The State newspaper reported on July 2 that the home-buying site Zillow is suing Richland County. The claim is that the County is violating public records laws by failure to reply to a Freedom of Information (FOIA) request for property tax data.
The article reports that in May, Zillow requested property assessment data from Richland County by submitting multiple FOIA requests. The County first responded that it did not have any records matching the request. Then, the County denied the request because the requested information is available online and argued that state law does not require the County to create new documents to fulfill a FOIA request.
Zillow argued, according to the article, that not all the assessment information for every parcel in the County is available online. Zillow had apparently requested an electronic copy of the assessment files for all the parcels instead of the option to search parcels one by one. The company apparently didn’t want to have to search titles in the manner of South Carolina real estate professionals.
Zillow also argued that it had received the requested information in prior years. Before 2022, the company said it had received the assessment date from the County each year in the format the company requested, which was an electronic file that contained all assessment information. The lawsuit claims the company paid about $8,800 per year for that information.
Zillow is now suing for the requested information and demanded that the County pay Zillow’s legal fees if the lawsuit is successful. We’ll see what happens with this one!
This blog has previously discussed MV Realty, as title examiners reported finding “Homeowner Benefit Agreements” or “Exclusive Listing Agreements” filed in the public records as mortgages or memoranda of agreement. The duration of the agreements purported to be forty years, and searches revealed hundreds of these unusual documents filed in South Carolina. The documents state they create liens against the real estate in question.
The company behind these documents is MV Realty PBC, LLC which appeared to be doing business in the Palmetto State as MV Realty of South Carolina, LLC. The company’s website indicated the company would pay a homeowner between $300 and $5,000 in connection with its Homeowner Benefit Program. In return for the payment, the homeowner agreed to use the company’s services as listing agent if the decision was made to sell the property during the term of the agreement. The agreements typically provided that the homeowner may elect to pay an early termination fee to avoid listing the property in question with MV Realty.
The company has been the target of litigation and legislation in many states, and, thankfully, Governor McMaster signed South Carolina Code §27-28-10, et seq., into law on May 20. This legislation effectively bans these long-term listing agreements.
The legislation defines a real estate service agreement as a “written contract between a service provider and the owner or potential buyer of residential real estate to provide services, current or future, in connection with the maintenance, purchase, or sale of residential real estate.” Under the new law, a real estate service agreement is “unfair” and void if it is intended to be effective for more than one year; 1) expressly or implicitly purports to run with the land and bind future owners of the property; 2) allows for the assignment of the services contract without notice or consent of the owner; or 3) creates a lien, encumbrance, or security interest on the property.
Under the legislation, any recorded unfair real estate services contract is no longer effective as a lien, encumbrance or security interest against property. The recording of this type of document no longer serves as constructive notice to any interested party in the real estate. And no additional filing is necessary to void the unfair agreements or to clear the public records.
Further, the property owner of the real estate may collect actual damages, costs and attorneys’ fees resulting from the filing of the contract. Such contracts are expressly stated to be in violation of the South Carolina Unfair Trade Practices Act.
Contact your friendly title insurance company underwriter if you have questions about these documents, but these documents should no longer create title problems for South Carolina dirt lawyers. Some things do work out as they should!
I was in Washington D.C. last week with one husband and four grandchildren under 12. To see as much as we could, we walked about ten miles per day. One day, we passed the Department of Justice and the National Association of Realtors. Coincidentally, on that same day, I received word from the Chicago Title office in Columbia that the D.C. Circuit Court had ruled that the DOJ’s Antitrust Division can reopen its investigation against the NAR.
This investigation dates back to a 2005 lawsuit challenging the NAR’s operation of its multiple-listing services (MLS). The suit claimed that internet competitors and their clients were blocked from having full access to listings. This practice, the lawsuit claimed, reduced competition and kept real estate agents’ commissions high.
The parties entered into a settlement in 2008, which expired in 2018. The DOJ began its investigation again and issued two subpoenas to the NAR. One subpoena sought information about the NAR’s “participation rule” which requires listing brokers to offer the same commission to all buyer brokers using the MLS. The other subpoena sought information about the NAR’s “clear cooperation policy”, which requires listing brokers to post properties on the MLS within one day of the beginning of marketing. The DOJ claimed both policies limited competition.
In 2020, the parties agreed to a Consent Judgment. This document contained a reservation-of-rights provision that allowed the DOJ to continue to investigate and bring additional litigation. The settlement documents did not mention the participation rule or the clear cooperation policy. But the DOJ sent a letter to the NAR stating it had closed its investigation into those two rules and that the NAR was not obligated to respond to the subpoenas. The letter contained a no-inference clause providing that no inference could be drawn from the closing of the investigation.
In 2021, after unsuccessfully attempting to renegotiate the reservation-of-rights clause, the DOJ withdrew the Consent Judgment. The DOJ also dismissed the complaint and issued new subpoenas. The NAR petitioned the Circuit Court to set aside one of the subpoenas on the grounds that it breached the settlement agreement. The Court agreed. A two-judge panel of the Court reversed, relying on the “unmistakability” principle, which requires courts to refrain from interpreting a contract to cede a sovereign right of the United States unless the government waives that right unmistakably. The no-inference clause, according to the court, explicitly disclaims that intent.
The Court allowed the investigation to continue but expressed no opinion about whether any laws have been violated by the NAR. This case is different from recent actions claiming the NAR’s policies on commissions are anti-competitive. We can expect much more litigation involving the NAR.
This blog has previously discussed the March 15 proposed settlement by The National Association of Realtors (NAR) of four large antitrust suits involving buyers’ broker commissions. The monetary settlement was set at $418 million. The settlement also involves a new rule prohibiting offers of compensation to buyers’ brokers on the MLS.
There is movement in a related matter between the NAR and the U.S. Department of Justice (DOJ). Last month, a District of Columbia Circuit Court of Appeals panel of judges reversed a lower court decision to set aside a 2021 investigative subpoena from the Antitrust Division of DOJ. That subpoena had been issued in a previously closed investigation into NAR commission policies.
This ruling effectively held that a case being previously closed does not prevent its being reopened, allowing the DOJ to continue its antitrust investigation.
Several news sources are reporting that in a status hearing in a Massachusetts case, the DOJ made its first public comment since the NAR settlement this week. An attorney for the DOJ apparently stated that the DOJ believes offers of compensation to buyers’ agents should not be made anywhere, and certainly not on the MLS.
This dirt lawyer does not have the legal ability to discuss the antitrust issues involved in this litigation. The speculation about how this settlement will ultimately affect the housing industry is widely varied among experts in several professions.
The impetus for the original complaints was to lower housing costs artificially inflated by commissions which seem to be set in stone at six percent. Some experts suggest that our housing market will be completely remodeled, with the end product being lower home prices.
Other experts suggest that buyers will be crippled by having to either forego the assistance of a real estate agent or by agreeing to pay commissions out of pocket. Some of these writers suggest that home prices will increase as a result of these machinations. I’ve even heard that only wealthy buyers will have broker representation.
I’ve seen several suggestions that home buying will remain virtually the same by use of several work arounds. But I’ve seen other experts suggest that the proposed work arounds may also violate antitrust laws.
Some suggest that buyers, sellers and real estate agents will simply negotiate commissions.
One thing that is not in question is that the settlement must be approved in court. The settlement suggests that the new rules will become effective in July, but settlements in these large cases often take months to approve, so I wouldn’t be surprised to see delays beyond this summer.
The industry may be in transition as all the experts digest the settlement and as we await court approval. There is no shortage of articles on the topic. I encourage dirt lawyers to keep their fingers on the pulse of these issues as the litigation dust settles. Any activity from the DOJ will be particularly noteworthy.
Justice Clarence Thomas authored the 7-2 decision. Justices Samuel Alito and Neil Gorsuch dissented.
A payday lender trade association sued the CFPB in 2017, seeking to overturn a rule prohibiting debits from bank accounts and arguing that the CFPB and all its actions since 2010 were unconstitutional because of its funding structure.
The agency is housed inside the Federal Reserve and draws up to $600 million from the Federal Reserve annually. Funding was set up in this manner to insulate the CFPB from industry influence. Normal funding would include the regular appropriations process. Article 1, Section 9 of the Constitution (the Appropriations Clause) states that no money shall be withdrawn from the Treasury “but in the consequence of Appropriations made by Law.”
The association’s argument was that this deviation from the normal appropriations process gave the agency “perpetual” funding. The opinion held, “Under the Appropriations Clause, an appropriation is simply a law that authorizes expenditures from a specified source of public money for designated purposes. The statute that provides the Bureau’s funding meets these requirements.”
In addition to the CFPB, the Customs Service, Postal Service and revenue officers are all funded through non-annual, standing appropriations.
The dissent stated, “Unfortunately, today’s decision turns the Appropriations Clause into a minor vestige. The Court upholds a novel statutory scheme under which the powerful Consumer financial Protection Bureau (CFPB) may bankroll its own agenda without any congressional control or oversight.
From a practical perspective, I can’t imagine how difficult it would have been to undo the many investigations, rulings, and fines during the CFPB’s tenure. This decision holds that the Bureau’s actions stand.
This blog has discussed “Captain Sam’s Spit” in Kiawah Island three times before. Googling that picturesque name will reveal a treasure trove of news, opinion and case law involving the proposed development of a beautiful and extremely precarious tract of pristine beach property on South Carolina’s coast.
In the news, reported by WCSC- TV (Charleston), the town of Kiawah Island, the Kiawah Island Community Association, and the Kiawah Conservancy filed a breach of contract suit against KDP II, LLC, the owner of the spit. According to the reporting, the lawsuit alleges that a 2013 development agreement required KDP to deed a portion of the property to the Kiawah Island Community Association as community open space and to place all remaining undeveloped lands under a conservation easement to be held by the Conservancy.
The most recent blog discussed the 2021 Supreme Court case the latest case* in which the Court refers to the property as one of our state’s only three remaining pristine sandy beaches readily accessible to the general public. The other two beaches are Hunting Island State Park and Huntington Beach State Park. I enjoy the blessing of walking the pristine beach of Huntington Beach State Park on a regular basis, so despite having a career on the periphery of real estate development, I am in favor of maintaining these three state treasures.
The South Carolina Bar’s Real Estate Intensive seminars have included field trips to Captain Sam’s Spit, from a distance at least. Professor Josh Eagle of the University of South Carolina School of Law was an excellent tour guide, and how many opportunities do we, as dirt lawyers, have for field trips? The South Carolina Environmental Law Project, located in Pawleys Island, fights these cases. Amy Armstrong, an attorney with that entity, joined our group to explain the environmental and legal issues.
Here are greatly simplified facts. Captain Sam’s Spit encompasses approximately 170 acres of land above the mean high-water mark along the southwestern tip of Kiawah Island and is surrounded by water on three sides. The Spit is over a mile long and 1,600 feet at its widest point, but the focal point of the latest appeal is the land along the narrowest point (the “neck”), which is the isthmus of land connecting it to the remainder of Kiawah Island. The neck occurs at a deep bend in the Kiawah River where it changes direction before eventually emptying into the Atlantic Ocean via Captain Sam’s Inlet.
The neck has been migrating eastward because of the erosive forces of the Kiawah River. The “access corridor”—the buildable land between the critical area and the ocean-side setback line—has narrowed significantly in the past decade to less than thirty feet. Googling this issue will lead to active maps which show the change over time. The width of the neck is significant because the developer needs enough space to build a road. At the base of the neck is Beachwalker Park, operated by the Charleston County Parks and Recreation Commission. Our fieldtrips were conducted on that Park.
Twice before, the administrative law court (ALC), over the initial objection of DHEC, has granted permits for the construction of an extremely large erosion control device in the critical area. In both cases (citations omitted), the Supreme Court found the ALC erred. The 2021 case arose from the ALC’s third approval of another structure termed “gargantuan” by the Supreme Court—a 2,380-foot steel sheet pile wall designed to combat the erosive forces carving into the sandy river shoreline in order to allow the developer to construct the road to support the development of fifty houses. The Court again reversed and, in effect, shut down the proposed development, at least temporarily. The economic interests of an increased tax base and employment opportunities do not justify eliminating the public’s use of protected tidelands, according to the Court.
I wouldn’t be surprised to see future appellate court cases involving this property.
*South Carolina Coastal Conservative League v. South Carolina Department of Health andEnvironmental Control, South Carolina Supreme Court Opinion 28031 (June 2, 2021)
Several media outlets are reporting that the family of Ralph Yarl, a black teenager who rang the wrong doorbell in a white neighborhood in Kansas City, is suing the homeowners’ association in addition to the man who fired the shot.
The theory against the HOA is that it failed to exercise reasonable care regarding the use of firearms in the neighborhood. There are apparently no rules against discharging firearms.
Yarl rang the doorbell on April 13, 2023, mistaking the house for a friend’s home. He had been sent to pick up his siblings, but the correct house was about a block away. The homeowner opened the door and allegedly shot Yarl twice with a Smith & Wesson .32-caliber revolver. He said he was afraid someone was trying to break into his home.
Missouri has “stand your ground” and “castle doctrine” legislation that indicates a homeowner may use deadly force for self-defense if he reasonably believes that deadly force is necessary. A criminal case is pending against the homeowner in addition to the recently filed civil case.
The HOA is reported to be an unincorporated association with minimal annual assessments. If that is true, it wouldn’t be surprising to see the individual homeowners named.
Any South Carolina dirt lawyers who represent homeowners’ associations will want to advise them of this lawsuit. Rules and insurance issues should be explored.
On April 24, the Consumer Financial Protection Bureau (CFPB) published an edition of its Supervisory Highlights that emphasizes the agency’s actions to combat “junk fees” charged by mortgage servicers. You can read the publication here.
Examples of the illegal activities revealed by CFPB examinations included charging prohibited property inspection fees, sending deceptive notices to homeowners, and violating loss mitigation rules. The publication touts that in response to the agency’s findings, financial institutions refunded fees to borrowers and stopped illegal practices.
The agency also claims its examiners found some mortgage servicers failed to waive late fees and penalties that should have been waived because of COVID rules. Further, some servicers were cited for making late tax and insurance payments, causing borrowers to incur interest and penalties.
Last October, the agency announced its examination work from February to August of 2023 resulted in $140 million refunds to consumers for unlawful junk fees in the areas of bank account deposits, auto loan servicing, and international money transfers. Since that time, the agency states its work has resulted in an additional $120 million refunds to consumers in junk fees in the area of bank account deposits.
Richland County passed an ordinance on April 9 to attempt to regulate short-term rentals. The ordinance requires Airbnbs, VRBO and other short-term rentals to obtain business licenses and pay a 3% accommodation tax monthly.
The ordinance applies only to unincorporated areas of Richland County, but the City of Columbia previously passed a similar ordinance. Other South Carolina jurisdictions have similar regulations.
Short-term rentals are described as being 30 days or less in duration. The properties will be subject to safety inspections, according to the ordinance. The properties will be required to have at least two parking spaces, and the operators will be required to keep records of all guests who have stayed at the properties during the past two years. The records must include the contact information of the guests.
The County has estimated that it will have no more than 100 short-term rentals particularly since they are only allowed in a handful of mixed-use and commercially-zoned areas of the county. They are not allowed in single-family neighborhoods. The cost of the business licenses will be determined by the annual revenue of the property.
This blog has discussed several times the difficulty of getting and maintaining homeowner’s insurance in some locations, especially coastal areas. This appears to be an extremely difficult issue in Florida, and I have heard similar concerns along South Carolina’s coast.
The Wall Street Journal is now reporting that insurance companies are increasingly using aerial images from drones and balloons as a tool to cancel insurance on properties deemed as higher risk. You can read the article here. Googling the topic also reveals several related stories.
Apparently, angry homeowners are reporting losing coverage because of images reflecting damaged roofs, debris in yards, and undeclared hazards such as swimming pools and trampolines.
Consumer advocates object to this tactic on privacy and other grounds. For example, the images could be outdated or otherwise inaccurate. Time frames for correcting the problems may be too short. And the secrecy of the “inspections” may be deemed to be unfair.
State law may require inspection reports to be delivered to the consumer, and some state laws may limit the reasons insurance companies may use to fail to renew coverage.
According to the articles, insurance companies find the use of aerial images is an efficient way to capturing data. The technology is sophisticated and continues to improve. The companies also claim that weeding out risky properties through visual inspections helps everyone by decreasing claims.
Of course, this issue arises as we are seeing increasing premiums in homeowner’s coverage. Count on homeowner’s coverage continuing to be in the news.
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