Archive for the "Banking & Finance" Category
South Carolina Supreme Court Sides with Innovation in Real Estate Lending Law
Posted on Aug 31, 2017 by
Kristen N. Nichols
A strongly worded decision from the South Carolina Supreme Court has surprised many real estate lawyers and lenders by firmly validating a new competitor that has become a gamechanger in the marketplace.
The case Boone v. Quicken Loans centered on whether internet-based residential refinance closings by Quicken Loans and Title Source constituted the unauthorized practice of law.
South Carolina requires a lawyer to close residential real estate transactions, but laws vary in other states where lawyers may have limited involvement and professional title abstractors or a title insurance company are permitted to handle closings.
The five steps that South Carolina lawyers must supervise in a residential closing were established in the 1987 state Supreme Court case, State v. Buyer Services Company. Those steps where a lawyer must be involved meaningfully are document preparation, title search, closing, recording and disbursement.
But in its ruling, the state Supreme Court cited an earlier opinion that said its duty is to protect the public, not lawyers:
"[T]he policy of prohibiting laymen from practicing law is not for the purpose of creating a monopoly in the legal profession, nor for its protection, but to assure the public adequate protection in the pursuit of justice, by preventing the intrusion of incompetent and unlearned persons in the practice of law."
In the Quicken case, the high court found that lawyers were involved in the internet-based transactions and used their professional judgment in each step. The declaratory judgment reversed the special referee’s decision earlier that said no lawyer was involved in a way that protected the interests of the borrower.
The court noted the existence of significant federal regulations, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act, Truth in Lending Act and Real Estate Settlement Procedures Act, which provide consumer protection. It said requiring more attorney involvement would not benefit the public or justify the increase in costs, which in turn could result in a reduction of consumer choice and access to affordable services.
Businesses Collecting Purchased Debt Get Relief In Supreme Court Ruling
Posted on Jul 06, 2017 by
Elizabeth A. Blackwell
A June 12, 2017, U.S. Supreme Court ruling means businesses have less to worry about from regulations designed to protect consumers from abusive and deceptive practices when attempting to collect their own debts.
The Fair Debt Collection Practices Act (FDCPA) authorizes private lawsuits and weighty fines to deter the wayward practices of debt collectors. In the high court’s view, “debt collector” refers to a third-party servicer collecting debts on behalf of a creditor. A bank or other provider that originates a loan and tries to collect the debt itself is not a debt collector and therefore is not bound by the FDCPA.
If Your Business Loan is in Trouble, You Can Prevent a Bad Situation from Getting Worse
Posted on Jun 06, 2017 by
Harriet P. Wallace
A business owner with visions of growth doesn’t borrow money thinking he or she won’t be able to pay it back. Sometimes, though, dreams don’t go according to plan.
When loan payments are late or missed or stop altogether, a loan will go into default, meaning the borrower hasn’t met his or her obligations when it comes to the agreement to repay. As difficult as that may be for a business to face, the situation won’t just go away by ignoring it.
Most business loans involve real estate, but they may also be secured with equipment or inventory as collateral. Defaulting on a loan places those assets at risk of foreclosure or liquidation.
7 Steps to Prepare Your Business for Sale
Posted on Apr 07, 2017 by
Ryan T. Judd
Putting your business up for sale is a major decision with implications that extend far beyond the financial considerations. Selling your company affects not only your future but the future of your valued employees. What’s more, letting go of a business you’ve grown for years or even decades can be a difficult process.
First, you need to consider whether you are truly ready to sell your business. Talk to family members and others who care about your future and may have a stake in your decision. Working through any personal concerns before proceeding will make the entire process a lot easier.
When Entering into a Commercial Lease, Understand Your Obligations
Posted on Jan 23, 2017 by
Ian D. McVey
Entering into a commercial lease is a significant responsibility for both the landlord and tenant. Before a commercial lease is finalized, it is critical that both sides perform due diligence on the lease provisions and protections.
In City Electric Supply v. Johnny Murray – a lease dispute between an electric company and a family-run boat repair shop in North Charleston – the Court of Common Pleas granted the plaintiff’s motion for summary judgment and ordered the tenant to be evicted from the property. The case featured several legal missteps by the defendant that can serve to inform parties who are entering into commercial leases.
New South Carolina Law Helps Fiduciaries Access Digital Assets
Posted on Aug 03, 2016 by
Marshall T. Minton
Our online presence can live forever. The internet is packed with Facebook pages, Twitter accounts and neglected blogs that have outlived their makers. With the increasing presence of technology in our lives, we often a leave behind a plethora of digital assets without any guidance to our fiduciaries about what they are and how to access them. Digital assets include our smartphones, tablets, personal computers, social networking site, email accounts, electronic access to our financial and insurance information, online accounts that hold a cash value such as PayPal, url addresses, blogs, and files, pictures, videos stored on the cloud. Often, these digital assets are held by a third-party custodian, and gaining access in the past has been a daunting process if the deceased didn’t have the foresight to ease this process in estate planning.
Fortunately, South Carolina passed legislation this summer that provides a pathway for fiduciaries to access the digital assets of deceased or incapacitated family members. Called the Uniform Fiduciary Access to Digital Assets Act, it sets out a process for personal representatives and others with power of attorney or fiduciary powers to view these accounts. Custodians of accounts must comply with requests to view accounts so long as access has not been eliminated by the account user, federal law, or by a separate terms of service agreement with the user.
Loan Servicers Must Continue to Follow Both Federal and State Rules in Foreclosures
Posted on Feb 11, 2016 by
Elizabeth A. Blackwell
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.
Creditors’ Rights Trump Ownership Restrictions in LLC Operating Agreements
Posted on Feb 03, 2016 by
Mark B. Goddard
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.
Court Comes Down Hard On Bank That Didn’t Satisfy Open-Ended Mortgage in 90 Days
Posted on Dec 02, 2015 by
Kristen N. Nichols
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.
Be Careful What You Sign: Red Flags in Commercial Contracts
Posted on May 19, 2015 by
C. Pierce Campbell
When businesses sign a contract, they’re usually focused on the opportunity it represents – a new customer, a better supplier or a partnership that expands their reach. Unfortunately, when we, as lawyers, see some of these same contracts, it’s after the air has gone out of such expectations and a deal has soured.
While our best advice is to have every contract reviewed by your attorney, we realize that most businesses aren’t going to do that for every agreement. If there is a lot of money – or risk – involved, consider asking your attorney to review a contract – a process that usually isn’t time consuming for legal counsel familiar with your business.
However, in those cases where you choose not to make a call to your attorney, here are some things to watch for based on our experience.
How to Pick a Lawyer
Posted on Apr 29, 2015 by
Jeffrey L. Payne
Just as we all need a family doctor who we can rely on, every small business eventually finds that it needs a relationship with a lawyer. As with the family doctor, many small business owners find it beneficial to develop rapport with one lawyer as a point of contact. While the relationship attorney may sometimes direct the client to someone with specific experience, it’s reassuring to begin the conversation with someone who understands your business and industry – and remembers the names of your kids.
I frequently go shopping for other lawyers myself, so I have some experience in this area. In my case, I’m usually looking for a lawyer or firm in another state who can handle a matter for a client. Even as a lawyer, it’s not always easy to judge if another is going to be a good fit, so I understand how business owners may find it difficult to pick an attorney. Here’s my test for picking a lawyer.
Don’t Let Hackers Cripple Your Business
Posted on Mar 04, 2015 by
Carmelo B. Sammataro
Some of the biggest names in American business were the victims of data breaches last year, but hackers didn’t limit their attacks to companies such as Target, Home Depot and eBay. If trends hold, almost half of American businesses each year will have sensitive data stolen, according to the Ponemon Institute, which studies cybersecurity.
Don’t Automatically Include Arbitration Clauses in Commercial Contracts
Posted on Feb 25, 2015 by
C. Pierce Campbell
For years, mandatory arbitration clauses have been almost automatically included in many commercial contracts, because they’ve been regarded as cost-effective detours for matters that might otherwise work their way through the courts. Over the last few years, we’ve adopted a more critical view of arbitration, and now regard it as a good strategy for some clients, but not for others.
Guarantors Can’t Slow Down Foreclosures by Asking for a Jury Trial
Posted on Feb 19, 2015 by
Jeffrey L. Payne
One way for debtors to slow down the foreclosure process in South Carolina has been to file counterclaims and request a jury trial. For guarantors of bad loans, that door was closed in January, thanks to a decision by the South Carolina Supreme Court. In what banks should regard as a victory for creditors’ rights, the high court said that guarantors who have been included in a foreclosure action in order to seek a deficiency judgment do not have a right to a jury trial.
Don’t Misunderstand the Memorandum of Understanding
Posted on Jan 20, 2015 by
Lanneau Wm. Lambert, Jr.
Can a city change its mind about development partners after signing a memorandum of understanding (MOU)?
That question bounced around in South Carolina courts for a decade, and the state Supreme Court issued the final answer last summer. A city – or any party – may back out of an “understanding” that doesn’t include a definitive agreement.
Financial Institutions & Consumer Protection Laws: How to Hit a Moving Target
Posted on Oct 08, 2014 by
TURNER PADGET LITIGATION TEAM
Since the federal Consumer Financial Protection Bureau opened its doors in 2011, banks, credit card companies, mortgage companies and other financial institutions realize that every business decision may be scrutinized.
The Check’s in the Mail: Unsecured Creditors’ Legal Options
Posted on Sep 15, 2014 by
TURNER PADGET LITIGATION TEAM
Some creditors have it better than others. No one knows this more than an unsecured creditor who is dealing with a borrower in default. Unlike a secured creditor, who can repossess the collateral that was pledged in exchange for a loan, an unsecured creditor has limited options. The unsecured creditor can either attempt to negotiate a settlement with the debtor, or it can go through the courts to obtain a money judgment against the debtor.
“Bank” – The New Four Letter Word: Tips to Avoid Lender Liability Claims
Posted on Sep 03, 2014 by
TURNER PADGET LITIGATION TEAM
Being a lender or an investor has its perks: you have money, you control it, decide where it goes and how it is used. But being a lender or investor certainly has its drawbacks, especially in a progressively litigious world. Most people have little sympathy for the seemingly impersonal financial monolith – the bank. Despite the reality that the majority of individuals and companies could never achieve their personal or business goals without the assistance of banks and other lenders, they are often viewed as unsympathetic gatekeepers. So it is not surprising that when individuals and businesses fall on hard times, they are increasingly challenging their financial institutions in court.