5.02 Conversion Regulation under the SCHPA
The SCHPA requires that within 30 days of recording a master deed or lease covering rental units to be converted to condominium ownership, certain identified documents must be delivered3 to tenants.4 The documents are:
(1) Disclosure items outlined in § 27-31-430.5
(2) Notice of the planned conversion setting forth generally6 the rights of tenants under § 27-31-420.
(3) An offer to convey to the tenant the apartment he or she occupies at a specified price and on specified terms.
A tenant may not be required to vacate an apartment until the expiration of:
(1) The lease.
(2) 90 days, if the tenant is under the age of 60.
(3) 120 days, if the tenant is 60 years of age or older.7
The longest applicable time period governs.8 Time periods begin to run on delivery of notice and the required documents to the tenant. The failure of the notice to conform to the requirements of § 27-31-420 will constitute a defense to an action for possession initiated less than 90 days (or, if the tenant is 60 years of age or older, 120 days) after delivery of the notice. Nothing in § 27-31-420, however, prevents termination of a lease according to the law where there is a violation of its terms.9
For tenants in possession, the price and terms offered must be at least as favorable as those offered to prospective purchasers who are not tenants of apartments in the building to be converted. A tenant in possession has 60 days to consider an offer. The statute does not specifically state when this period runs. It apparently runs from the time of the delivery of notice. If, within 60 days, a tenant fails to accept the offer,10 the unit cannot be offered to anyone else at a price or on terms more favorable than those offered to the tenant for 15 days, or, if the tenant is 60 years of age or older, for 50 days. This prohibition, however, does not apply if the more favorable offer is extended to the tenant for exclusive consideration for 10 days.
If a developer conveys an apartment in violation of § 27-31-420(B) and the buyer is a purchaser for value with no knowledge of the violation, recording the deed conveying the unit extinguishes the tenant's rights under § 27-31-420(B) if the deed states the seller has complied with § 27-31-420(B). The tenant retains the right, however, to recover damages from the seller for violation of the statute.11
The converter must also make written disclosure to all prospective purchasers, including tenants in possession,12 regarding the physical condition of the property.13 The disclosure must contain the written report of an independent architect or engineer licensed to practice in South Carolina and must include:
(1) A description of the condition of all general common elements.
(2) A good faith estimate of the remaining useful life expected for each item reported on.
(3) A list of any notices of uncured violations of building codes or county or municipal regulations.
(4) An estimate of the cost of remedying the violations.
Additionally, the statute provides:
[t]he good faith estimate of useful life shall not constitute a warranty and, as to an independent registered architect or engineer.. .shall not be deemed a representation of material fact or an inducement to purchase and shall not give rise to any cause of action at law or equity against such architect or engineer.14
Failure to make the required disclosure will constitute a violation of the South Carolina Unfair Trade Practices Act.15
A conversion program may be abandoned if, after recording a master deed or lease and giving the required notices, it is discovered that any pre-sale requirements cannot be met or the converters simply no longer wished to convert the property.
Occasionally, local governments attempt to regulate condominium conversions. The regulation is most often through land use restrictions.16 For example in Baker v. Town of Sullivan's Island,17 the owner of rental apartments sought to convert them to condominium ownership. The building was a legal non-conforming use. The town argued that the conversion would create separate lots. The court rejected the contention, noting that under the SCHPA land on which a condominium is built is held by the owners as co-tenants and is not subject to partition. The court also held that conversion of the building from an apartment to condominiums was a change in ownership, not use, and therefore not in violation...
