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For South Carolina business and legal updates:

Loan Servicers Must Continue to Follow Both Federal and State Rules in Foreclosures

Banks have now had two years of experience with the Dodd-Frank Act and the Consumer Financial Protection Bureau (CFPB), the agency that implements the parts of the law that apply to mortgage servicers.

The foreclosure crisis and accompanying recession are in the rearview mirror, but the stringent consumer protection rules attached to the law continue to set tight boundaries for how banks handle loss mitigation. Dodd-Frank was a response to a period when many mortgage servicers were unresponsive to consumers as a result of being overwhelmed by the volume of defaults. As a result, the law severely tightened protections for borrowers, requiring mortgage loan servicers to follow strict procedures and documentation in loss mitigation.

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Creditors’ Rights Trump Ownership Restrictions in LLC Operating Agreements

A recent South Carolina Supreme Court decision affirms the supremacy of creditors’ foreclosure rights, and sounds a cautionary note for LLCs. The state’s high court said that LLCs can’t use an operating agreement to force a creditor to sell a distributional interest it obtained via judicial foreclosure. 

The ruling came in Levy v. Carolinian, LLC, a case involving an LLC that owns an oceanfront hotel. One of the members, who owned about a quarter of the LLC, found himself on the wrong end of a judgment for $2.5 million. Creditors obtained a charging order – essentially a lien – against their debtor’s distributional interest in the LLC. The creditors then foreclosed on its charging lien and purchased the member’s distributional interest at public auction. 

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Your Right to be Free of Your Neighbor’s Water

Almost any change that people make to the natural landscape can alter the flow of surface water, and that often creates problems that grow into legal disputes. It’s an area where property rights, nature and engineering intersect in unpredictable ways.

A new subdivision, parking lot, expansion of a building or even change in the use of rural land can result in water washing out a neighbor’s lawn, flooding homes, attracting mosquitos in standing pools, depositing silt on a golf course, polluting a backyard pond or rendering crop land less profitable. While we typically see these problems emerge in urban developments, disputes can arise anywhere water flows. 

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Precise Communication is the Antidote to Accounting Malpractice Claims

In my experience as both an attorney and a formerly licensed CPA, true accounting malpractice is rare. But, when there are claims, they can be expensive. It’s incumbent on accountants, as well as clients, to take steps to minimize the misunderstandings that can lead to litigation. 

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Records Retention - Do You Have a Plan?

For many small businesses, deciding what documents to keep and for how long is a function of storage capacity. As servers and filing rooms reach capacity, businesses look for documents to discard. 

This is not the way to manage your documents.

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Court Comes Down Hard On Bank That Didn’t Satisfy Open-Ended Mortgage in 90 Days

The South Carolina Supreme Court recently sent a clear message to banks: all mortgages – including those with a home equity line of credit (HELOC) – must be satisfied within 90 days of receiving a payoff. Banks that don't have a procedure for timely execution of payoffs where there is a line of credit should implement one immediately or risk certain liability.

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Why You Must Renew South Carolina Buy-Sell Agreements to Reflect Inclusion of Goodwill

A recent South Carolina court ruling has adopted the emerging majority approach utilized by the courts nationwide, and for the first time has recognized the distinction between “enterprise goodwill” and “personal goodwill” for equitable distribution purposes in a divorce action. 

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Why Your Lawyer and Accountant Should Work as a Team

One of the first things I do when I get a new business client is to ask if they have a relationship with an accountant. With the client's permission, I'll call the accountant, introduce myself and open up the lines of communication between us. 

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