You’ve been asked to close a $3 Million transaction on the coast.  Fantastic, right?  Well, maybe….

Properties along the coast and other bodies of water may pose a greater risk and should be closely examined.  Often the survey – and sometimes the legal description – will alert you to potential issues.  For example, the inclusion of any of the following terms will require exceptions and further examination:

* marsh/marshlands
* swamps (both salt and fresh water)
* OCRM Line (DHEC)
* filled-in lands
* tidelands
* wetlands (both salt and fresh water)

Of these, marsh/marshlands, tidelands and wetlands are of particular concern if title is conveyed without exception.  Accordingly, if the property you are searching includes or abuts a body of water, to include an ocean, lake, pond, river or stream, particular attention should be given to whether the title to the property is within the confines of the State (see herein for more explanation), as well as to what specific exceptions are required for said property, as set forth in the SC Supplement and GUP.

Further, if the transaction mentioned above was an island or had another unusual or extra hazardous risks as defined in the GUP (i.e., tidal line changes; insuring title to water, water rights, wetlands, or water related to dependent land such as tidelands or submerged land), it would require completing a Reinsurance Questionnaire in addition to the Over the Limit Request Form, as transactions with unusual or extra hazardous risks in the amount of $3 Million or over or any transaction of $10 Million or more require this.

With regard to the ownership of these types of lands, the Supreme Court made it clear in McQueen v. South Carolina Coastal Council, 354 S.C. 142 (2003) that South Carolina abides by the public trust doctrine in the context of land bordering navigable waters and that “wetlands created by the encroachment of navigable tidal water belong to the State…. The State has the exclusive right to control land below the high water mark for the public benefit and cannot permit activity that substantially impairs the public interest in marine life, water quality, or public access.”  This is in keeping with the holding in State v. Fain, 273 S.C. 748 (1979), where the property owner was divested of its ownership of the land when the Court held that “all tidelands remain in the state unless there is ‘specific language, either in the deed or on the plat, showing that it was intended to go below the high water mark’….” Id. at 753.

Some may assume that since the body of water may not be navigable now that it is not subject to the above.  However, the U.S. Supreme Court extended the Public Trust Doctrine to include nonnavigable tidelands in Phillips Petroleum Co. v. Mississippi, 484 U.S. 469 (1988) by including title to all lands under waters influenced by the ebb and flow of the tide.   Further, the Federal Water Pollution Control Act and the Clean Water Act of 1977, along with the Rivers and Harbors Appropriations Act of 1899 have been interpreted to include waters that “have been used in the past, are now used, or are susceptible to use as a means to transport interstate commerce landward to their mean high water mark and up to the head of navigations . . . and also waters which are subject to the ebb and flow of the tide shoreward to their mean high water mark as navigable waters.”

And as the public trust doctrine seems to be expanding in SC, stay tuned for more “developments” – or lack thereof, no pun intended!