FEMA’s action causing many homeowners to drop flood insurance

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Devine St. and Crowson Rd., Columbia, SC during the “1000-year flood” of 2015

If you have clients who are complaining about the rising cost of flood insurance, there may be a good reason for those complaints. This issue came to my attention through The DIRT listserv which I have recommended to South Carolina dirt lawyers several times. If you haven’t already, subscribe to this listserv for interesting discussions of current real estate topics.

In 2021, FEMA announced that the National Flood Insurance Program (NFIP) was shifting to a risk-based premium system. The new system is called Risk Rating 2.0, and it attempts to base premiums on the actual characteristics of individual properties rather than simply referring to “flood maps”. I’d like to refer everyone to this article from ClimateWire dated August 27, 2022.

According to the article, FEMA’s shift was intended to encourage more homeowners to buy flood insurance by showing more precisely the risk that each property faces of being flooded. The shift has apparently caused the opposite result. Many homeowners have dropped FEMA flood insurance based on increasing premiums. It should be noted that many premiums were also reduced.

Closing attorneys understand all too well that properties in high-risk flood zones require flood insurance if the property owners obtain federally backed mortgages. The individuals who are dropping the coverage are not those who have such mortgages. Many of the individuals opting out of flood insurance because of increased costs are low-income individuals in coastal areas.

The article states that the number of NFIP policies dropped from 4.96 million in September of 2021 to 4.54 million in June of 2022. The declining numbers cause concerns that owners whose homes are flooded will not be able to rebuild or recover financially, and that low-income households will suffer the most.

FEMA told the reporter that many factors could influence the drop in policy holders, including the economic impact of the pandemic, inflation, the housing market, and the affordability of purchasing flood insurance from the private market. It is not clear how many people who dropped NFIP policies have bought flood insurance through private insurers. In other words, FEMA does not consider that its change in premium calculations is the sole cause of the problem.

We need to pay attention to this issue as Congress wrestles with possible solutions. It is certainly dangerous to have flood insurance priced in a way that fails to protect low-income homeowners who live in the most precarious areas geographically.

Failure to search title leads to disastrous result

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Fourth Circuit unpublished opinion weighs in on SC tax sale issue

South Carolina appellate courts will overturn tax sales on the flimsiest of technicalities. In a recent unpublished opinion of the Fourth Circuit Court of Appeals, a tax sale was not overturned, but the result was almost the same for the tax sale purchaser who failed to search the title.

Remember that an unpublished opinion has no precedential value, but this case is particularly interesting to South Carolina dirt lawyers who understand the necessity of searching titles. Thanks to my friend and real estate litigator extraordinaire Jim Koutrakos who sent this case to me.

Guardian Tax SC, LLC v. Day* involved a Charleston County tax sale. Ralph and Virginia Day bought property in Charleston in 1991. In 2006, the Days mortgaged the property to Bank of New York Mellon. Between 2005 and 2007, the Days failed to pay their federal income taxes, and beginning in 2010, they failed to pay -county taxes.

In 2016, the Day’s title was subject to three interests: (1) the county tax lien; (2) the mortgage; and (3) the federal tax lien. By operation of law (S.C. Code §12-49-10), the county tax lien took priority. The mortgage had a higher priority than the federal tax lien because it was recorded first. Charleston County sold the property to Guardian through a tax sale that year.

The County did not notify the bank or the United States of the tax sale, but it did publish notice in a local newspaper. Guardian’s purchase of the property satisfied the County lien and generated approximately $1.6 million in excess proceeds. The Days owed approximately $3.5 million to the bank and their federal tax liabilities totaled approximately $2.9 million.

After the tax sale, the County searched the title and notified the Days and the bank of their one-year statutory redemption period. The County did not notify the United States nor inform Guardian of the notices it sent to the Days and the bank. Neither the Days nor the bank redeemed the property. At some point after the expiration of the period of redemption, Guardian searched the title and discovered for the first time the interests of the bank and the United States. Guardian filed a quiet title action which was removed to federal court by the United States.

Guardian, the bank, and the United States filed competing motions for summary judgment. Guardian and the bank argued over the excess proceeds, and Guardian argued that the federal tax lien was extinguished by the tax sale or, alternatively, the United States should be awarded a 120 day right of redemption.

The district court agreed with the bank that it was entitled to the proceeds and agreed with the United States that its lien was valid and that a right of redemption was not appropriate. The Court of Appeals affirmed, holding that the tax sale was nonjudicial and that the United States’ lien survived the tax sale because it did not receive the required notice. Further, because of the lack of notice, the redemption period never began to run.

Both courts rejected Guardian’s argument that the federal lien should be extinguished because of South Carolina equitable principles because federal law governs the enforcement of federal tax liens. The Court of Appeals quoted the District Court’s jab that there is “nothing inequitable about the outcome” because Guardian could have avoided the result by engaging in due diligence prior to the tax sale by searching the title, a “minimal burden.”

*United States District Court of Appeals for the Fourth Circuit Unpublished Opinion No. 21-1411 (August 23, 2022)

SC Supreme Court issues one more opinion on the Episcopal church controversy

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….despite the fact that the same Court declared “this case is over” in April

This is the fifth blog about the controversy surrounding the Episcopal Church and its properties in South Carolina. The subject of this post is the case the South Carolina Supreme Court decided on August 17* which follows an opinion in April** that declared definitively “this case is over”. It seems the Court found a reason to disagree with itself. And, once again, the Court declares that there will be no remand and that the case is over.

Church schisms are difficult in many ways, and the real estate issues are particularly thorny. This dispute began in 2010 when the Lower Diocese of South Carolina, after doctrinal disputes, dissociated from the National Episcopal Church. The parties have been involved in extensive litigation in state and federal courts for the years that have followed the dissociation. As dirt lawyers, we don’t have to figure out the doctrinal issues, but we do have to be concerned with the real estate issues.

As I said in April, my best advice to practicing real estate lawyers is to call your friendly and intelligent title insurance underwriter if you are asked to close any transaction involving Episcopal church property. In fact, call your underwriter when you deal with any church real estate transaction. They will stay current on the real estate issues involving churches.

The current controversy involves whether the parishes adopted the national church’s “Dennis Cannon”. This church law provides that all real and personal property owned by a parish is held in trust for the national church. The actions taken by each church with respect to the Dennis Cannon have been examined ad nauseum by our Court.

In April, the Court ruled that 14 of the 29 churches would be returned to the national body. The opinion re-filed in August ruled that six more churches are allowed to keep their properties. After this decision, 21 parishes will remain with the local entity and eight will be returned to the national entity.

Without belaboring the analysis, the following parishes will maintain their properties according to the April opinion. The statuses of these congregations do not change with the August opinion:

  • Trinity Episcopal Church, Pinopolis
  • The Protestant Episcopal Church of the Parish of Saint Philip, Charleston
  • The Protestant Episcopal Church of the Parish of Saint Michael, Charleston
  • Church of the Cross, inc. and Church of the Cross Declaration of Trust, Bluffton
  • The Church of the Epiphany, Eautawville
  • The Vestry and Church Warden of the Episcopal Church of the Parish of St. Helena, Beaufort
  • Christ St. Paul’s Episcopal Church, Conway
  • The Church of the Resurrection, Surfside
  • The Church of St. Luke and St. Paul, Radcliffeboro
  • The Vestry and Church Wardens of St. Paul’s Church, Summerville
  • Trinity Episcopal Church, Edisto Island
  • St.Paul’s Episcopal Church of Bennettsville, Inc.
  • All Saints Protestant Episcopal Church, Inc. Florence
  • The Church of Our Savior of the Diocese of South Carolina, John’s Island
  • The Church of the Redeemer, Orangeburg

The following churches were ordered returned to the National Church by the April opinion but allowed to maintain their properties by the August opinion:

  • The Church of the Good Shepherd, Charleston
  • St. Bartholomew’s Episcopal Church, Hartsville
  • The Vestry and Church Wardens of the Episcopal Church of the Parish of St. John, John’s Island
  • St. David’s Church, Cheraw
  • The Vestry and Church Wardens of the Parish of St. Matthew, St. Matthews, Fort Motte
  • Holy Trinity Episcopal Church, Charleston
  • Vestry and Church Wardens of the Episcopal Church of the Parish of Christ Church, Mount Pleasant
  • St. James Church, James Island

The properties of the following parishes are held in trust for the National Church, according to both opinions.

  • The Church of the Holy Comforter, Sumter
  • The Vestry and Church Wardens of St. Jude’s Church of Walterboro
  • Saint Luke’s Church, Hilton Head
  • The Vestries and Church Wardens of the Parish of St. Andrew (Old St. Andrew’s, Charleston)
  • The Church of the holy Cross, Spartanburg
  • Trinity Church of Myrtle Beach

We may see more church schism opinions in South Carolina and elsewhere. Stay in touch with your friendly title insurance company underwriter!

*The Episcopal Church in the Diocese of South Carolina v. The Episcopal Church, South Carolina Supreme Court Opinion No. 28095 (Re-filed August 17, 2022)

**The Episcopal church in the Diocese of South Carolina v. The Episcopal Church, South Carolina Supreme Court Opinion NO. 28095 (April 20, 2022).

Easements don’t typically lead to criminal contempt charges

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These horrible commercial neighbors have fought (and litigated) for years!

Our Advance Sheet from August 10 contained two Court of Appeals easement cases involving adjoining commercial properties in Murrells Inlet. Last week’s blog discussed the first of the two cases, which involved an award of attorneys’ fees*. This week, we’ll take up the second case. A footnote in the first case indicates the parties were heading to trial again immediately after oral arguments. These neighbors are obviously not getting along!

The litigation involves a restaurant property owned by Gulfstream Café, Inc. and an adjoining property containing a marina, a store and a parking lot owned by Palmetto Industrial Development, LLC. Palmetto’s predecessor in title granted four non-exclusive easements in 1986 and 1990 to Gulfstream. The easements allowed for ingress and egress and vehicular parking. It was anticipated that the marina property would use the parking primarily in the daytime and the restaurant property would use the parking primarily in the evening.

The easements included general warranties, the same language that appears in our normal general warranty deeds: “(A) does hereby bind itself and its successors and assigns, to warrant and forever defend, all and singular, the said easement unto (B), its successors and assigns, against itself and its successors and assigns, and all others whomsoever lawfully claiming, or to claim the same or any part thereof.” This language is consistent with South Carolina Code §27-7-10.

This case actually involves a criminal contempt finding in the Circuit Court for parking a golf cart in front of the easement holder’s delivery gate! The golf cart was parked there on multiple occasions in a normal parking spot. But Gulfstream couldn’t orchestrate efficient deliveries while the golf cart blocked its delivery gate. The parties are obviously horrible neighbors.

The second case reveals an interesting fact. The property owner of the burdened property intended to demolish its building and rebuild a larger building on stilts and extending over the parking lot. The owner of the easement was having none of that!

In 2017, the Circuit Court found criminal contempt and ordered a fine of $3,000 or thirty days in jail. In 2018, the parties proceeded to trial, and a jury awarded Gulfstream $1,000 for interference with the easement. The Circuit Court entered a permanent injunction: “(Appellants) are enjoined from preventing (Gulfstream) from enjoying the right(s) granted to it in the recorded nonexclusive joint easement. (Appellants) are restrained and may not expand the outside boundaries of any new building beyond those previously used. The (c)ourt is specifically not talking about height, only the outside boundaries.”

The parties fought on, seeking to clarify the easement, and seeking another criminal contempt finding. The Court amended the injunction for clarification. The Appellants moved again to clarify the injunction and argued that an injunction should not have been granted because the jury awarded monetary relief. Other arguments related to the building’s construction and that the injunction enlarged the easement. The Circuit Court denied the motions and issued a finding that the Appellants “engaged in criminal contempt of court by deliberate and intentional acts by placement of a golf cart which interfered with the proper use of the non-exclusive easement in this matter and was in direct violation of the (c)ourt’s previous order.” Appellants were fined $5,000.

Skipping a little of the very long procedural history, let’s move on to the appeal. To make a very long story shorter, the Court of Appeals held that the Circuit Court did not abuse its discretion in finding Appellants in criminal contempt. You should read these two entertaining cases. Real estate lawyers don’t often have the pleasure of being entertained by published opinions!

*The Gulfstream Café, Inc. v. Palmetto Industrial Development, LLC, South Carolina Court of Appeals Opinion 5935 (August 20, 2022).

** The Gulfstream Café, Inc., vs Lawhon, South Carolina Court of Appeals Opinion 5936 (August 20, 2022).

Chicago Title identifies earnest money fraud scheme

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Chicago Title’s South Carolina state office sent a memorandum to its agents on July 26, entitled “Checks Drawn on Foreign Banks.”  I wanted to share this valuable information with all South Carolina practitioners even though this particular fraud scheme has not been reported in any South Carolina transactions. Knowledge is power! Let’s stop this scheme at our borders.

The memo points to buyers who tender counterfeit cashier’s checks from Canadian banks as earnest money deposits. The fraudster quickly backs out of the transaction and requests a refund. Because foreign checks can take more than thirty days to process, the refund requests are made before the checks can be negotiated.

The scheme has been used in at least nine Midwestern states. The common facts are:

  • The offer to purchase provides for an all-cash transaction.
  • The selling broker has never met the buyer.
  • The buyer has not physically viewed the property.
  • The buyer is located outside the United States.
  • The initial deposit exceeds the required earnest money deposit.
  • The deposit is in the form of a check drawn on a Canadian bank.
  • The buyer requests that the funds be returned by a wire to their account.

Chicago Title advises that its agents should not accept foreign checks at all. Instead, agents are advised to insist on wired funds. This is great advice which will assist you in working within our ethics rules and in protecting your trust accounts. You don’t want to be in the position of having to replace lost funds! Be careful out there!

Check out this interesting “heirs property” article with a SC slant

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I was not familiar with “The Daily Yonder” until a Google search for real estate news revealed an interesting article about heirs’ property. The tag line for The Daily Yonder is “Keep it Rural”.  The articled, with a South Carolina connection, can be read in its entirety here

Entitled “Land rich, cash poor—How black Americans lost some of the most desirable land in the U.S.”, the article was written by Sarah Melotte and was dated July 11. It caught my attention because it quoted a South Carolinian, Ercelle Chillis, who said her family’s seven-acre tract off Folly Road in Charleston means so much because it was purchased in 1926 by her father, who saved “pennies and nickels and dimes” to buy it. Chillis’ father died without a will, and his children did not probate his estate. Family members now own the land as heirs’ property.

The article focuses on the precarious nature of owning real estate as heirs’ property. The numbers of owners multiply as the years pass, making it more and more difficult to obtain clear title. Developers may target heirs, purchasing fractional interests to ultimately force a sale by all owners. These sales are often at below-market prices. In the case of natural disasters, relief from FEMA and other entities may be unavailable for properties with title issues.

Historically, many of these properties were in swampy and mosquito infested areas with low property values. The “Gullah Geechee Corridor”, a strip of land once predominantly inhabited by enslaved people, runs along the coasts of North Carolina, South Carolina, Georgia, and northern Florida. We all know that the values of coastal properties have sky-rocketed in recent years.

The article points to several reasons black Americans have lost properties: violence, discrimination, intimidation, and immigration to the North. But legal scholars also blame vulnerable forms of land ownership, such as heirs’ property.

The author points to organizations such as The Sustainable Forestry and African American Land Retention Network, that are attempting to fix this problem. Legal reforms are also being implemented. Notably, in 2016, South Carolina state senator and Emanuel AME shooting victim Clementa Pinckney helped pass The Uniform Partition of Heirs Property Act which allows an heir to purchase other heirs’ interest to avoid forced sales to developers. Other important aspects of this legislation are the requirement of an appraisal and a directive that heirs receive a fair share of the profit.

Read this article for an interesting take on a real estate issue that many South Carolina practitioners confront on a fairly regular basis.

Does real estate “wholesaling” work in our market?

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Maybe, but real estate practitioners should be careful!

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

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

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

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

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

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

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

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

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

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

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

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

How do you advise clients on issues of insurable title vs. marketable title?

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An age-old question for dirt lawyers: how do you explain the state of title to your client where you have discovered a title defect but you were able to obtain affirmative coverage over that defect from your favorite title insurance company?

I spent over two thirds of my legal career working for a title insurance company. A title insurance underwriter’s job involves, for the most part, fielding title questions from practicing lawyers. Questions go something like this: “Two links back in the chain of title, there is a deed from an attorney-in-fact to herself for no consideration. Is that a problem?”  What the caller really means is: “I found a title defect in the chain of title and want to know whether you will insure over it.”

The underwriter will answer “yes” or “no” and discuss whether the title defect is a real concern or merely a technical defect that will not cause future problems. Often the discussion will include suggestions of how to “fix” the problem if it can be remedied. And often the discussion will lead to how to insure the title. At the end of the discussion, the two lawyers will have determined whether the title is insurable.

The question of whether a title is marketable is an entirely different matter.  My unofficial definition of marketable title is title that is reasonably free from doubt and acceptable by a prudent purchaser or lender and their attorneys. That definition includes a great deal of reasonableness which means that the standard is open to discussion. I often picture the county’s best dirt lawyer and decide whether that person would close on the title without calling a title insurance company.

Most real estate contracts provide that the seller will deliver marketable title. When the standard is marketable title, the arbiter is the prudent purchaser or lender, their lawyers and, ultimately, the courts. Some contracts call for insurable title, a standard that is determined by title insurance company underwriters.

Let’s look at some examples. Take the case of the power of attorney question above. Case law in South Carolina and elsewhere (and common sense) all lead to the conclusion that this title is probably not marketable. Depending on the passage of time and the estate file for the principal, a title insurance underwriter may agree to insure over the defect.

What if you discover a tax deed in your chain of title? Depending on the age of the tax deed and ownership of the property since that deed, an underwriter may insure the title, but this title is most likely not marketable.

What if your title reveals a deed that recites, “we are all the heirs”, but there is no estate confirming the identity of the heirs? That title is probably not marketable but may be insurable, depending on the facts.

Assuming your underwriter can be convinced to insure these titles, how do you advise your client?

I suggest obtaining informed consent confirmed in writing is the only answer that will protect you and your client.

In a real-life example from private practice days, a doctor client purchased a large house in the Hollywood area of Columbia for his newly blended family. The current survey revealed a very tiny (inches!) violation of a side setback line and a reverter in the chain of title. Technically, the property had reverted to the developer when the house was built in the 1950’s.

Because the violation was so small, I was able to talk my friendly and brilliant underwriting counsel into insuring over it. But because the defect was so technically, if not practically, devastating, I wrote a letter to the client, advising him of the problem, telling him to refrain from adding onto the house which would have made the violation larger and more difficult, and suggesting that any sale of the house should involve a contract drafted by me to provide for insurable, not marketable, title.  I added a paragraph at the bottom to the effect that he understood the conundrum and agreed to purchase the house despite the defect. He dutifully signed the letter.

Did he listen to me? Of course not!

How do I remember this tale so well decades later?

The next time I heard from the doctor and his title was in the context of one of those phone calls a dirt lawyer never wants to receive. A lawyer friend called the day before closing of the sale of the property asking how I managed to close in the fact of the huge (yards, not inches) setback violation with a reverter clause in the restrictive covenants. The doctor had added onto the house and had subsequently signed a standard residential contract requiring marketable title. In the minutes between the phone call and retrieving the file, I lost ten years off my life. But thankfully, the file revealed my CYA letter. 

How was the situation resolved? My law firm brought a quiet title action for the client on his dime. The developer corporation was defunct with no apparent survivors. The court quieted the title, and I lived to practice law another day.

Here is my point. Never fail to explain title defects to your client even if you are smart enough to obtain affirmative coverage. And always obtain informed consent confirmed in writing.

EAO Opinion 22-04 gives real estate lawyers guidance on non-negotiated checks

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How we did it back in the day

Ethics Advisory Opinion 22-04 addresses a trust accounting question from a real estate practitioner.

The underlying facts are: “Due to the nature of a residential real estate practice, Lawyer frequently issues relatively small dollar amount checks from Lawyer’s trust account to both clients and third parties. A number of these checks are not timely negotiated, resulting in ongoing trust accounting maintenance costs, including labor costs, stop-payment fees and mailing fees for uncashed trust account checks that require stop payments and/or reissuance and re-mailing to the payee.”

This is an age-old concern. When I was in private practice (150 years ago or so), our law firm’s excellent bookkeeper chastised me monthly about the $5.00 check issued for mortgage satisfactions that never seemed to get cashed.

The lawyer poses the following question to the Ethics Advisory Committee: “May Lawyer charge an amount to cover administrative costs associated with stop-payment fees and trust account check reissuance and re-mailing fees for checks that remain outstanding for more than thirty (30) days after issuance?”

Thankfully, the Committee responded affirmatively.

The opinion states that a lawyer may charge a check recipient an amount to cover administrative measures undertaken to resolve the outstanding check, which includes expenses incurred such as stop payment fees and postage fees, provided the amount charged is not unreasonable.

Comment 1 to Rule 1.5 provides, “A lawyer may seek reimbursement for the cost of services performed in-house…by charging an amount that reasonably reflects the cost incurred by the lawyer.” The Committee opined that the lawyer may charge an amount against the recipient’s check to obtain reimbursement for the same, provided the amount charged is not unreasonable. To collect on the amount charged, Lawyer may deduct the amount to be charged from funds that remain in trust after adequate steps have been taken to cancel, void, or otherwise nullify the previously issued check…”

The Committee imposed one limitation by stating that the amount to be charged is limited to the total amount of funds that were paid by the outstanding check.

This opinion may provide a small amount of assistance, but the administrative nightmare remains. Small checks that fail to be negotiated will remain a monthly quagmire. But this opinion may allow law firms to at least recoup a portion of the cost.

Here’s a new wrinkle in real estate marketing: “Homeowner Benefit Program”

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South Carolina title examiners are discovering “Homeowner Benefit Agreements” or “Exclusive Listing Agreements” filed in the public records as mortgages or memoranda of agreement. The duration of the agreements purport to be forty years, and a quick search revealed hundreds of these unusual documents filed in Georgetown, Horry, Charleston, and Berkeley Counties. The documents indicate that they create liens against the real estate in question.

The company behind these documents is MV Realty PBC, LLC which appears to be doing business in the Palmetto State as MV Realty of South Carolina, LLC. The company’s website indicates the company will pay a homeowner between $300 and $5,000 in connection with its Homeowner Benefit Program. In return for the payment, the homeowner agrees to use the company’s services as listing agent if the decision is made to sell the property during the term of the agreement. The agreements typically provide that the homeowner may elect to pay an early termination fee to avoid listing the property in question with MV Realty.

In response to numerous underwriting questions on the topic, Chicago Title sent an underwriting memorandum to its agents dated June 8 entitled “Exclusive Listing Agreements”. Chicago Title’s position on the topic was set out in its memorandum as follows: “Pending further guidance, Chicago Title requires that you treat recordings of this kind like any other lien or mortgage. You should obtain a release or satisfaction of the recording as part of the closing or take a exception to the recorded document in your commitments and final policies.”

Googling MV Realty results in a great deal of information. Real estate lawyers should familiarize themselves with this company and its program to advise clients who may question whether the program makes sense from a financial and legal perspective.