Court of Appeals case may affect title search procedures

Standard

scales - blue background

I’m going to talk about this case* gingerly for reasons that will become obvious when you read the caption. I won’t express any opinions, but I want to make South Carolina lawyers aware of this South Carolina Court of Appeals case from last week that seems to create a new wrinkle for title examinations.

At issue in this case are a statute, an ordinance and an official county map.

The statute, S.C. Code §6-7-1220, says “Counties and municipalities may establish official maps to reserve future locations of any street, highway, or public utility rights-of-way, public building site or public open space for the future public acquisition and to regulate structures or changes in land use in such rights-of-way, building sites or open spaces….”

The Ordinance of Horry County, 107-98, passed in 1999, established an official county map to “show the location of existing or proposed public streets, highways and utility rights-of-way, public building sites and public open spaces”.  The ordinance provided that “no building, structure, or other improvement, shall hereinafter be erected, constructed, enlarged or placed within the reservation area…without prior exemption or exception….”

In 2002, Horry County Ordinance 88-202 amended the official map to add “the right-of-way identified as Alternative 1 for the proposed Carolina Bays Parkway…”

Both ordinances were recorded in the Register of Deeds and indexed under Horry County.

A developer purchased 131.40 acres in Horry County in 2006 to develop as a residential subdivision. Title insurance was issued to two mortgage lenders through Chicago Title. The developer defaulted in 2007 and the lenders foreclosed. In 2009, the South Carolina Department of Transportation (SCDOT) filed an eminent domain action to take 10.18 acres of the property for the Carolina Bay Parkway. The lenders submitted title insurance claims, which were denied on the basis of the exclusion for zoning restrictions or ordinances imposed by any governmental body.

Summary judgment for Chicago Title was granted at the trial court, but the Court of Appeals reversed, concluding that the ordinance constituted a defect and an encumbrance.

Title examiners do not search ordinances. Should they now? Stay tuned. I hope this case will be appealed!

*Jericho State Capital Corp. of Florida v. Chicago Title Insurance Company, South Carolina Court of appeals Opinion 5731 (June 10, 2020)