For your reading pleasure, here is a repost of an excellent blog (with maps!) by my friend Josh Lonon of The Wyche Firm in Greenville. We will have to pay particular attention as this un-folds. Some of us who have been involved in the practice of real estate law for many years will remember confusion and extra work for title examiners and practitioners when other county boundary lines changed. Thanks, Josh, for the great information!
Here’s what you’ll need to know to get started
It’s always good to start with the law. In South Carolina, the case is, believe it or not, a 1938 grand larceny case.* It turns out that stealing standing timber is not grand larceny because standing timber is considered to be a fixture. The proper charge would be trespass.
Once the timber is severed from the real estate, however, it can be the subject of a grand larceny charge. What happens, you ask, if the criminal himself severs the timber and carries it away in a continuous act? That, my friends, is grand larceny. Even the South Carolina Supreme Court suggested this distinction may be subtle and illogical.
Now that we have exhausted my knowledge of subtle and illogical criminal law, let’s look at a few things dirt lawyers can understand. We draw from this case the proposition that standing timber is real estate in South Carolina.
Timber, like all real estate, should be conveyed by a deed. A seller might also reserve timber in a deed of the real estate to a third party. This would be similar to reserving an easement or reserving mineral rights.
The definition of “land” in a title insurance policy would include the timber growing on the land because the fee simple title holder owns all the physical elements (the “bundle of rights”, as we learned in law school) of the land. To insure land where the timber has been reserved, an exception would be taken for the timber.
From time to time, a title insurance company may be asked to insure timber. Only standing timber is insurable. Downed, fallen or cut trees would become personal property and no longer insurable in a title insurance policy. It might be problematic to insure future growth, trees seeded after a conveyance and timber sold expressly as “perpetual”. Consult your title insurance company before you get down into those weeds, so to speak.
Be careful about access issues. Timber roads are notoriously tricky, so pay careful attention to the description and ownership of real estate where the road is located. Often, GPS descriptions may be used to describe timber roads. Your client must be able to access the timber legally. The deed should grant the rights to cut and transport timber as well as the right of access.
Be careful about survey issues. You will typically not insure the acreage, and you may, again, face the problem of only having a GPS description. You might be the bad guy who has to require a survey.
You will typically take exception to the rights of others to use the land, as well as the terms and conditions of the timber deed.
Finally, determine whether a separate tax bill exists for the timber in order to prorate the correct tax amount.
You will likely want to involve your friendly title insurance company underwriter early and often if you become involved in a timber transaction.
* State v. Collins, 288 S.C. 338, 199 S.E. 303 (1938).
REALTOR®Mag is reporting that although financing remains the top roadblock to successful closings, fewer real estate agents are reporting financing as an issue today as opposed to previous months. This trend is a good one! Check out the article here.
The article indicates that, according to the REALTORS® Confidence Index, which is based on the responses from 2,500 real estate agents nationwide, the decline in complaints about financing may reflect an improvement in the economy, better credit histories from buyers and an improvement in loan evaluation processes.
But the article does report that appraisals are becoming a growing concern. Real estate agents indicated that a shortage of appraisers, valuations that are not in line with market conditions and “out-of-town” appraisers who are not familiar with local markets create the difficulties.
And for the first time in eleven years, the Fannie Mae and Freddie Mac conforming loan limit has increased to $424,100, allowing more home buyers to avoid jumbo loans, obtain lower interest rates and deliver lower down payments. The non-conforming loan limit had previously been stuck at $417,000. Read the article from INFOGRAPHIC here.
The economic news surrounding real estate closings is generally positive nationally. And the news is good in South Carolina, too. I’ve traveled around the state a good bit since the beginning of the year, and everywhere I go, I ask lawyers about business.
Early in the year, it seemed residential practices were sluggish in some markets while commercial practices were extremely busy statewide. In the last few weeks, I’m hearing much more encouraging news about residential practices, and commercial lawyers continue to report that business is excellent.
Our office is in the middle of a seminar series we have entitled “The future’s so bright, we have to wear shades.” We’re drinking the Kool-Aid and enjoying these economic good times. Those of us who weathered 2008 – 2012 deserve it!
In a sign that the average cost of houses is increasing across the country, the conforming loan limit for loans to be purchased by Fannie Mae and Freddie Mac will increase in 2017 for the first time in ten years.
The Federal Housing Finance Agency has announced the maximum conforming loan in most parts of the country (including South Carolina) will increase from $417,000 to $424,100. Stated another way, a borrower will not have to qualify for a “jumbo loan” unless the amount to be borrowed exceeds $424,100.
This change should help qualified buyers, particularly in our coastal areas where home prices are higher, obtain mortgages backed by Fannie Mae and Freddie Mac, even though credit remains tight and interest rates are likely to increase.
This is the time of the year when all of us involved in the housing industry are charged with looking into the proverbial crystal ball and projecting how we think the real estate market for the new year will compare with the current year. For what it’s worth (and this and $5 will buy you a cup of coffee at Starbucks), I’m projecting around a 3 percent increase for next year in South Carolina. Let me know what your crystal ball is disclosing!
And what to do if you suspect a compromise
With the increase in wire fraud that is happening in closing offices around the country, our company recently shared two documents that I thought would be beneficial to pass along to all South Carolina dirt lawyers .
The first document is a Public Service Announcement from the FBI dated August 27, 2015 concerning Business Email Compromise (BEC). BEC is defined as a sophisticated scam targeting businesses working with foreign suppliers and businesses that regularly perform wire transfers. Legitimate e-mail accounts are compromised through social engineering and computer intrusion to conduct unauthorized wire transfers.
We have seen this happen in more than one law firm in South Carolina!
This PSA states that the total number of victims from October 2013 through August 2015 was 8,179 and the total exposed dollar loss was $798,897,959!
The second document was prepared by Linda Grahovec, the Director of Education and Marketing for our company. This document provides two cyber incident checklists, one for use in preparing, and the other for use if your office is attacked.
Here are three pieces of advice for all closing attorneys:
- Use an e-mail system that requires two-factor authentication;
- Never wire funds based on the content of an e-mail. Always assume e-mail has been compromised, and validate the information by phone. A good practice would be to refrain from sending wiring instructions by e-mail.
- If you suspect fraud, contact the bank immediately.
Please remain vigilant! Read everything you can on this topic, and continue to update and guard your systems. One incident could easily put a law firm out of business. Title insurance companies are excellent sources of information and training on these topics! Call on them!
Just prior to the destruction brought on by Hurricane Matthew to our beloved state on October 8th, I saw two funny quips, which proved that humor is not always lost in the face of disaster. A friend posted on Facebook a football metaphor, hoping Matthew’s aim would be “wide right”. That didn’t happen. And a preacher friend of a friend put up a sign at his church: “Mark, Luke and John, please come get your boy.” That didn’t happen either.
What did happen, according to CoreLogic was $4-6 billion in damage from wind and storm surge damage in all states affected by Matthew. CoreLogic’s media advisory, which compares the destruction of Matthew to Katrina in 2005, Sandy in 2012, Floyd and 1999 and David in 1979, can be read here. The damage from Katrina, for example, was in the range of $35-40 billion. Of the $4-6 billion damage from Matthew, 90 percent of insurance claims are expected to be related to wind and 10 percent to storm surge, according to the article.
Our hearts are breaking for our family members, friends and neighbors who have lost so much in this disaster. Some have not yet been able to return home and don’t know the extent of the damage at this point.
It was just one year ago that South Carolina was forced to begin recovery efforts from the 1,000 year-flood, and those efforts are far from complete. I said in a blog about the flood, and I will repeat here that for those of us old enough to remember, this disaster feels incredibly like the aftermath of Hurricane Hugo in 1989.
As we think back to the beautiful areas of South Carolina that were hardest hit then and reflect on those areas today, it seems that almost all of them are better and stronger and more beautiful than they were before the disaster. South Carolinians are strong and resilient, and we are stronger today than we were last year.
Dirt lawyers are in a unique position to advise clients who are not familiar with the assistance that may be available to them. I challenge each of us to pass along the information that will assist in recovery efforts.
For example, Fannie Mae and Freddie Mac wrote press releases reminding mortgagors of the options available for mortgage assistance in the affected areas. Those press releases can be read here and here. FEMA resources are outlined here.
As always, I have confidence that South Carolina real estate lawyers will rise to the occasion and provide the best advice available for their clients. I am proud to be associated with this dedicated group of lawyers.
Five time NFL Pro-Bowler jailed
It’s a sad day in South Carolina! Post-flood, many South Carolinians are reeling from the damage to their homes and businesses. Many are dealing with insurance companies and FEMA, and more continue to boil water and dodge blocked roads and bridges. And in the midst of our State’s recovery, legendary Coach Steve Spurrier is hanging up his visor after eleven years coaching our beloved Gamecocks. As I was thinking about the idea of loss today, I decided to write about a place where football and real estate (in this case real estate fraud!) intersect.
We need only look back as far as October 2, when retired NFL wide receiver Irving Fryar was sentenced to five years in prison by a state court in New Jersey on charges of conspiracy and theft by deception. Fryar’s mother, Allene McGhee, was given three-years’ probation on the same charges.
Irving Fryar was the first wide receiver to be the NFL’s number one draft pick in 1984 when the New England Patriots made him their top selection. In his remarkable 17-year career, he played for the Patriots, the Dolphins, the Eagles and the Redskins. He played in Super Bowl XX with the Patriots and scored the Patriots’ only touchdown in that game in their loss to the Bears. He made it to the Pro Bowl five times and retired in 2001.
He was, at times, a troubled player. In 1986, he missed a game after being injured in a domestic dispute with his pregnant wife. In 1988, he was arrested on weapons charges. There were also headlines involving drug use, depression and even attempted suicide. But he purportedly turned his life around. While still playing, he received a Ph.D. from the North Carolina College of Theology and became a minister. After retirement from the NFL, he founded New Jerusalem House of God in his home town, Mount Holly, New Jersey, and became its preacher. He was also a regular speaker at the NFL rookie symposium and a high school football coach. His message in all these capacities was “don’t do what I did”, and “it’s never too late for salvation”.
So where did this redemption story run off the rails? Prosecutors argued in a three-week jury trial that Fryar and his mother, along with a financial advisor who testified against them, used false employment and income information to close six home equity loans on Ms. McGhee’s home in Willingsboro, New Jersey in 2009 in a six-day period. Loan applications stated that Ms. McGhee earned $6,000 per month as an events coordinator at her son’s church. Each lender agreed to make a loan on the belief that it would be in first lien position. Four of the loans were closed in a single day! Only a few payments were made, and the lenders had to either foreclose or write off their loans.
This mortgage fraud scheme will sound familiar to Columbia lawyers. Matthew Cox a/k/a Gary Sullivan moved to Columbia in the summer of 2004, buying two homes in northeast Columbia communities. He convinced the sellers in both transactions to enter into seller financing transactions. He forged mortgage satisfactions on the sellers’ mortgages and subsequently obtained multiple institutional mortgages on both properties within several days in February of 2005, amounting to more than $1 million. He then disappeared. This scam was widely reported in the real estate community in Columbia and in newspapers in three states. Matthew Cox was a former Tampa mortgage broker who was eventually convicted of mortgage fraud in Florida, South Carolina and Georgia and served time in federal prison.
I will never forget the phone call from a Columbia lawyer who said courthouse abstractors discovered this scheme on the day of the closings by conferring about the name of the borrower whose title they were all updating!
No dirt lawyer looks back with nostalgia at those days of loose lending practices that were a major factor in the global financial crisis. But Irving Fryar’s story is a reminder that the clean-up from those days is not over!
Now back to football. Steve Spurrier is an outstanding coach who has done a remarkable job in our state. I wish him good luck and God speed in retirement. Now, let’s find our next great coach!