USA – SOUTH CAROLINA Law and Practice Contributed by: Matt Norton and Christian Kolic, K&L Gates
Real Property Tax Real property tax matters are a significant part of the purchaser’s due diligence. In addition to veri - fying that all taxes due and payable have been paid, certain transactions may be deemed to be “assessable transfers of interest” ; this designa - tion can trigger a reassessment of the property for tax purposes in the year following the trans - fer, and the resulting increase in value will result in an increase in real property taxes levied. If the property has been classified as agricultural property, a change to a non-agricultural use may result in a recapture (or “roll back” ) of tax dis - counts given in the prior three years on account of the property’s agricultural classification. Under South Carolina law, the state can impose a tax lien on property in the hands of the pur - chaser for income and other general taxes not paid by the seller. South Carolina law further provides several safe harbours under which this liability can be avoided based on tax compliance affidavits of the seller and a compliance certifi - cate from the South Carolina taxing authorities. 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 transaction has been author - ised 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 customary representations
With respect to contaminated properties, pur - chasers may enter into a voluntary clean-up contract with the state authorities in order to limit environmental claims. The ability of the purchaser to enter into such a voluntary clean- up contract, however, is subject to a number of technical requirements. For example, the clean- up contract must be in place prior to the time the purchaser obtains title; otherwise, the purchaser may have full joint and several liability for envi - ronmental contamination on the property. Even if an agreement is reached with the state environ - mental authorities, this is no guarantee that the protections in the agreement will be recognised by the federal environmental authorities. Identification of Wetlands Federal and state regulation precludes develop - ment of or damage to many kinds of wetlands and regulates the discharge of stormwater run - off into the wetlands. Wetland regulations are highly technical; the purchaser may be required to restore damaged wetlands (typically at con - siderable expense) if rules are not fully complied with. Should wetland impairment be necessary for an economically viable development, such impairment may be permitted if the purchaser makes an appropriate investment in “wetland bank” that ensures the preservation of a com - parable amount of wetlands located elsewhere. Physical Condition Due diligence as to the physical condition of the property is typically undertaken by engineers or consultants retained by the buyer or by way of a property condition report. If construction is contemplated, geotechnical soil tests will be conducted to determine the suitability of the site for construction.
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