Interested in buying a pristine SC island near Charleston?

Standard

The price is $15 million; and the buyer may not be able to develop it

The Charleston Post and Courier reported on March 9 that Long Island, a large, private island between James Island and Folly Beach off the coast of South Carolina is for sale. You can read the article here and the listing here.

long island sc

Long Island, SC. (Photo credit: The Post and Courier)

According to the article, the current owners would like to find a buyer who would put the land under a conservation easement.  This easement would purportedly fit well with Folly Beach’s recent efforts to stem development in vulnerable areas.

The listing indicates the size of the island is about 4,600 acres, including approximately 147 acres of high land, and touts views of Morris Island Lighthouse and the Arthur Ravenel, Jr. Bridge.

Called a once-in-a-lifetime opportunity for outdoor enthusiasts to own a unique slice of coastal paradise, the purchase would include an archaeological site eligible for The National Register of Historic Places featuring Civil War artifacts. On the west end of the island is Star Battery, an earthen fort used by Union Forces during the Civil War. The remains of a causeway that leads to nearby Oak Island and dates back to the Civil War, is said to be dry during low tide.

The listing states that the high land is potentially developable and would be an outdoor paradise for fly fishing, wildlife viewing, kayaking and paddle-boarding.

A 2014 article in Forbes states that the island contains an interior roadway providing access to all parts of the island including the archeological site, but it can only be reached by boat. This article indicates the price was $29 million in 2014. The Post and Courier article says the island is almost entirely undisturbed, with no electricity, water service or roads.

The Post and Courier article states that there was an attempt by a builder to develop this island in 1999 into more than 200 home sites. But the proposal would have required a new bridge, the plan for which was rejected.

A challenge now would be to convince a conservation organization to participate, considering the high price tag. The current owners would like to recoup as much of their investment as they can, while protecting the island, if possible, according to the article. It sounds like quite a challenge!

Advertisements

Have you heard about “Zillow Offers”?

Standard

It’s not available in South Carolina yet, but it may be a matter of time

zillow-logo

In early 2017, Zillow tipped its toe into the process of selling homes by launching a product it called “Instant Offers”. The product was initially tested in Las Vegas and Orlando and was described as a method for homeowners to sell their homes for a discounted price without the traditional complications of repairing, listing, staging and allowing for open houses.

The process started with a homeowner providing basic information via Internet about the home (square footage, number of bedrooms and bathrooms, and remodeling information) and uploading photos. The Zillow product then connected the homeowner with investors who buy homes in the area, and, typically, an all-cash offer was made by one or more of the investors. The homeowner paid no fee for the service and was not obligated to accept any offers. Zillow touted the product as a method to alleviate the seller’s stress and to allow the seller to close in a shorter timeframe.

Other companies, OpenDoor and OfferPad were already operating in this space at the time of the Zillow launch. The launch was called another example of technology disrupting the process of closing real estate transactions.

Real estate agents, of course, met the news with alarm. They said sellers would be suckered into making mistakes that might cost them the education of their kids, vacations or just the ability to sleep better at night because they have more money in their bank accounts. An online petition was initiated, asking the National Association of Realtors to threaten Zillow with being removed from access to listings. The NAR responded that it could not sponsor or encourage such a boycott.

Zillow has always stated publicly that it is not in the business of getting rid of real estate agents. Its executives called Zillow a media company, not a real estate company, and said it sold ads, not real estate. Even the Instant Offers program encouraged sellers to use a realtor even while avoiding the traditional listing and sales process. The question then became the amount of commission the real estate agent would earn for reduced services. When real estate agents initially complained about Instant Offers, Zillow responded that 70% of its revenue came from working with real estate agents.

In early 2018, however, Zillow announced that it would begin buying homes directly from sellers and then turning around and selling them. With this announcement, Zillow began selling ads and houses. Two test markets were announced, Las Vegas and Phoenix. Zillow said that when it buys homes, it will make the necessary repairs and updates and list the homes as quickly as possible. Zillow said local real estate agents would represent Zillow in the transactions. Zillow also announced in a press release that the vast majority of sellers who requested an Instant Offer ended up selling their homes with agents.

The program was later launched in several other markets, Phoenix, Atlanta, Denver and Charlotte. And last week, Zillow announced that it would be expanding to Miami, Minneapolis-St. Paul, Nashville, Orlando and Portland in 2019. So far, nothing is in the works for South Carolina as far as we know, but I did get a kick out of one article that referred to one of the markets as “Charlotte, South Carolina”.

Stay tuned for more news on this topic. Real estate lawyers will need to figure out how to remain in the game whether properties are sold through the Internet or not!

Lawyers: be careful with client documents

Standard

You and your staff can’t “fix” them

paperwork confusion

A recent disciplinary case from the South Carolina Supreme Court involved a document problem in a child custody case, but the case reminded me of an area that can create difficulties for real estate lawyers. The case, In re Robinson*, resulted in a definite suspension of nine months for a lawyer who submitted a sworn affidavit to a family court purportedly signed by the client and notarized by the lawyer. After the attorney-client relationship was dissolved, the client informed the court that the affidavit was forged. The client indicated that she had no knowledge of the affidavit when it was filed but contents of the affidavit were true.

It’s easy to imagine the scenario. A deadline approached. An affidavit was needed. The client was unavailable. The lawyer decided “no harm no foul” and “fixed” the document problem with an affidavit that spoke the truth but that was not signed by the client.

How does this case translate to real estate? Closing attorneys and their staff members are often tempted to correct errors in executed documents by replacing pages or typing or writing directly on them, both before and after recording. Some practitioners assume that if they can locate the original document after recording, they can simply “fix” it and re-record it. This assumption is incorrect. The documents belong to the parties to the transaction. Lawyers and their staff members cannot revise and re-record documents without party participation.

Changes in documents should be accompanied, at the very least, by the initials of the signatories. Perhaps more often, new documents should be signed, witnessed, notarized and re-recorded. Substantial changes may require more formal corrective measures, such as a deed back from the grantee and a corrective deed from the grantor.

Closing attorneys and their staff members sometimes attempt to correct documents with the participation of only the seller or borrower when actual correction of the problem may require the participation of the buyer or lender. For example, a developer’s deed mistakenly refers to Lot 1, when the closing involved Lot 2. It is not sufficient to correct this problem by having the seller sign a corrective deed using the legal description for Lot 2. The buyer should reconvey Lot 1 to the seller, and the seller should then convey Lot 2 to the buyer. Similarly, if Lot 1 was mortgaged in this closing, the lender should release Lot 1, and Lot 2 should be substituted by way of a corrective mortgage or mortgage modification.

Like the lawyer in the disciplinary case, real estate lawyers and their staff members may believe the adage “no harm no foul” comes into play when a mistake is found in a document. To stay out of the Advance Sheets, resist the impulse to “fix” client documents acting alone. And train your staff to resist similar impulses.

 

* South Carolina Supreme Court Opinion 27824 (July 11, 2018)

Did your 2019 Bar dues give you sticker shock?

Standard

The United States Supreme Court signals possible First Amendment violation

businessman shock

The United States Supreme Court may be considering upending the system bar associations in about thirty states use to support themselves, mandatory bar dues paid to private associations.  David G. Savage of the Los Angeles Times reported on December 3 that the more conservative high court may have an appetite to address this issue. You can read the article here.

Bar associations in most states regulate the legal profession by licensing and disciplining lawyers. The LA Times article reports: “In a brief order on Monday, the court overturned a ruling last year by the U.S. 8th Circuit Court of Appeals that had upheld mandatory bar dues in North Dakota and sent the case back ‘for further consideration in light of Janus.’”

Janus v. AFSCME is a 5-4 case from June where the Supreme Court struck down California law that required teachers and other public employees to pay fees to support unions.

The current case, Fleck v. Wetch, began when Arnold Fleck, a North Dakota lawyer, sued his state bar association after he learned it had contributed $50,000 to support a state ballot measure. When the 8th Circuit rejected his constitutional argument, the Goldwater Institute assisted him in filing an appeal.

The article quotes Justice Alito as calling it a “bedrock principle” that “no person in this country may be impelled to subsidize speech by a third party that he or she does not wish to support.”

The lawsuit challenges private associations, not state agencies that regulate lawyers. We will always pay bar dues. We just may not pay them to a private bar association.

Deadline approaching for new HOA recording requirement

Standard

“Governing documents” should be recorded by January 10

gavel house

The South Carolina Homeowners Association Act, an amendment to Title 27 of the South Carolina Code which included new §27-30-130, was signed into law by Governor Henry McMaster and became effective on May 17.

The act states that in order to continue to be enforceable, a homeowners association’s governing documents must be recorded in the county where the property is located by January 10, 2019 for associations in place on the effective date of the legislation. For new associations or for amendments to governing documents, recording must take place by January 10 of the year following the adoption or amendment of the documents.

The requirement to record Master Deeds is, of course, not new to South Carolina practitioners. We have recorded Master Deeds and their required attachments since the creation of Horizontal Property Regimes became possible in South Carolina. The new requirement applies to rules, regulations and bylaws of associations, including amendments to rules, regulations and bylaws. Practitioners have not routinely recorded these documents. It is interesting that recording rules, regulations and bylaws will not be subject to the requirement of witnesses and acknowledgements of §30-5-30.

A memorandum from the Register of Deeds of Horry County states that these documents will be accepted electronically and across the counter. Documents recorded across the counter must contain an original wet signature plus the printed name and title of the signatory. Horry County will also require contact information (address, email address or telephone number) of the person recording the document, the Homeowners Association’s name and the physical address or legal description of the property. Horry County also highly recommends, but does not require, the book and page number of the recorded Master Deed. This additional information may be included in a cover sheet.

The law also creates a new duty to disclose whether real property being sold is part of a homeowners association and a duty to disclose the condition of floors, foundations, plumbing, electrical and other components of the property. Real estate practitioners may be called upon to assist with these newly-created disclosures.

Another requirement of the legislation includes a 48-hour notice for meetings that are intended to increase budgets by more than ten percent. A requirement for access to community documents by owners was also added. This requirement was previously in place for associations that are created as non-profit corporations. The new law makes it clear that all homeowners associations must provide similar access to documents for owners. The law also gives magistrate’s courts concurrent jurisdiction for monetary disputes of up to $7,500 involving homeowners association disputes.

SC Court reverses itself on “active energy” judgment issue

Standard

law-books-gavel1

South Carolina dirt lawyers seldom breathe a sigh of relief when our Supreme Court decides a real estate case. But the November 21 opinion in Gordon v. Lancaster* was greeted with a collective “thank goodness”!  We were living with a less-than-exact term for the viability of a judgment, and we didn’t like it.

The question in this case was whether a creditor may execute on a judgment more than ten years after enrollment when the ten-year statutory period for execution** expires during the course of litigation. The Court overturned its 2010 decision in Linda Mc Co. v. Shore***, which held that, despite the passage of more than ten years, the judgment continued to have “active energy” because the judgment creditor had filed for supplemental proceedings.

In the current case, a judgment was enrolled in 2002 against Rudolph Drews, the now-deceased uncle of the Petitioner Donald Lancaster, in connection with a civil action for violating securities laws in an investment scheme for a new business venture in Charleston. Frank Gordon, the creditor, filed a petition for supplemental proceedings in 2006. During the hearing, Gordon’s counsel became suspicious that Drews’ wife and Lancaster were attempting to shield Drews’ assets from creditors. The hearing was continued when Drews failed to produce tax and financial documents.

Drews died in 2007. Gordon sought to continue supplemental proceedings, but there were delays in the estate administration. In 2010, suspicions were confirmed about hiding assets when Lancaster was deposed. Soon after, one day before her scheduled deposition, Drews’ wife died. Gordon filed this action, asserting Lancaster assisted Drews is hiding assets in violation of the Statute of Elizabeth. In 2011, Drews’ estate confessed judgment in the approximate amount of $300,000, and his wife’s estate settled with Gordon for $60,000.

During a bench trial in 2013, Lancaster moved for a directed verdict based on Gordon’s prior concession that the suit was based on the earlier judgment, which was obviously older than ten years. The trial court and the Court of Appeals disagreed, relying on the holding in Linda Mc: If a party takes action to enforce a judgment within the ten-year statutory period of active energy, the resulting order will be effective even if issued after the ten-year period has expired.

The Court noted that Linda Mc represented a departure from its historic approach and created confusion in what was formerly a well-settled area of the law. (To that I would like to very politely reply “duh”.) The Court overruled itself and returned to the bright-line ten-year rule.

In a footnote, the Court stated that it is overruling Linda Mc prospectively. The same footnote referred to Justice Pleicones’ dissent in Linda Mc, which predicted confusion in a previously settled area of the law.

Justice Few concurred in the result but disagreed with overruling Linda Mc, which he said created a narrow exception to the bright-line ten-year rule for the issuance of an execution on a judgment. There was a discussion in the opinion and the concurring opinion about dictum vs. holding, but, thankfully, nothing concrete came out of that. Justice James concurred in part and dissented in part, agreeing that Linda Mc should be overruled, but believing that Gordon should have received relief because of the prospective nature of the decision.

Pennsatucky AmenAs a title insurance lawyer and title examiner from way back, I am happy to see us return to a common sense, bright-line approach to the ten-year rule. Can I get an “Amen”?

* South Carolina Supreme Court Opinion 27847, November 21, 2018.

** South Carolina Code Section 15-39-30.

*** 390 S.C. 543, 703 S.E.2d 499 (2010).

Good news during Thanksgiving week for real estate agents…and us!

Standard

thanksgiving 2

Many real estate lawyers rely on their local real estate agent friends for the bulk of their residential closing business. When business is good for them, it’s good for us! Two recent stories in national publications are good signs for all of us.

First, an article from Housing Wire dated November 12, which you can read here, indicates more Americans are using real estate agents than ever before, including Millennials. The article cites a Harris Insights housing consumer study, which shows a full 90% of consumers use real estate agents to buy and sell their homes. These numbers are higher than those shown in previous similar studies, up 5 points from 2014 and 9 points from 2001.

We have all assumed that Millennials, ages 18 – 34, are replacing real estate agents with technology, but this study found the 91% of them use real estate agents in their transactions. According to this article, that number is higher among the Gen X group, ages 35 – 44, at 94%.

Surprising to me, this study indicates the older generations are more likely to cut real estate agents out of their transactions. Only 81% of consumers ages 55 and older indicate they use real estate agents in their transactions. And, apparently, more educated consumers enjoy the use of real estate agents in buying and selling their homes. High school graduates reported 83% use, while college educated consumers reported 94%. Higher income earners were also more likely to use real estate agents (98% of $75,000 – $100,000 earners vs. 79% of $50,000 or less earners.)

Read the article and the underlying study for more insight.

The second article that caught my attention is from Realtor Magazine on November 7. This article, entitled “Big Night of Midterm Wins for Realtors®”, reported that candidates across the country at federal, state and local levels won elections with the promise to benefit the real estate industry’s goals of strong communities and healthy residential and commercial property markets.

This article reports that the National Association of Realtors® supported hundreds of candidates they considered to be real estate champions, regardless of party affiliations.

It’s budget time for me, and our company is predicting a slight softening of residential and commercial markets in 2019. This positive news for our real estate agent partners makes me feel better about the year to come!

Here’s wishing everyone a very happy Thanksgiving with family and friends!