USA – SOUTH CAROLINA Law and Practice Contributed by: Matt Norton, Parker Havis and Aaron Lay, K&L Gates
If a seller is an entity, the purchaser’s lawyer will verify the existence and good standing of the seller in South Carolina and, if different, its state of formation. The purchaser’s lawyer will also confirm that the transac - tion has been authorised by all necessary resolutions and that any other necessary entity action has been adopted or taken by the seller’s governing body. 2.5 Typical Representations and Warranties There are no legally mandated representations and warranties or disclosures in commercial real estate transactions – the doctrine of caveat emptor prevails. Purchase and sale agreements typically contain cus - tomary representations and warranties, although rep - resentations as to ownership and the status of title are less common – title matters are left for due diligence by the buyer’s counsel, with the buyer’s risk further mitigated by title insurance. Sellers frequently indemnify the purchaser against breaches of representations and warranties; however, the liability of a seller for such breaches is frequently capped monetarily and subject to shortened periods in which claims may be asserted, but even where such indemnities are capped, it may be the case that cer - tain intentional, bad acts of the seller are carved out of the indemnity, such as fraud or wilful misconduct. Note that the enforceability of provisions shortening general statutes of limitations may be unenforceable under South Carolina law, and South Carolina counsel should be consulted. It is also common for purchase and sale agreements to preclude recovery for indirect or consequential damages. Most real estate transaction documents include waiv - ers of jury trial and arbitration requirements. To ensure their enforceability, South Carolina counsel should be consulted during the drafting of such provisions. 2.6 Important Areas of Law for Investors General principles of contract and property law gov - ern the transfer and ownership of real estate, but an investor would also want to understand the tax impli - cations of investing in real estate. Specifically, real estate investment trusts (REITs) are a common invest - ment vehicle that provide unique tax advantages to their investors.
The South Carolina Local Government Development Agreement Act (S.C. Code Title 6, Chapter 31) is criti - cal for developers in South Carolina. The Act author - ises binding agreements between municipalities and developers, gives developers confidence that they will be able to develop the project and, among other terms, describes the responsibilities of each party for public infrastructure. Fee in Lieu of Taxation Agreements (FILOTs) (S.C. Code Title 12, Chapter 44) are another important tool for developers in South Carolina. FILOTs are granted by, and at the discretion of, the county where the project is located, and are available to industries that invest at least USD2.5 million in South Carolina. FILOTs can result in savings of about 40% on property taxes otherwise due for the project. 2.7 Soil Pollution or Environmental Contamination Purchasers may become liable for environmental con - tamination simply by acquiring an interest of record in contaminated real property. For this reason, it is critical in South Carolina to conduct environmental assess - ments of property prior to acquisition. If property is found to be contaminated, a purchaser may enter into a voluntary clean-up contract with the state that limits the exposure of the purchaser to environmental claims asserted by the state; these voluntary clean-up con - tracts, however, must be entered into prior to the time the purchaser acquires the real property interest and do not necessarily protect a purchaser against claims asserted under federal law. Generally, purchase and sale agreements provide that the seller is responsible for any clean-up costs and other liabilities arising from contamination occurring prior to the transfer of title, with the purchaser being liable for contamination occurring after the transfer of title. In larger transactions, purchasers are sometimes required to bear all the risk of contamination and may even be required to indemnify the seller against liabili - ties relating to such contamination. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law Purchasers of South Carolina real estate may either verify directly with the appropriate local zoning author -
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