USA – SOUTH CAROLINA Law and Practice Contributed by: Matt Norton and Christian Kolic, K&L Gates
and warranties, although representations as to ownership and the status of title are less com - mon – 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 war - ranties; 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 indem - nities are capped, it may be the case that certain intentional, bad acts of the seller are carved out of the indemnity, such as fraud or wilful miscon - duct. 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 consequen - tial damages. Most real estate transaction documents include waivers 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 govern the transfer and ownership of real estate, but an investor would also want to understand the tax implications of investing in real estate. Specifically, real estate investment trusts (REITs) are a common investment vehicle that provide unique tax advantages to their investors. The South Carolina Local Government Develop - ment Agreement Act (S.C. Code Title 6, Chapter 31) is critical for developers in South Carolina. The Act authorises 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 infra - structure. 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 environmen - tal contamination simply by acquiring an interest of record in contaminated real property. For this reason, it is critical in South Carolina to conduct environmental assessments of property prior to acquisition. If property is found to be contami - nated, 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 contracts, however, must be entered into prior to the time the purchaser acquires the real property interest and do not necessarily pro - tect a purchaser against claims asserted under federal law. Generally, purchase and sale agreements pro - vide that the seller is responsible for any clean- up costs and other liabilities arising from con - tamination occurring prior to the transfer of title, with the purchaser being liable for contamination occurring after the transfer of title. In larger trans - actions, purchasers are sometimes required to bear all the risk of contamination and may even
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