USA – SOUTH CAROLINA Law and Practice Contributed by: Matt Norton and Christian Kolic, K&L Gates
meeting intermediate milestone dates and the completion date. In addition, lenders frequently incorporate construction milestones into the financing documents. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Owners frequently seek additional assurance as to performance by contractors by way of a pay - ment and performance bond issued by surety. The use of letters of credit in construction pro - jects in South Carolina is not common. 7.6 Liens or Encumbrances in the Event of Non-Payment Persons performing work or providing materials with respect to construction and development of property who are not paid for such work or materials are entitled to file a lien on the property as security for the amounts owed. In addition, liens may be filed by persons providing security services, by surveyors, by leasing (but not sell - ing) real estate brokers, by persons providing landscaping services, and by persons providing design services (architects and engineers). Mechanic’s liens may be discharged from the real property by the posting of a bond; the lien then attaches to the bond and is released from the real property. Further, in a proper cir - cumstance a court may order the removal of a mechanic’s lien. 7.7 Requirements Before Use or Inhabitation Buildings may not be occupied until a certificate of occupancy has been issued. The requirements for obtaining a certificate of occupancy include the inspection of the major functional portions of the building (including electrical and plumbing) during the construction process and verification
that construction was done in accordance with the approved plans and specifications.
8. Tax 8.1 VAT and Sales Tax
The gain on the sale of real estate is taxed as income under general state and federal income tax laws. In addition, there is a transfer tax levied on transfers of ownership of real estate evidenced by deeds, which is typically paid by the seller, and the rate is USD1.85 per USD500 of the sales price, subject to limited statutory exemptions. There is no sales tax on the sale of corporate real estate. 8.2 Mitigation of Tax Liability In some cases, transfer tax (deed recording fee) may be avoided or reduced by structuring the transaction appropriately. For example, the deed recording fee may be avoided by contributing the property to be sold to a single-member LLC and then selling the equity in that single-member LLC to the economic purchaser of the property. 8.3 Municipal Taxes Although in most jurisdictions there is a busi - ness licence tax assessed against businesses at the county and city levels, this tax is based on gross revenues of the business in the jurisdiction and not on the property per se. The ownership and operation of real property would constitute a business subject to this business licence tax. In addition, commercial properties may be sub - ject to solid waste disposal, stormwater and other user fees. South Carolina law also allows for special assessments of property for adjacent improvements (such as street paving). There are no specific occupancy taxes or taxes on rent oth - er than ordinary state and federal income taxes.
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