Recent SC case law update: Town of Hollywood v. Floyd

Recent SC case law update: Town of Hollywood v. Floyd

The S.C. Supreme Court affirmed the circuit court’s grant of summary judgment in favor of the Town of Hollywood on its claims for declaratory and injunctive relief, finding that the Town’s ordinances clearly stated that the planning commission, rather than the zoning administrator, must approve subdivision plats if the property is subdivided into more than three lots. The Court reversed the circuit court’s denial of the Town’s motions for a directed verdict and judgment notwithstanding the verdict on the developers’ equal protection claim, finding the developers failed to show the planning commission treated them differently than other similarly situated developers in the subdivision application process. As a result, the Court also reversed the circuit court’s award of attorney’s fees and costs to the developers.

The Town of Hollywood, SC filed an action against developers, seeking a declaration that the developers may not subdivide their property without approval from the Town’s Planning Commission and an injunction prohibiting subdivision of the property until such approval is obtained.  The developers filed counterclaims, alleging equal protection and due process violations as well as various state law claims.  The circuit court granted summary judgment in favor of the Town on its claims for equitable and declaratory relief, and also granted the Town’s motion for a directed verdict on the developers’ state law claims.  The jury returned a verdict in favor of the Town on the developers’ due process claim, but awarded the developers $450,000 in actual damages on their equal protection claim.  Both parties appealed.  The Town argues the circuit court erred in denying its motions for a directed verdict and judgment notwithstanding the verdict on the developers equal protection claim.  The developers argue the circuit court erred in granting summary judgment in favor of the Town on its claims for equitable and declaratory relief.

To read the full case, click here.

License Renewals

June 30 LLR License Renewal Deadline

SCR recommends that all licensees check their LLR license renewal requirements ASAP.
Visit the LLR website at the following link for more information -http://www.llr.state.sc.us/POL/REC/

SCR recommends that all Brokers-in-Charge check all associated licensee LLR license renewal requirements ASAP.
Visit the LLR website at the following link for more information – http://www.llr.state.sc.us/POL/REC/

Do not rely on the LLR A-K or L-Z “rule of thumb” because at least 700 of 35,000 licensees are not covered by that LLR rule of thumb.

  • Renewing by June 30 2013 - You need 4 hours continuing education:  CEC aka Core aka federal laws update or any CEE (elective)
  • Renewing by June 30 2014 - You need 8 hours continuing education:  4 hours CEC aka Core aka federal laws update plus any 4 hour CEE (elective)
  • Salesman provisional to Permanent license - You need 30 hours post licensing course prior to expiration date on license and pay LLR $25 with form LLR240
  • Salesman inactive to active - You need 8 hours continuing education (2 hours must be CEC Core federal laws update) and pay LLR $10 with form LLR210

Multiple offers: Careful what you email

Multiple offers: Careful what you email

A licensee recently emailed a contract with all the material terms inserted (but no seller signature) to three buyer’s agents during a multiple offer scenario. The buyers all accepted the terms and the seller was in a legal problem because the seller had arguably agreed to sell one property to three different buyers.

The seller tried to argue that because their signature was not on the offers, there could be no contract. However, the buyers argued that there was an electronic signature by the listing agent who had the apparent authority to bind the seller.

Sellers should consult their attorney and be very careful about putting multiple offers or counter offers out to potential buyers during a multiple offer scenario.

Sellers may want to negotiate with one buyer at a time.  NAR and SCR recommend that sellers consult with their attorney and request all multiple offer buyers to bring their highest and best offer (without escalator clauses) to a specific location at a specific date and time.

Therefore, you may want to insert some variation of the language below into your email signature:

“Emails sent or received by this real estate licensee shall not constitute any offer or acceptance of contract terms by this real estate licensee and do not bind my Principal(s) unless my electronic communication includes one or more of the following: (1) the necessary Party(ies) electronic signature or (2) electronic reproduction of the necessary Party(ies) “wet ink” signature or (2) my Principal(s)’s electronic written authorization for this real estate licensee to bind my Principal(s) in contract.  Licensee does not have apparent authority to sign for or bind Principal(s) in contract.”

April is Fair Housing Month

The REALTOR Code of Ethics Article 10 was amended to hold you to higher standard than state or federal law, when it comes to fair housing.

The number one fair housing complaint is based on discrimination against disabled persons, so remember to allow reasonable accommodation for items such as handicap parking spots, ramps, pool access, wider doorways, lowered cabinets, elevators, roll in showers, handrails, etc.

Age also can be a fair housing issue, so be wary of age discrimination.  Under certain circumstances, retirement communities are allowed and some municipal governments use single family zoning to control undergraduate tenants (house parties, loud, parking, etc.).

Imagine you are on a hidden camera 24/7 when discussing fair housing issues. There are testers testing real estate agents daily and patrolling the internet for any advertisements that violate fair housing laws.

You should show your support of fair housing through your advertising. SCR recommends using the fair housing symbol along with images that display diversity. And of course, treat everyone equally … persons in protected classes, treat unequivocally equal.

Use these resources for more information on fair housing:

Risk Management: Case Updates

Gladden v. Palmetto Home Inspection Services

Thomas and Vera Gladden appeal the trial court’s order granting summary judgment to Palmetto Home Inspection Services (Palmetto), alleging the limit of liability provision in a home inspection contract was unenforceable as violative of public policy and as unconscionable under the facts.  The Supreme Court affirmed the lower court’s order in favor of Palmetto.  In the course of purchasing a home, Vera Gladden entered into a contract with Palmetto for a home inspection.  The contract contained a limit of liability clause, which limited Palmetto’s liability to the home inspection fee paid by the client.  After Mrs. Gladden contacted Palmetto about certain conditions in the home that were not included in the home inspection report, Palmetto returned the inspection fee.  The Gladdens brought action against the seller, real estate agents, and real estate companies involved in the transaction in addition to Palmetto.  As to Palmetto, the Gladdens alleged an action for breach of contract for failing to conduct the inspection in a thorough and workmanlike manner and to report defective conditions in the home.  The Court held that the contractual limitation of a home inspection’s liability does not violate SC public policy as expressed by the General Assembly and, as a matter of law, is not so oppressive that no reasonable person would make it and no fair and honest person would accept it.

Taylor v. Aiken County Assessor

D. Michael Taylor appealed the ALC’s finding that Taylor lacked standing to challenge the 2010 property appraisal and tax assessment for property he purchased on Sep. 7, 2010.  Taylor agued that he had standing despite not owning the property on Dec. 31, 2009, when the tax was levied.  The SC Court of Appeals agreed with Taylor and reversed the ALC’s decision.

Taylor purchased the real property located in Aiken County at a foreclosure sale.  He then immediately emailed the Aiken County Tax Assessor to “protest the appraised fair market value and resulting assessment of the referenced property for tax year 2010.”  In response, the Assessor reduced the property’s market value for 2011 tax year but did not reduce the market value or assessment for the 2010 tax year.  Taylor appealed to the Aiken County Board of Assessment Appeals but the Board denied the appeal because Taylor was not the property owner at the time the Assessor levied the 2010 tax.

Taylor then appealed to the ALC and the ALC found that Taylor lacked standing to appeal the property tax assessment for 2010 because he did not own the property as of Dec. 31, 2009, the date the 2010 tax was assessed.

The Court of Appeals agreed with Taylor that he had standing because he was a “property taxpayer” as defined by S.C. Code 12-37-610.  Taylor qualified as a property taxpayer as a person whose property is subject to the property tax.  Pursuant to section 12-49-10, unpaid property taxes become a lien upon the real property at the time when they are assessed.  Accordingly, Taylor’s interest in the property is subject to the 2010 tax by virtue of this lien.  The Court found the statute provides subsequent property owners, whose properties are “subject to… a property tax” by virtue of a tax lien, with the right to appeal their property’s valuation and resulting tax assessment.  Taylor had standing to appeal because he owned the property from the date of sale (Sep. 7, 2010) through the end of 2010 tax year.

The Court also added that the SC Revenue Procedure Act allows a property taxpayer to appeal the fair market value and assessment of property during a non-reassessment year.

Berry v. SCDEHC

The Court affirmed the circuit court’s order dismissing the Appellants’ complaint for lack of subject matter jurisdiction.  Because the Appellants’ circuit court complaint only challenged the Enforcement Order issued by DHEC, and not the Revocation Order, the complaint falls within the jurisdiction of the Administrative Law Court under the Administrative Procedures Act.  Pursuant to the APA, the Administrative Law Court had exclusive jurisdiction to hear the Appellants’ challenge of an administrative issue and the circuit court lacked subject matter jurisdiction to hear Appellants’ claim.

Simmons v. Berkeley Electric Cooperative Inc., and St. John’s Water Company, Inc.

Roosevelt Simmons appealed the master-in-equity’s grant of summary judgment in favor of Berkeley Electric Cooperative, Inc. (Berkeley) and St. John’s Water Company, Inc. (St. John’s) in an action regarding utility easements over his property.  The SC Court of Appeals affirmed in part, reversed in part, and remanded. The Court affirmed the master’s grant of summary judgment in favor of Berkeley on the basis that it was granted an easement over the property and that it had established a prescriptive easement for the power lines.  The Court reversed the master’s finding that St. John’s had an express easement to cross the property and affirmed the determination that St. John’s established a prescriptive easement, but only as to the water main.

Reeping v. JEBBCO

Robert and Annette Reeping appealed the master-in-equity’s denial of their request to set aside the tax sale of their real property in Orangeburg County.  The Court of Appeals reversed this decision.  It held that the Delinquent Tax Office failed to use the best address in providing notices to the Reepings.  This failure constituted a violation of the statutory notice requirements and rendered the tax sale of their property void.  The Court found the master erred in finding the Reepings’ action barred by the statute of limitations since the failure to give proper notice rendered the tax sale void.

Click here to read more

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The Lead Disclosure Rule

Congress passed the Residential Lead-Based Paint Hazard Reduction Act of 1992, also known as Title X, to protect families from exposure to lead from paint, dust, and soil. Section 1018 of this law directed HUD and EPA to require the disclosure of known information on lead-based paint and lead-based paint hazards before the sale or lease of most housing built before 1978.

What is Required?:

Before ratification of a contract for housing sale or lease, sellers and landlords must:

  • Give an EPA-approved information pamphlet on identifying and controlling lead-based paint hazards
  • Disclose any known information concerning lead-based paint or lead-based paint hazards. The seller or landlord must also disclose information such as the location of the lead-based paint and/or lead-based paint hazards, and the condition of the painted surfaces.
  • Provide any records and reports on lead-based paint and/or lead-based paint hazards which are available to the seller or landlord (for multi-unit buildings, this requirement includes records and reports concerning common areas and other units, when such information was obtained as a result of a building-wide evaluation).
  • Include an attachment to the contract or lease (or language inserted in the lease itself) which includes a Lead Warning Statement and confirms that the seller or landlord has complied with all notification requirements. This attachment is to be provided in the same language used in the rest of the contract. Sellers or landlords, and agents, as well as homebuyers or tenants, must sign and date the attachment.
  • Sellers must provide homebuyers a 10-day period to conduct a paint inspection or risk assessment for lead-based paint or lead-based paint hazards. Parties may mutually agree, in writing, to lengthen or shorten the time period for inspection. Homebuyers may waive this inspection opportunity.

Most private housing, public housing, Federally owned housing, and housing receiving Federal assistance are affected by this rule.

For the EPA’s homepage on lead-based paint, click here. To check out NAR’s latest field guide on lead-based paint, click here.

Don’t Allow Access to Your Listings Except In Accordance With Agreements

Entering listed properties or allowing others to enter listed property in ways that do not comply with listing and MLS agreements should not be done.

Here is some mischief that can occur when you enter property for unofficial reasons or allow others to borrow your MLS key to access the property:

1.  Illegal rent free home long term
2.  Illegal rent free beach/lake vacation home for a week
3.  Stealing alcohol and prescription drugs from property – and even using these substances on premises
4.  Using the property for parties
5.  Making copies of the key, then pretending to be the landlord or property manager and renting the vacant property to tenants
6.  Theft:  identity, valuables, weapons, furnishings, clothing, appliances, fixtures
7.  Vandalism
8.  Criminal activity including methamphetamine production, marijuana grow facilities, prostitution, etc.
9.  Liability issues – slip and fall personal injury lawsuits or accidentally starting fires that damage the property

Most MLS systems have rules prohibiting sharing of keys and discipline for violations (warnings, fines, reprimands, suspension).

NAR Code of Ethics Standards of Practice 3-9 makes this a potential ethics violation for the agent and their broker.  Discipline can include warnings, fines, education, suspension, probation, and publication.

Electronic keys will record the date and time of the e-key holder entering the property.  So this circumstantial evidence could attach  liability and responsiblity for all sorts of mischief to the e-key holder instead of the perpetrator who borrowed the e-key and actually did or caused the mischief.

Even a successful defense to such circumstantial has a cost in terms of time, lawyer fees, loss of business good will, and damage to your reputation.

The entire brokerage brand and REALTOR brand could be damaged in these situations that often show up in print, internet, and television news media.

SC Advance Sheet Update

Kiawah Development Partners, II v. SCDHEC — The S.C. Supreme Court affirmed an administrative law court’s (ALC) decision authorizing Kiawah Development Partners (KDP) to construct a bulkhead and revetment on Captain Sam’s Spit on Kiawah Island.  In 2008, KDP submitted an application to DHEC for a permit to construct a 2,783 ft bulkhead and 2,783 x 40 ft articulated concrete block revetment on the shoreline of the Kiawah River.  DHEC issued a conditional permit approving the construction of the erosion control structure for a distance of 270 ft but refused the permit request for the remaining 2,513 ft based on its concerns regarding cumulative negative impacts, including interference with natural inlet formation and possible adverse effects on wintering piping plovers.  DHEC also determined that the project was contrary to the policies set forth in the Coastal Zone Management Program.  KDP requested a final review conference by the DHEC Board but was declined; KDP then requested a hearing before the ALC challenging the denial of the construction of a bulkhead and revetment along the remaining 2,513 ft.  The Coastal Conservation League (CCL) also joined in the proceedings.  The ALC granted the permit to construct the bulkhead and revetment.  DHEC and CCL appealed and the Supreme Court reversed the ALC and remanded the issue in 2011.  The Supreme Court now withdraw its initial opinion, affirming the original decision of the ALC.  The Court concluded that the appellant’s argument regards the language and structure of the ALC’s order, and not in actual errors of law or absence of substantial evidence.  The ALC had acted within the permissible scope of its authority in modifying the existing permit.

Sapp v. Wheeler — In an action to collect rent obligations, the S.C. Court of Appeals affirmed the lower court’s denial of Wheeler’s motion for a directed verdict on the claim for future damages, motion for a directed verdict based on the statute of limitations, request for a jury charge, and motion for a new trial.  The parties had entered into a lease agreement to rent a building so Wheeler’s company could operate a video gambling business.  The lease was from 1994-2014; however, Wheeler defaulted in its payments and was evicted in 2008.  He tried to argue that subsequent to the lease agreement, SC outlawed video gambling so the purpose for the lease could not be performed, and as a result, Wheeler was excused from performing its duties under the lease.  Despite these arguments, the trial court returned a verdict of $252,789 for Sapp and the Court of Appeals found that this was not inconsistent nor excessive.

Independence Nat”l Bank v. Buncombe Professional Park, LLC — In this mortgage dispute, the Court of Appeals reversed the master-in-equity’s decision and held that it erred in applying reformation and equitable subrogation as remedies.  The master erred in reforming the mortgage to alter the parties’ priority rights because reformation does not permit a court to write a new additional party into the mortgage to correct the error.  Equitable subrogation was also an improper remedy because Independence had actual notice of the prior mortgage.  The court reasoned that because that attorney authorized to conduct the closing was present, actual notice to that attorney of the prior mortgage was actual notice to Independence.

To read further about these cases and others on the advance sheets, click here.

Disparate Impact under the Fair Housing Act

The U.S. Department of Housing and Urban Development (HUD) issued a final rule authorizing “disparate impact” claims under the Fair Housing Act.  The rule provides support for private or governmental plaintiffs challenging housing or mortgage lending practices that have a disparate impact on protected classes of individuals, even if the practice is facially neutral and there is no evidence that the practice was motivated by a discriminatory intent.  The rule also will permit practices to be challenged based on claims that the practice improperly creates, increases, reinforces, or perpetuates segregated housing patterns.

In its final rule, HUD codified a three-step burden-shifting approach to determine liability under a disparate impact claim.  Once a practice has been shown by the plaintiff to have a disparate impact on a protected class, the final rule states that the defendant would have the burden of showing that the challenged practice “is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests of the respondent… or defendant… a legally sufficient justification must be supported by evidence and may not be hypothetical or speculative.”  As proposed, the defendant would have had the burden of proving that the challenged practice “has a necessary and manifest relationship to one or more legitimate, nondiscriminatory interests.”

The new regulation is mostly about specifying a standard for proving a discriminatory effects violation and formalizing a burden-shifting test for determining whether a given practice has unjustified discriminatory effect.  HUD and every federal appellate court has long interpreted the Fair Housing Act to cover “disparate impact” but this newest regulation codifies it.  A case out of Mount Holly, New Jersey is being reviewed by the United States Supreme Court, which will specifically address whether the Fair Housing Act allows for disparate impact claims.  The Court has not officially decided to hear the case yet but is seeking advice from the Solicitor General.

To read HUD’s final rule, click here.

To read about the Mt. Holly case, click here.