USA – SOUTH CAROLINA Law and Practice Contributed by: Matt Norton, Parker Havis and Aaron Lay, K&L Gates
5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets Title real estate can be held by any legally recognised entity having a separate legal existence, including partnerships, limited partnerships (LPs), limited lia - bility companies (LLCs), corporations and statutory trusts. Title can also be held by trustees under com - mon law trusts. The type of entity most frequently used to hold title to real estate is the LLC. LPs are also frequently used. The use of corporations and partnerships as title- holding vehicles is less common. 5.2 Main Features and Tax Implications of the LLCs provide limited liability protections – members and managers are not liable for debts of the LLC. LLCs have great flexibility with respect to: • management and control options; • allocations of profits, losses and other tax attrib - utes among the members; • distributions among the members; and • limitation of duties owed by members to each other and to the LLC. Constitution of Each Type of Entity Limited Liability Companies (LLCs) In some states, creditors of individual members may only reach the distributional interest of that member and not the member’s actual limited liability interest; to this extent, an LLC may provide limited asset pro - tection benefits. Single-member LLCs are generally ignored for income tax purposes, with taxation occurring at the parent/ owner level. Multiple-member LLCs are typically taxed as partnerships. As a result, the LLC is a pass-through entity for tax purposes – taxation is at the member level and not the entity level. LLCs may, however, elect to be taxed as C corporations under the Internal Rev - enue Code, such that tax is also levied at the entity level.
Architectural plans must also be approved by the applicable planning and zoning department and, when applicable, the governing architectural review board. Required land disturbance and building permits must be issued before construction commences. When a project complies with existing zoning require - ments, there is generally no formal public input into the permitting process. However, if a variance or a zoning amendment is required, the property owner must comply with a formal application process, requir - ing, among other things, one or more public hearings where the public is given the right to object to any requested variances or zoning amendment. Most state and local authorities maintain a board of zoning appeals or similar body authorised to hear appeals from permitting and zoning decisions, includ - ing denials or conditions imposed on permits and zoning variances. Aggrieved parties generally have a right of appeal to such boards with respect to adverse decisions. To provide certainty to developers, local governments may enter into development agreements with property owners. These agreements, typically used for larger projects or those requiring zoning amendments or variances, may address zoning and land-use, density, infrastructure obligations and the funding of related public services. Public notice and one or more public hearings are required before development agreements are executed. Planning and zoning restrictions are primarily enforced at the permitting stage, where inconsistent projects may be denied land disturbance permits, building permits or certificates of occupancy. Restrictions on use may also be enforced through legal proceedings initiated by local authorities or private parties seeking to enjoin the unauthorised use or development of the property.
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