Bulletin: SC2024001

Dear Associates:

To address agreements such as MV Realty’s “Homeowner Benefit Program,” the South Carolina Legislature recently added Chapter 28 (Prohibition of Unfair Real Estate Service Agreements) to Title 27 (Property and Conveyances) which voids certain “real estate service agreements.”

A similar provision was included in amendments to Chapter 57 (Real Estate Brokers, Brokers-in-Charge, Associates, and Property Managers) of Title 40 (Professions and Occupations), South Carolina Code, 1976, as amended.

What it Does

Under Title 27, Chapter 28, "real estate service agreement" means a written contract between a service provider and the owner or potential buyer of residential real estate to provide services, current or future, in connection with the maintenance, purchase, or sale of residential real estate.

Chapter 28 is intended to prohibit the use of real estate service agreements that are unfair to an owner of residential real estate or to other persons who may become owners of that real estate in the future. This chapter also prohibits the recording of such residential real estate service agreements so that the public records will not be clouded by them.

Key Provisions

27-28-30. (A) A real estate service agreement is unfair, void, and in violation of this chapter if the agreement is to be in effect for more than one year and either expressly or implicitly aims to do any of the following:

1. run with the land or bind future owners of residential real estate identified in the real estate service agreement;
2. allow for the assignment of the right to provide services without notice or consent of the owner or buyer; or
3. create a lien, encumbrance, or other real property security interest.

27-28-40. (A) Any recorded unfair real estate service agreement or notice or memorandum of an unfair real estate service agreement is void.

(B) All the following shall apply to a recording that is void under subsection (A):

1. The recording shall not operate as a lien, encumbrance, or security interest.
2. No owner or buyer shall be required to record any document voiding the recording.
3. The recording shall not provide actual or constructive notice to any person interested in the residential real estate that is identified in the unfair real estate service agreement.

Effective Date

This act took effect on May 24, 2024, and applies to any unfair real estate service agreements that are executed, recorded, modified, extended, or amended on or after this date.

Underwriting

1. An “unfair real estate service agreement” such as MV Realty’s “Homeowner Benefit Program” recorded on or after May 24, 2024, is void. You are not required to obtain a termination or satisfaction of the agreement or take exception to it.
2. An “unfair real estate service agreement” recorded prior to May 24, 2024, is not voided by statute and must be terminated or satisfied of record to insure without exception to it.
3. National Bulletin SLS2024011 was recently released informing agents of the dismissal of MV Realty PBC, LLC and its affiliates from bankruptcy, and contains more detailed underwriting guidelines for insuring when your chain of title reveals an “unfair real estate service agreement” that has not been statutorily voided.

National Bulletin SLS2024011 can be viewed by clicking [here].

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.