place after he recused himself. The majority found the subsequent approvals of the completely revised project by the Council, acting this time with the councilman’s recusal, were sufficient to overcome any impropriety in the first vote. 

The two dissenting Justices, though concurring in ultimate result, were much more skeptical of the councilman’s conduct and made it plain that the Justices believed County made unique concessions in its review of the Marina project.[5] The Court questioned whether the Council had properly re-examined the basis for approving the concessions after the recusal.   

In any event, the legal duel between the restaurants seems to be over for now. The next time you are in Garden City, you may just want to take a fact-finding mission to sample the cuisine. Just be sure to arrive early as you know that the parking may be an issue.

[1] The Court’s opinion tells us that Gulfstream separately filed an ethics complaint that resulted in an official sanction and fine being levied against the council member.

[2] See S.C. Code 6-29-740. 

[3] Penn Central Transport Corp. v City of New York, 438 U.S. 104 (1974).  Some attorneys may vaguely recall from the boring semester of Constitutional Law that under the Penn Central test, a court, in considering whether a state action amounts to a regulatory taking,  must consider 1) the character of the state’s action; 2) the economic impact of the regulation on the claimant; and 3) the extent the regulation interferes with an investment backed expectation. Partial credit to you though if the name seemed familiar! 

[4] The entire Court seemed to find the expert’s testimony as lacking in credibility. The Court characterizes his testimony as indicating that the new Marina restaurant had rendered the Gulfstream property as almost entirely without value.  The expert seems to have bitten off more than he could chew there. 

[5] The dissent seemed especially concerned that the councilman had asked for $72,000 from the Marina as additional compensation for his role in shepherding the matter through County Council.

PASSING IT DOWN:  RECIPES, TRADITIONS AND REAL ESTATE

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Like many of you, Fall is my favorite season of the year. The oppressive heat and humidity is finally starting to temper itself, the kids are back in school, football is being played once again, leaves are changing, and the holiday season is fast approaching. This week, we celebrate Thanksgiving, which just so happens to be my favorite holiday of the year. The Thanksgiving holiday naturally lends itself to so many time-honored traditions. It is a time family and friends gather to reflect on the important things in their lives and to overindulge in so many wonderful dishes.

The passing down of recipes through generations drew my mind to how real property is also passed from one generation to another. Ideally, property owners would properly plan for an orderly transfer of property through sound estate planning. Most wills express the testator’s intentions as to real property and grant the personal representative the power to effectuate the transfer. Other times, the will grants the personal representative the power to sell the property, creating a fiduciary duty to properly disburse the proceeds from that sale.

Under South Carolina Probate Code §62-3-711(c) a personal representative who has the power to sell pursuant to the decedent’s will may execute a deed in favor of a purchaser for value. This power is subject to §62-3-713, which prohibits transfers to the personal representative or certain related individuals or entities unless the will or a contract or court order authorizes the transaction. Pursuant to §62-3-910(B), a purchaser for value from a personal representative takes title free of heirs or other interested parties.

In the context of title insurance and in circumstances where either a will does not specifically grant a personal representative the power to sell real property or when a probate estate is opened in the absence of a will of a property owner, an Order from the Probate Court authorizing the personal representative to sell the subject property would be required to insure without taking exception to the possible interest of heirs or other interested parties.

Often times though, a property owner dies without leaving a will. Absent a proper directive from the decedent, one would turn to the laws of intestate succession, which can be found in the S.C. Probate Code at §62-1-101, et seq.  The law of intestate succession dictates how a person’s property is distributed by making the assumption that the decedent would want the property to go to the decedent’s closest relatives. 

Testate and intestate succession laws can sometimes get confusing.  However, whenever there is a doubt about the proper way to insure a transaction there is always a common correct answer: contact your title insurance underwriter.

This blog post began by reflecting on the changing of the seasons and the approach of the Thanksgiving Holiday. Appropriately, this is the perfect time to remember the many blessings in our lives. Perhaps more than any other time in the calendar year, Thanksgiving provides the opportunity to honor old traditions, create new ones and remember those that have passed on before us. May each of you enjoy time with family and friends and have an opportunity to reflect on those blessings and why they are so meaningful.

In the spirit of succession, having been born and raised in coastal South Carolina, I would like to share one of my favorite Thanksgiving recipes that has been passed down through my mother’s side of the family.  Happy Thanksgiving, everyone!

Oyster Cornbread Dressing

INGREDIENTS

  • 2 lb. unsweetened cornbread, cut into 1/2-inch cubes (about 12 cups)
  • 3/4 cup melted unsalted butter (1 1/2 sticks)
  • 5 tbsp. unsalted butter
  • 2 cups chopped onions (about 2 medium onions)
  • 1 1/2 cups chopped celery (about 3 ribs)
  • 2 cloves garlic, finely minced
  • 6 oz. country ham (the saltier the better), finely diced
  • 2 tbsp. chopped fresh sage leaves
  • 2 tsp. fresh thyme
  • 1 1/2 tsp. sea salt
  • 1 tsp. ground black pepper
  • 1/2 tsp. ground nutmeg
  • About 18 to 20 freshly shucked oysters, roughly chopped with liquor reserved
  • 1 cup chicken broth
  • 3/4 cup milk
  • 3 large eggs, lightly beaten
  • A few more tsp. unsalted butter

PREPARATION

  1. Heat oven to 400°F.
  2. Toss cornbread cubes with melted butter and lay out flat on a baking sheet, crumbs and all. Bake in the oven, stirring occasionally, for 30 minutes or until a nice toasty color forms on the cornbread.
  3. Meanwhile, melt the 5 tablespoons of butter in a large skillet over low to moderate heat. Stirring occasionally, sauté the onions, celery, and garlic until the onions are translucent, about 6 minutes.
  4. Transfer the cooked vegetables to a large bowl and add the toasted cornbread, tossing gently to mix. Add the ham, herbs and spices, and oysters with reserved oyster liquor, and mix with a rubber spatula.
  5. Warm the chicken broth and the milk together in a small pot just until simmering. Drizzle over dressing mixture and fold in. Fold in eggs.
  6. Lightly butter a 9-by-13-inch baking dish. Transfer the dressing into the baking dish and dot with a few teaspoons of butter. (The bread crumbs should be loosely stacked, not packed down tight.)
  7. Turn the oven down to 350ºF. Bake in the oven until the edges and the top are browned, about 30 to 40 minutes, keeping the pan covered with foil for the first half of the baking time. Serve hot out of the oven.

    Haunted Houses and Legal Horrors: The Ghostbusters Case That Shook Real Estate Law

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    As Halloween creeps in with its ghoulish charm, it’s the perfect time to revisit one of the eeriest and most entertaining legal decisions (and my personal favorite) in real estate history: Stambovsky v. Ackley, better known as the “Ghostbusters” case. This 1991 New York appellate decision, with it’s dad-humor level puns and references, didn’t just acknowledge the supernatural: it made it legally binding! And for those in real estate law and title insurance, it’s a chilling reminder that what lurks in the shadows might just haunt your contracts.

    The story begins in Nyack, New York, where Helen Ackley owned a charming Victorian home with a not-so-charming reputation. Over the years, Ackley had publicly described the house as haunted, recounting ghostly encounters in Reader’s Digest, local newspapers, and the house was even included in walking haunted house tours. Ackley claimed the spirits were friendly—playful poltergeists who left gifts and woke her grandchildren with ghostly shakes.

    Enter Jeffrey Stambovsky, a New York City resident who agreed to buy the home, but was unaware of its spectral fame. Upon hearing about its haunted reputation, he sought to rescind the contract, arguing that Ackley’s failure to disclose the home’s paranormal notoriety materially impacted its value.

    The New York Supreme Court, Appellate Division, sided with Stambovsky in a decision that has since become legendary. With perhaps one of the greatest single lines in an opinion, the court held that:  “As a matter of law, the house is haunted.”  Ackley was estopped from denying the haunting because she had repeatedly and publicly affirmed it. The court emphasized that while New York generally follows caveat emptor (“let the buyer beware”), this case warranted an exception. The haunting was not something a buyer could “reasonably discover” through standard due diligence or inspection.

    While this case is from New York and is a pretty extreme example, it does raise some important questions for transactions in other states as well, even if the facts may not be exactly on point:

    1. Disclosure Duties Can Be Contextual

    While most jurisdictions don’t require sellers to disclose ghostly activity, material facts that affect a property’s value or desirability, especially if they’re publicly known, may need to be disclosed. In this case, the haunting wasn’t just folklore; it was part of the home’s local identity.  For example, in SC, a seller does not have to disclose if someone has died in the property up front, but they do have to answer honestly if specifically asked the question.

    2. Equitable Estoppel Has Teeth

    Ackley’s own statements came back to haunt her. Because she had repeatedly affirmed the haunting, she couldn’t later deny it to avoid legal consequences. This principle can apply to other types of representations whether about property condition, zoning, or history. 

    3. Buyer Beware Isn’t Absolute

    Even in caveat emptor states, courts may intervene when fairness demands it. If a seller knows something that a buyer couldn’t reasonably discover, and that information materially affects the transaction, silence may not be golden, but grounds for rescission.

    From a title insurance perspective, the Ghostbusters case raises intriguing questions. Can we remove the “parties in possession” exception if the property is also occupied by ghosts?  While I’m fairly certain ghosts wouldn’t have legal rights of possession, how would one go about evicting them in the first place?  Title insurance typically covers defects in title, not defects in reputation. Paranormal activity doesn’t cloud title, but it can cloud marketability.

    Most policies include coverage for marketability of title in regards to title defects, which courts have interpreted to mean that a property must be free from legal or practical issues that would prevent a reasonable buyer from purchasing it. While ghosts don’t affect legal ownership, a well-publicized haunting might affect marketability, especially if it leads to litigation or public stigma. 

    For a more realistic example, think Breaking Bad instead of Ghostbusters.  Some county sheriff departments will record a notice of clandestine laboratory when a meth lab is discovered on the property.  While a history of use for cooking meth doesn’t affect title, it can definitely affect someone’s willingness to buy the property.  This particular issue arose in a potential claim at a previous employment stop.  The company wasn’t sure it was a covered claim because notice of a prior criminal activity didn’t affect the title to the property.  The insured’s argument was that it was recorded in the records and, even though the properly had been fully remediated, the notice had already caused one contract to fall through and was affecting the insured’s ability to market and sell it.  Unfortunately, I moved to my current position and don’t know how that claim turned out.

    While title insurance is mainly concerned with matters in the public records that affect title, sometimes the risk assessment does factor in other information.  Title agents/insurers should be aware of Public representations made by sellers; Local folklore or media coverage that could affect a property’s reputation; or Claims or disputes that might arise from non-physical defects.  Whether you’re a broker, attorney, or title insurer, the Ghostbusters case offers some hauntingly good advice:

    • Ask about unusual property history—especially if the home has been in the news for any reason, but especially if it has been included on recent ghost tours.
    • Advise sellers to disclose reputational issues that could affect buyer perception.
    • Review local laws on disclosure obligations, especially regarding stigmatized properties (e.g., those associated with death, crime, or paranormal activity).
    • Consider adding disclaimers in contracts for properties with unusual histories.

    Finally, this case reminds us that real estate law isn’t just about bricks and deeds; it’s also about stories, reputations, and sometimes, ghosts. As Halloween approaches, let this case be a playful but powerful reminder: in real estate, what you don’t disclose might come back to haunt you.

    Whether you’re selling a haunted mansion or a humble bungalow, remember: the law sees more than meets the eye, and sometimes, it sees ghosts.

    Graceland Fraudster Does the Jailhouse Rock

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    Riley Keough, inset, with Graceland

    Lisa Findley, a woman from the Ozarks with a known history of petty crime, was sentenced to 57 months in federal prison last month after pleading guilty to mail fraud. The charge stemmed from a bizarre scheme in which she attempted to secure a $3 million payoff using a fake loan backed by a fraudulent mortgage on Graceland, the former home of Elvis Presley.

    Using at least four different alter egos, Findley attempted to convince lawyers for the estate of the late Lisa Marie Pressley1 and of her daughter, actress Riley Keough2, that a non-existent company called Naussany Investments & Private Lending, LLC, had loaned Lisa Marie $3,800,000 secured by the iconic home.

    Findley supported the scheme by forging the signatures of Lisa Marie and a real Florida notary on fake loan documents. She even went so far as to threaten foreclosure. While attorneys for the Presley estate grew suspicious minds, Findley escalated her efforts by filing a creditor’s claim against the estate in California and separately recording a fraudulent Note and Deed of Trust in Tennessee land records. Despite making little progress, she pressed the matter by publishing a Notice of Foreclosure Sale in the Memphis Commercial Appeal.

    While the Pressley attorneys rushed to obtain an injunction to keep the Jungle Room in the family’s domain, reporters and law enforcement began to close in on what proved to be an easy web to unweave. Perhaps feeling caught in a trap, Findlay’s alter egos abruptly disclaimed any connection to the loan and directed attention to a third alter ego.  After some token resistance, this alter ego confessed in an email written in Spanish – don’t ask me why – to that he was really a Nigerian scam artist and that the authorities should seek him in that fine African nation. 

    This final effort to by Findlay was … not successful. Despite asking the judge to don’t be cruel, she will now spend a blue Christmas in a federal penitentiary for the next several winters.

    In all seriousness, this scheme highlights both the growing prevalence of “imposter” frauds and the lengths and doggedness which fraudsters will pursue them. While this imposter chose very poorly in her attempted fraud target, the methods used should be a warning to all real estate professionals of what kind of methods they might run across in a scam. You could see how a less ambitious scheme could have been a little more credible and come closer to success.  

    [1] Daughter of the King of Rock and Roll, and wife to the King of Pop, Michael Jackson! Plus, her mom was on Dallas! Pure royalty. 

    [2] Keough was great in the Amazon mini-series ‘Daisy Jones and the Six.’  Definitely worth the watch if you have not seen it.

    [3] Foreclosures can proceed non-judicially in Tennessee, which means creditors may in many circumstances sell property without court oversight.  

    No horsing around with HOA disputes

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    Real estate practitioners will not be surprised to hear that neighbors in a well-to-do development with a significant set of covenants and shared easements will sometimes disagree (and even litigate) about how those easements ought to apply to their properties. Our Court of Appeals recently had occasion to hear an appeal related to covenants and easements in an equestrian subdivision in Aiken County, in the case of Richard Viviano v. Fulton Jeffers and Braeloch I Association, Inc., Appellate Case No. 2024-000147, Ct. App., Opinion No. 6120, Filed August 20, 2025.

    The underlying dispute in the case concerned an established equestrian community near Aiken named Braeloch. Braeloch has extensive pedestrian and riding trails, and when the subdivision was originally planned, one trail extended all the way around the outer boundaries of the subdivision. The recorded covenants included easements encumbering all the lots around the subdivision’s exterior boundary to account for this trail. The trail easement was also shown on the recorded subdivision plat. Later (in 2002) an additional lot was added (Lot 51) and eventually became the center of a dispute involving Lot 51’s owner, the homeowners association, and the owners of two adjacent existing lots. The neighboring lot owners and Lot 51’s owner disagreed about how the riding trail should be adjusted or relocated in light of Lot 51’s addition. Mr. Viviano was one of those neighboring lot owners. The Court of Appeals opinion implies that personalities clashed, and that the neighboring lot owners questioned the motivation and personal friendships of the HOA officers in making decisions about Lot 51 and the trail. Unfortunately, the parties could not agree at this point, and litigation was filed.      

    The main issue presented to the Court of Appeals here, which may be less interesting to real estate practitioners, concerned whether a settlement agreement that the parties signed at the conclusion of mediation would be enforceable. (Spoiler alert: The Court of Appeals said, Yes, it is enforceable.) At the trial court level, the parties had mediated the case and reached a written agreement. The agreement was broad and addressed all the issues in dispute between the parties: relocation of the riding path easement, who would pay to make improvements to the path, compensation to the impacted lot owners, that the parties would sign a mutual non-disparagement agreement, etc. It required formal approval by the full HOA of a few items that the HOA representatives agreed to in mediation; the HOA formally voted and approved those after the fact.

    As a worthwhile aside, the mediator (retired Judge Thomas Cooper, Jr.) made a lovely allusion to Aristotle (or the movie “Legally Blonde,” depending on your point of view) when he noted in his mediation report that the attorneys and parties had wisely “recogni[zed] . . . that emotion has to give way to reason to resolve difficult disputes.” We can all benefit from remembering that “law is reason, free from passion.”  

    Later, several months after mediation, Mr. Viviano seemed to have regretted the agreement and changed his mind. A couple of the details that he asked the court to consider in support of his motion might be of more interest to dirt lawyers.

    Viviano’s argument was basically that the 2002 petition to amend the covenants and easements to add Lot 51 was not valid because it did not have the support of the required number of lot owners. Viviano also argued that there was a “smoking gun” email from the owners’ association acknowledging that they did not have enough signatures on the petition to add Lot 51, and he claimed that this email had been deliberately concealed from him. (He argued that he would not have signed the settlement if he had known about it.) The Court of Appeals found this argument meritless. Without getting into the details of whether or not the Lot 51 admission had been completed correctly, the court pointed out that the Lot 51 admission documents were filed in the Aiken County public records, and therefore available to anyone to review. Viviano’s own complaint in the underlying suit had made an allegation of fact that Lot 51 had been admitted with two thirds vote of the HOA members. The court also noted that Viviano had access to the HOA email acknowledging insufficient signatures on the petition, as it had been produced in discovery more than 2 years prior to mediation, so it was not “concealed” from him. The Court of Appeals also cited established caselaw reinforcing the principle that, once the parties have reached a written settlement agreement, the courts are not inclined to entertain arguments by one party who regrets having agreed to the settlement.   

    For those real estate practitioners who represent HOAs, this case might be a good opportunity to remind your association clients about the importance of having counsel assist in the process of amending CCRs. Having an attorney guide an association through the complicated formalities of submitting petitions, calling meetings, sending notices, and being sure to obtain the required number of signatures/votes to amend could avoid costly litigation in the long run! For practitioners who review title and handle real estate closings (and prepare title commitments and policies!), this is also a good reminder to be on the lookout for recorded amendments to covenants, and to carefully review those to determine how they affect the title.          

    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. 

    FinCEN’s Anti-Money Laundering Regulations for Residential Real Estate Transfers: Who, What, How & When?

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    At this point we should have all heard about FinCEN’s Anti-Money Laundering rule, but details may still be fuzzy. Let’s break down the information available to prepare for what appears to be a new reporting requirement intended to go into effect December 1st, 2025! That’s right! As of this article, reporting obligations begin THIS YEAR!

    FinCEN’s Anti-Money Laundering Rule applies to any non-financed transfer of any residential real estate to a legal entity or trust. This includes transfers that occur anywhere in the U.S., including Puerto Rico and overseas territories. Keep in mind that this rule covers “transfers” – not just sales. There is no minimum purchase price to trigger this reporting requirement.

    There are several key words in this first sentence. 

    “Non-Financed” – Specifically, FinCEN is targeting transactions where there is no loan secured by transferred real estate, AND the loan is not made by a financial institution with an anti-money laundering program and an obligation to report suspicious transactions.  

    So, in the inverse, if you have a transfer that is a cash purchase or involves private equity lending or even hard money lenders, this will trigger the reporting obligation.

    “Residential Real Estate” – What is residential real estate? This seems like it should be a pretty straightforward question with an expected response.  Here are certain types of residential real estate that FinCEN includes within these regulations:

    • A residential property with a 1-4 family structure 
    • Vacant land on which buyer intends to build 1-4 family structure
    • Condo or co-op
    • Apartment buildings or mixed use with a 1-4 family structure (existing or to be built)

    However, how do you determine buyer’s intended use of the property? Will the inclusion of commercial aspects of use affect reporting requirements? We may not see many properties that combine residential and commercial use, but, especially in more rural areas, there are sites on which a business owner both lives and maintains a commercial structure such as a workshop or garage.

    “Legal Entity or Trust” – This is pretty broad language. We can probably all agree on the most common types of entities that hold property, including corporations, limited liability companies, general partnerships and limited partnerships. These are easy to recognize in connection with a non-financed transfer or residential real property. The second part, or the “Trust” component of this term, is generally understood, as well, and is intended to include the basic understanding in South Carolina that, although a trust is a legal fiction, a trustee of a trust can hold title to real property in South Carolina apart from the individual rights of that trustee, the grantor/settlor or the beneficiary(ies) of the trust. For purposes of FinCEN’s rule, a transferee trustee does not include (i) a statutory trust); (ii) a trust that is a securities reporting issuer; or (iii) a trust in which the trustee is a securities reporting issuer. Other exclusions from FinCEN’s definition of trust transferee include a governmental authority, a bank or credit union and a public utility.

    Exemptions!!!

    There are certain exemptions to FinCEN’s reporting requirements under these regulations, including the grant, transfer or revocation of an easement or property subject to a reverse 1031 exchange1. Other exemptions may include:

    • A transfer pursuant to the terms of Last Will, testamentary trust, by operation of law or contractual obligation following the death of an individual;
    • A transfer incident to divorce order;
    • A transfer to a bankruptcy estate; and
    • A transfer supervised by a court in the United States (possible a forfeiture).

    Who is the Reporting Person?

    There is a list of priorities for who is to be the reporting person for purposes of these regulations. First is the settlement agent named on the settlement statement. FinCEN does not note a difference between an attorney settlement agent and a non-attorney settlement agent. The second choice for a reporting person is the person that prepares the settlement statement. The third choice is the person that records the deed in the public records. The fourth option is the person that issues the owner’s title insurance policy. Fifth is the person that dispenses the greatest amount of funds. Sixth choice is the person who examined title and the final and seventh option is the person that prepared the deed.

    I can imagine so many unforeseen and unexpected problems arising from placing reporting obligations upon the individuals that might find themselves on the foregoing list. Other than a settlement agent, or perhaps the person preparing the settlement statement if that person has been specifically allocated the duty to report under these regulations, these individuals could be people that have never heard of these regulations or the type of reporting requirements that have now been legally assigned to them. A prime example could be a deed from a parent as grantor to a family estate planning entity or other estate planning transfer where a real estate attorney might not be involved. If there is no settlement agent and no settlement statement prepared, as between the parties (grantor/grantee/trustee?), whoever records the deed now has the obligation to report this transfer to FinCEN.  

    What must be reported?

    There has been a lot of discussion of what type of beneficial ownership information must be reported and disclosed, so I won’t go into that in this article, but what other information must be reported? Certain payment information must be reported to FinCEN under these regulations including (i) the amount of any payment made, (ii) the form of payment, (iii) the name of the payor if the payor is not the transferee entity or trust and, (iv) if the payment comes from a financial institution, the name of that institution and the account number.

    When must the report be submitted? The report is due to FinCEN by the last day of the month after the date of closing. For example, if the transfer occurs on February 28th, reporting is due by the last day of March that same year. However, it is particularly important to gather all information needed for a full and complete report prior to closing. We know once the transfer is complete, it is difficult to get additional items from the parties to the transaction. However, when pressed by ALTA for a “good faith” basis of approval for a partial or incomplete report, FinCEN did not bite.  FinCEN maintains that their “Reasonable Reliance Rule” addresses concerns over difficulty to obtain all information necessary to fully report the transfer.

    What is the Reasonable Reliance Standard/Rule? FinCEN says that absent knowledge of facts that reasonably call into question the reliability of the information provided, a reporting person may rely on information provided, including buyer’s intended use of the property (for residential purposes?) and for lenders’ qualifications (do they hold themselves out to have an AML program and be subject to obligatory reporting?). However, BOI must be certified to the reporting person!

    What if you do not report under these regulations? Violations of these regulations include both civil and criminal liabilities and penalties. These are the normal violations and penalties under general FinCEN regulations and not special to the AML Regulations but can be severe. Criminal penalties can result in financial obligations and prison time and civil penalties, which accrue for each separate willful violation range from $25k to$100K and violations for negligence are not to exceed $500 or $50k if a pattern of negligence is found. This is not all-inclusive of the repercussions for violations of these reporting regulations, but definitely something to get your attention!

    How can we prepare? 

    Although we do not have FinCEN’s final real estate report that real estate professionals can use to report information for each covered transfer, as I stated at the beginning of this article, the reporting period begins December1, 2025. This means that people involved in residential real estate transfers to legal entities or trusts that may not involve financial institutions subject to federal anti-money laundering programs and reporting duties need to begin studying these regulations and to afford time and resources for training to know what information to collect, how and from whom to collect it, and how and when to report it.

    1. While there may be an exemption in a standard 1031 exchange depending on the deal specific facts, this potential exemption is intended for reverse 1031 transactions where the replacement property is transferred to an entity accommodation titleholder during the course of the overall 1031 exchange transaction. ↩︎

    Privacy Protection Acts set to take effect January 2026

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    Our story began when Governor McMaster signed Act 56 of 2023, commonly known as the Law Enforcement Personal Privacy Protection Act and the Judicial Personal Privacy Protection Act. This Act represented a significant legislative development at the intersection of personal privacy and public access to real property records. While the goal of this legislation was to protect the privacy of law enforcement officers and judges, it carried important implications for the practice of real estate law, particularly in how attorneys conduct title examinations, advise clients, and navigate public records. Many other states had enacted similar legislation with mixed results. “The Redaction Bill,” as passed, also imposed significant burdens on county offices. Registrars needed a system of redacting information upon request, yet it was unclear how someone who needed access to the information could obtain it. 

    The Redaction Bill grants active and former law enforcement officers and judicial employees to right to request redaction of personal information from publicly accessible state and local government websites. It was designed to protect these public servants from targeted harassment or threats. The redacted information includes names and home addresses, which are vital to maintaining the integrity of real property records. 

    For those in the title industry, the Redaction Bill posed an immediate concern: how would the redaction of identifying information affect title searches, chain of title evaluations, or the ability to confirm ownership and encumbrances? County recorders and advocacy groups such as the Palmetto Land Title Association urged the general assembly to slow down and consider changing the bill to accomplish its main objective while minimizing its impact on real estate transactions. Despite these warnings, the legislature pushed the Redaction Bill through to the Governor’s desk with an effective date of July 1, 2024. 

    For attorneys handling real estate transactions, the redaction of names and property identifiers raises a number of legal and practical issues. First and foremost is the risk to title integrity. If an individual’s name or parcel ID is redacted from the public record, attorneys may face increased difficulty in confirming ownership, assessing liens, or determining if any litigation is pending involving the property. This difficulty may increase the time and cost of due diligence and could expose clients to hidden encumbrances or title defects.

    Moreover, attorneys acting as title agents or representing lenders could be placed in a precarious position when disbursing closing proceeds based on incomplete or obscured information. The redaction of key ownership data may also affect notice requirements under state law. For example, if the name on a deed is completely redacted, then how is a title examiner supposed to verify the ownership of the property they are searching? 

    Finally, county officials—such as registrars of deeds and clerks of court—may each adopt different redaction protocols in the absence of a unified state-level system. This lack of consistency could result in a patchwork of record keeping practices, with varying impacts depending on jurisdiction. 

    Despite pushing through the Redaction Bill, legislators were amenable to working with concerned groups to address the concerns raised by this bill. Recognizing that a fix was needed, the SC State Senate added a provision to the budget bill delaying the effective date to July 1, 2025, allowing extra time to make the needed changes.  Initially introduced as Senate Bill 126, Act 4 of 2025 (“Fix Bill”) was signed into law just last month.  Most critically, the Fix Bill changed “redaction” to “restriction”. The Fix Bill also limits the definition of “Disclosed Records” to those that are placed on a publicly available internet website. This clarification means that names and tax map numbers must still appear where they are embedded in formal documents—such as deeds, mortgages, easements, and affidavits—even if that information is restricted from online directory search results. This crucial carve-out preserves the reliability of title records and ensures that attorneys can still conduct necessary due diligence using official sources.  The final key change of the Bill is that it named certain people who may still access the restricted information, specifically including title insurers, their affiliates, or title insurance agents and agencies.

    The Fix Bill delays the effective date to January 1, 2026, giving government agencies extra time to establish procedures, and ensuring that the real estate legal community has an opportunity to adjust workflows, educate staff, and advise clients on potential implications. It will be interesting to see how each of the counties handles the restriction of information within their own systems.

    What Should Attorneys Do Now ?

    Realtors and real estate attorneys will likely be the first to be asked about this bill and how one may avail themselves of this privacy protection. In addition to knowing about this Bill in general, South Carolina closing attorneys should begin reviewing internal procedures and client advisories to prepare for the January 2026 implementation. While we don’t yet know the mechanics each county will be using to restrict information, some key considerations include:

    • Title Search Protocols: Update search procedures to account for redacted records. Train staff to request and cross-reference official document images, not just searchable indexes.
    • Client Education: Inform institutional clients, especially lenders and developers, about the potential for privacy-related gaps in online records and the need for more thorough due diligence.
    • Engagement with Recorders: Develop working relationships with local registers of deeds to understand how each county plans to implement redaction requests and what access will be retained through in-office systems.
    • Legislative Monitoring: Stay informed about any additional regulations or guidance issued by the state to refine implementation, as further clarification may come through administrative rulemaking. 

    For real estate attorneys, the Fix Bill introduces both challenges and obligations. While it mitigates the most serious risks to property records, attorneys must remain vigilant in adapting their practices to protect clients and ensure the continued reliability of title. A proactive approach built on awareness, communication, and procedural readiness will be essential as these laws take full effect. This journey also highlights the importance of advocacy groups such as the Palmetto Land Title Association and their work to protect the title industry in South Carolina.

    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.

    It’s the little things

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    Most real estate practitioners can relate to the experience of getting that call or email from a real estate agent, saying that a nice little deal is coming our way. The buyer and seller have already signed a contract and set a closing date. There may be some “little issues” that will need to be worked out before closing, but that should not be a problem. Right?

    Often, a lawyer has been involved in preparing the contract or advising the parties before that call comes in. As often as not, those “little issues” turn out to be significant, and some can even derail a closing and pit the seller and purchaser against each other. The South Carolina Court of Appeals recently issued its opinion in the case of Anderson v. Pearson, Appellate Case 2023-001897 (Ct. App., 2025) discussing a case where there were, in fact, some big issues. We are left to wonder how different the outcome might have been if an attorney had been consulted in drafting the contract and advising the parties as to its terms.

    The basic facts of the case are that Pearson (together with some family members) owned acreage in Spartanburg County, on Lake Cooley. This consisted of one parcel which Anderson agreed to buy (and which the parties chose to refer to as the “twenty-acre parcel”), as well as another nine-acre parcel next to it. Anderson (who owned property adjacent to Pearson’s) and Pearson, communicating through a broker, negotiated and agreed to some basic contract terms including a purchase price and closing date. Other details, such as whether the property was to be defined in a new survey, and whose responsibility it would be to get a survey, were not included in the contract. The contract was, however, clear on the inclusion of a “time is of the essence”, merger, and non-reliance clauses. The contract included the (not very helpful) comment that “[b]rokers recommend Buyer have Property surveyed . .  .”

    After depositing her earnest money, the record indicates that Anderson continued to communicate with Pearson via the broker, and that Pearson indicated multiple times that he was obtaining a survey of the 20 acres in order to address the placement of an access route that would be needed to get to and from the nine-acre parcel which he was not selling. Communications went back and forth for some time, with Pearson never providing a copy of the survey, and Anderson continuing to ask for updates. Pearson applied for mortgage financing through AgSouth, but the record indicates that she had not provided all the items (such as a title commitment or a survey) that AgSouth would require to make the loan.  Eventually, the contract closing date came and went. The broker told Anderson that Pearson was not returning her calls or texts. Eventually, several weeks later, Pearson told the broker “We are building on the property ourself. We no longer want to sell.”  Turns out the Pearsons had actually gotten a survey but chose not to share it with Anderson. And the Pearsons had determined that they could sell the property to a developer for more than twice what Anderson had agreed to pay.

    Some months later, Anderson filed suit for specific performance. At summary judgment, the Master in Equity conducted a trial and entered a judgment granting Anderson’s request for specific performance. Anderson offered evidence at trial concerning communications about the survey, which were not reflected in the written contract. A significant ruling by the Master in reaching her decision was that Pearson should be equitably estopped from asserting the Statute of Frauds to exclude Anderson’s evidence of those communications. Pearson appealed, raising several issues on appeal.

    The Court of Appeals reversed the Master’s order, focusing on the Master’s application of the Statute of Frauds and equitable estoppel. Ultimately, the Court of Appeals found that Anderson’s reliance on Pearson’s communications was not reasonable. The Court of Appeals believed that Anderson should have realized that Pearson was delaying, and gotten her own survey. Additionally, the Court of Appeals expressed its view that Anderson did not change her position in reliance on Pearson’s communications about the survey, and since detrimental reliance is an element of equitable estoppel, the Court of Appeals held the Master erred in finding that equitable estoppel should apply to Pearson in his assertion of the Statute of Frauds.

    As additional grounds, the Court of Appeals opined that since the contract did not require Pearson to provide a survey, the merger and non-reliance clauses weighed in Pearson’s favor on that point. The Court of Appeals proposed that the Master should have applied the parol evidence rule to Anderson’s offer of communications outside the contract itself. Further, the “time of the essence” clause, in the Court of Appeals’ view, meant that since the contract had expired by its own terms, and Anderson had not demonstrated that she had been able to timely perform her obligations under the contract (i.e. she did not show that she had the cash ready to pay the purchase price) specific performance was not available as a remedy. 

    This case may be a good example to mention to real estate agents and brokers (as well as clients) to demonstrate the value of a clearly drafted contract and of legal advice from a seasoned real estate attorney as to contract terms.