South Carolina

Court of Appeals grants DeBordieu right to intervene in Baruch litigation

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The Belle W. Baruch Foundation (Baruch) owns approximately 8,000 acres of high ground in Georgetown County. Baruch brought a declaratory judgment action* against the State of South Carolina, claiming it also holds title to 8,000 acres of adjoining marshland.

The State answered, asserting its status as the presumptive titleholder of all marshlands, and counterclaimed that the public holds a presumptive easement over the marshlands. Alternatively, the State claimed that the property had been dedicated to the public.

DeBordieu is an upscale private coastal community which shares a boundary with the disputed marshlands.

Anyone familiar with Georgetown County history knows that Belle Baruch was the daughter of Bernard Baruch, a wealthy landowner and statesman who advised President Wilson during World War I and President Roosevelt during World War II.

Baruch owned Hobcaw Barony, a former rice plantation, and surrounding real estate. President Roosevelt famously convalesced during one of his illnesses at the property. Belle Baruch inherited much of the property and donated it to the Foundation as a nature and research preserve.

Hobcaw has relationships with the University of South Carolina and Clemson University for the purposes of conservation and other research. The property is also the location for delightful Lowcountry tours and events like oyster roasts and holiday parties. I learned on one of these tours that Belle Baruch was interested in preserving the real estate, but not the buildings. The funds she left were not intended for the upkeep of the buildings. The Foundation raises money for that purpose.

I highly recommend that locals and tourists take the time to visit Hobcaw. It’s a beautiful property that reminds me of George Washington’s Mount Vernon. If funds had been left to preserve the buildings, Hobcaw would likely be as impressive as Mount Vernon.

According to the lawsuit, DeBordieu’s members have a history of using the marshland for shellfish harvesting, crabbing, wade fishing and similar recreational activities. In the early 1970’s, DeBordieu created a system of creeks and canals allowing its members access to the marshland and to the Atlantic Ocean. DeBordieu has periodically dredged its canals to maintain its access to the marshland.

DeBordieu sought intervention as a matter of right or, alternatively, permissive intervention. The circuit court denied intervention under both theories.

The Court of Appeals reversed, stating that precedent and Rule 24(a) of the South Carolina Rules of Civil Procedure set a liberal standard for intervention. Although the State and DeBordieu similarly claim that if Baruch owns the disputed property, the marshlands are encumbered by the States and/or DeBordieu’s easements, it is not accurate to classify those easement claims as the same interest in the property.

The State’s and DeBordieu’s claims are independent of each other and require different proof, according to the Court.

The Court also addressed the practical effect of denying the motion to intervene. A declaratory judgment must name all parties having a claim or interest in the matter and must not prejudice the rights of persons who are not parties to the proceeding. The Court concluded that a judgment valid against the State but not against others claiming an interest in the marshlands would not be an efficient use of judicial resources.

DeBordieu is allowed to intervene, and the litigation will proceed. We will keep you posted.

*The Belle W. Baruch Foundation v. The State of South Carolina, South Carolina Court of Appeals Opinion 6043 (January 17, 2024.)

SC joins states where real estate commissions are being litigated

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This blog recently discussed the Missouri class action by residential real estate sellers against the National Association of Realtors (NAR), a real estate agent trade association, and several real estate agent entities, which resulted in a judgment of $1.8 billion. The plaintiffs argued that commissions are rarely negotiable and that the seller is required to pay commissions for both sides of transactions

A South Carolina lawyer posted on a listserv I read on the subject that litigation like this wouldn’t happen in South Carolina because standard residential contracts leave a blank for the percentage of the buyer’s agent’s commission. This poster was, sadly, wrong.

Housingwire reported on November 10 that Shauntell Burton has filed a lawsuit in the U.S. District Court for South Carolina alleging that the NAR and Keller Williams colluded to artificially inflate agent commission rates. You can read the story here.

The plaintiff is seeking class action status for all home sellers in South Carolina who have sold a home on the MLS with a Keller Williams agent since November of 2019. The 107-page complaint states that NAR’s “clear cooperation” policy leads to the commission problem because that policy requires agents to provide a blanket offer of compensation to the buyer’s agent to list a property on the MLS.

Apparently, similar suits are being brought in multiple states.

Dirt lawyers, what do you think about this? Is Keller Williams the only broker involved in the practice, or will other brokers be named in the future? Is it your experience that commissions paid by sellers to buyers’ agents are negotiated, as the poster mentioned above suggested? I’d love to hear your thoughts and learn from your experience.

Gullah Geechee residents of St. Helena Island attempt to stop golf course development

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Last week, this blog discussed a real estate dispute between a developer and a 93-year-old great-great-grandmother in Hilton Head who said her husband’s family has owned the property since the Civil War. This week, we turn to a similar story in St. Helena Island.

NPR reported on August 3 that residents of St. Helena Island have banded together to protect the culture of the Gullah Geechee people from a golf course development. You can read NPR’s story here.

The story reports that St. Helena Island has a decade’s old zoning ordinance that bans golf courses, resorts and gated communities, which the Gullah Geechee people say threaten their existence. Direct descendants of slaves have farmed and fished St. Helena Island for nearly 200 years, using their own language, culture and traditions.

NPR reports that developer Elvio Tropeano purchased 500 acres and wants to build a golf course despite the zoning ordinance. He contends the golf course would benefit the community by allowing public access and attracting visitors who would become educated about the Gullah Geechee people and spend funds that would support their culture. If he is unable to build the golf course, he threatens to build more than 160 luxury homes. According to the NPR story, some locals believe the subdivision would be worse than the golf course. They prefer to have the land sustained the way it is, unspoiled and resilient.

These stories are certainly not the first South Carolina tales we have heard about disputes between locals and developers and pressures on “heirs property” and other undeveloped, pristine real estate. The pressures seem to be building!

Magistrate has no jurisdiction when title is in question

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Court of Appeals reverses Circuit Court on this issue

In Rivers v. Smith*, South Carolina’s Court of Appeals reversed Orangeburg County’s Circuit Court order affirming a magistrate’s order of eviction.

Rufus Rivers and Merle Rivers have lived on property once owned by Jessie Mae Smith since 2009, although there was no record of a written lease. In 2013, Jessie Mae Smith signed a power of attorney in favor of her son, James Smith. In 2014, James Smith conveyed his mother’s property to himself by quitclaim deed using the power of attorney.

(The opinion contains no discussion of whether the conveyance of the property by the attorney in fact to himself was a valid transfer, but that would have been my first question.)

Jessie Mae Smith died in 2016. In 2018, James Smith sent the Rivers a letter demanding they vacate the property within 30 days. The Rivers refused. They asked James to cease and desist his efforts to displace them. They argued that James had an invalid power of attorney and alleged he had breached fiduciary duties. Competing lawsuits followed.

The Rivers’ lawsuit in the Circuit Court challenged James’ ownership of the property and alleged constructive fraud, unjust enrichment and other causes of action. The Rivers amended their complaint, alleging that James used an invalid power of attorney and that Jessie Mae Smith had orally given or promised the property to the Rivers.

James filed the subject case in the magistrate court, seeking eviction. The Rivers made various arguments to the magistrate opposing the eviction, including alleging that Jessie Mae Smith had promised the property to them. The Rivers also alerted the magistrate of their claims against James Smith in the circuit court.

James Smith’s main argument to the magistrate centered around the statute of limitations because the alleged gift would have occurred more than three years before the lawsuits were brought. The magistrate ruled that James Smith was the lawful owner of the property and ordered eviction.

On a motion by the Rivers to reconsider, the magistrate found that the case did not involve a question of title and that she had jurisdiction to hear the case. The circuit court affirmed, and this appeal followed.

The issue on appeal was whether South Carolina Code §22-3-20(2), which bars a magistrate from hearing a case when title to the property is in question, prohibited the magistrate from hearing this case.

The Court of Appeals acknowledged that Smith has defenses to Rivers’ claims, and that those defenses may be valid ones, but held that the magistrate’s jurisdiction ended as soon as it became clear that there was a challenge to title. The opinion further stated that the case may end in a second and successful eviction, but they refused to say that outcome is certain.

I will be curious to learn what the future holds in the litigation between these parties. I hope the property is worth the litigation, and I note with interest that the Rivers represented themselves pro se in the subject case.

*South Carolina Court of Appeals Opinion 5992 (June 21, 2023)

Real estate lawyers: how are you feeling about SC’s 2023 housing market?

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Earlier this year, several news sources reported that South Carolina’s 2023 housing market could return to a “normal” sales level, leaving behind the frenzy we have seen in previous years. We were anticipating the market may return to our ordinary seasonal ebbs and flows. Law firms have always had to adapt to those fluctuations from a staffing and other cost standpoint.

Redfin is reporting some interesting South Carolina statistics. Redfin’s website indicates that in May, home prices were up 2.1% year-over-year. During the same period, the number of homes sold fell 11.5% and the number of homes for sale rose 2.5%. The median sales price was $375,200, and 6,893 homes sold during that period. The median number of days on the market was 55, up 16 days year-over-year.

We all know that South Carolina is a primary destination for consumers looking for milder winters and following jobs at BMW, Volvo and other companies. We have recently learned that Scout Motors is establishing a manufacturing plant in Blythewood to build all-electric trucks and SUVs. We have heard the company is investing $2 billion and has the potential to create 4,000 permanent jobs. The future in South Carolina definitely does not appear to be dismal in the long run.

National economists seem to be predicting that home prices will continue to rise in 2023. Sales may be down and mortgage rates may be up, but home prices still seem to be rising because there are so few homes for sale. Rising prices are good news for home sellers, but not for cash-strapped home buyers. Inflation, of course, is causing major concerns for these potential home buyers. The Federal Reserve may or may not continue to raise rates to control inflation.

I never miss a chance to ask a South Carolina real estate professional about business. I’d love to know what you are seeing in your office this year and how you are thinking about what 2024 might bring.

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).

Short-term rentals questioned in South Carolina cities

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Vrbo and Airbnb are two go-to websites to find interesting short-term rentals in vacation locations. Sometimes a cabin or house seems much more appropriate and fun than a hotel room for a family get-away. Having a kitchen and room for dining is often a plus. And I love a hot tub with a view!

But I’ve seen a couple of news articles about South Carolina cities questioning whether these types of short-term rentals are appropriate in residential subdivisions, and I understand the concern.

WLTX posted an article on March 16 entitled, “Renters frustrated after South Carolina city pauses short-term rentals for 6 months.” The article reports that Rock Hill is halting new and renewal permits for short-term rentals for at least the next six months.

The article quotes a man who said he and his wife operate nine Airbnb locations and have been put out of business by the resolution. The article quotes the resolution: “the homes are mainly in their older neighborhoods and these transient tenants have a negative effect on the peace and perceived safety of those neighborhoods.”

An article posted on March 17 by South Carolina Public Radio entitled “Upstate cities ponder the fate of short-term rentals” discusses the Rock Hill moratorium as well as similar discussions by city officials in Spartanburg.

The city attorney in Spartanburg is quoted as saying that city’s “permissive” zoning ordinance does not address short-term rentals and that any use that is not specifically allowed is prohibited. He admitted, however, that there are “plenty” of short-term rentals—about 120 on Airbnb alone.

One councilman in Spartanburg was quoted as arguing in favor of creating rules to keep “bad actors” from causing trouble in neighborhoods.

Rules vary greatly in the cabins and houses we’ve rented, but a common theme seems to be that parties are not allowed. I’ve also seen limits on the number of cars that can be accommodated and, of course, the number of people permitted. Pets may or may not be allowed.

What do you think? Would you be comfortable with short-term rentals in your neighborhood? Could rules about groups, parties and parking make a difference?

We may see other cities in The Palmetto State considering whether to limit short-term rentals through zoning or permitting. It’s an interesting question!

EAO 21-01 says it’s ethical to pay $249 to be on lender’s closing attorney list

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The first Ethics Advisory Opinion of the year is noteworthy for South Carolina real estate practitioners.

Here is a brief summary of the facts:  In a residential refinance, the lender’s loan estimate package provided the name of a specific South Carolina licensed attorney that the bank “identified” as one who could close the loan. The package expressly said the borrower could “shop for (the borrower’s) own providers” for legal and other services.

The borrower informed the bank that a different lawyer had been selected, but the bank’s second set of loan estimate documents again identified a different lawyer and again said the borrower could chose its own provider.

When the borrower asked why another lawyer’s name was identified, the bank responded that the borrower’s chosen lawyer could sign with a third-party company that the bank had contracted with to produce loan forms for an annual fee of $249 to be included on the list.

The borrower’s lawyer did not enroll in the program but did close the loan.

The question to the Ethics Advisory Committee was whether a lawyer may participate in a service provider network for an annual fee of $249 to be listed as an “identified” service provider without violating S.C. Rule of Professional Conduct 7.2(c)?

Rule 7.2 (c) generally provides that a lawyer shall not give anything of value to a person for recommending the lawyer’s services. One exception to the rule is that a lawyer may pay the reasonable costs of advertisements or communications permitted by the Rule.

The Committee pointed to Comment 7 which states that a communication contains a recommendation if it endorses or vouches for a lawyer’s credentials, abilities, competence, character, or other professional qualities. The bank’s form in this case only provides contact information for participating lawyers and indicates the lawyers on the list have been identified. And the borrower is told in each instance that he or she can choose a different lawyer.

The Committee said these limited statements hardly match up the verbs and nouns used to describe a “recommendation” in the comment because the language in the forms says nothing substantive about the credentials, abilities, competence, character, or professional quality of the listed lawyers.

The Opinion further stated that participation in the network appears to be open to any real estate attorney and that the fee appears to be reasonable considering the enrollment, onboarding, and maintenance charges for including attorneys in the network.

The short answer to the question was “yes”, a lawyer may pay the fee and participate in the network of legal service providers and be “identified” as a possible service provider.

It is interesting that the facts included this statement: “The package and disclosures are assumed to be compliant with federal and state requirements for loan applications and attorney-preference notices.” The Committee answered the very specific question put to it and clearly has no authority to address federal law.

Court of Appeals refiles order setting a timing rule on ATI exemption

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The new rule favors the taxpayer

A case* from the South Carolina Court of Appeals on August 26 concerns South Carolina Code Section 12-17-3135 which allows a 25% property tax exemption when there is an “Assessable Transfer of Interest” of real estate. The issue was one of timing, whether a property owner must claim this exemption during the first year of eligibility.

The order was withdrawn by the Court of Appeals, and a new order with the same result was refiled on December 23, 2020**. In comparing the two orders, I could find only one change, the deletion of a sentence that didn’t appear to affect the result. Perhaps someone involved in the case can point out the reason for withdrawing and refiling the order. Regardless, the Court of Appeals lets the result of its prior decision stand.

The Administrative Law Judge had consolidated two cases. In both cases, the property owner had purchased property during the closing months of 2012. Neither taxpayer claimed the ATI Exemption in 2013, but both claimed it in January of 2014. The Dorchester County Assessor denied the requests, but the ALJ decided the exemptions had been timely claimed.

The statutory language in question provides that the county assessor must be notified before January 31 for the tax year for which the owner first claims eligibility. The taxpayers argued that the plain meaning of this language allows them to choose when to claim the exemption. The Assessor argued that the exemption must be claimed by January 31 of the year following the transfers.

The Court looked at taxation of real property as a whole and held that the legislature intended that all purchasers would have a meaningful opportunity to claim the exemption. Under the Assessor’s interpretation, there would be a much less meaningful opportunity for taxpayers who purchase property later in the calendar year.

The Court also stated that the ATI Exemption is not allowed to override the appraised value set in the statutorily required five-year reassessment scheme, so there would be a built-in time limit for claiming the exemption.

* Fairfield Waverly, LLC v. Dorchester County Assessor, Opinion 5769 (August 26, 2020)

** Fairfield Waverly, LLC v. Dorchester County Assessor, Opinion 5769 (August 26, 2020); Withdrawn, Substituted and Refiled December 23, 2020.

Are you up for some haunted entertainment?

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…or do you think 2020 has been frightening enough?

“It’s got great curb appeal!”

This article entitled “Would You Buy a Haunted House?” by Amanda Farrell at PropLogix caught my eye this morning. A real estate lawyer might face a challenge or two closing a haunted house!

And it’s Halloween week! Let’s entertain ourselves.

If you and your kids are up for some in-person creepy places, try Sweet Dreams Scare House in Easley, Madworld Haunted Attraction in Piedmont, Dark Castle Haunted Attraction in Elgin, Nightmare Haunted House in Myrtle Beach or Ripley’s Haunted Adventure in Myrtle Beach.

If your family prefers to check-out real haunted sites in South Carolina, check out this article.  Even the names of “Greenville Tuberculosis Hospital” and “South Carolina Lunatic Asylum” are menacing!

I grew up in the Low Country (otherwise known as “God’s Country), and the story of Alice Flagg, a ghost in Murrells Inlet, is considered fact.

The story, according to this article, is that in 1849, a wealthy doctor named Allard Flagg moved into The Hermitage and invited his beautiful sister, Alice, to live with him. (They’re always beautiful.) Alice, of course, falls hopelessly in love with an unsuitable man, who is sent away by her brother.

Alice continued to see her suitor secretly. When her brother discovered the assignations continued, he sent sweet Alice off to a boarding school in Charleston. She contracted malaria, and just before she died, her brother brought her home. After her death, he found an engagement ring on a ribbon around her neck and furiously threw it into the marsh. Beautiful Alice has spent the last 150+ years clutching her chest while walking around All Saints Cemetery. 

I bet that story would scare your kids, especially if you tell it after dark in the cemetery!

If you’re like me, though, 2020 has been scary enough. “Casper, The Friendly Ghost” is pretty much the most my family can handle this year. I wish you and your family more treats than tricks this weekend. Stay safe and Happy Halloween!