A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS by ENACTing THE "HOMEOWNER CONTRACT TRANSPARENCY AND FAIR DISPUTE RESOLUTION ACT" BY ADDING ARTICLE 3 TO CHAPTER 50, TITLE 27 SO AS TO REQUIRE SELLERS IN RESIDENTIAL REAL ESTATE TRANSACTIONS TO PROVIDE CERTAIN ADVANCE DISCLOSURE OF HOME PURCHASE DOCUMENTS TO BUYERS BEFORE CLOSING, INCLUDING DISPUTE RESOLUTION PROVISIONS AND LEGAL WAIVERS, TO PROVIDE REMEDIES FOR NONCOMPLIANCE, AND TO IMPOSE AN AFFIRMATIVE DUTY ON ATTORNEYS WHO CONDUCT CLOSINGS.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  This act may be cited as the "Homeowner Contract Transparency and Fair Dispute Resolution Act."

 

SECTION 2.  Chapter 50, Title 27 of the S.C. Code is amended by adding:

 

Article 3

 

Homeowner Contract Transparency and Fair Dispute Resolutions

 

    Section 27-50-310. The General Assembly finds that:

       (1) residential real estate transactions are among the most significant financial transactions entered into by consumers;

       (2) buyers are frequently presented with important documents containing dispute resolution provisions and legal waivers for the first time at or near closing;

       (3) the timing and circumstances of closing may impair a buyer's ability to review, understand, and voluntarily agree to such provisions; and

       (4) requiring advance disclosure and clear, accessible dispute resolution procedures promotes fairness, transparency, and informed consent without restricting the use of arbitration or other alternative dispute resolution methods.

 

    Section 27-50-320. For purposes of this article:

    (1) "Residential real estate transaction" means the sale of real property improved with one to four dwelling units, including newly constructed homes.

    (2) "Seller" includes a builder, developer, or any person or entity transferring residential real property.

    (3) "Buyer" means a natural person acquiring residential real property for personal, family, or household use.

    (4) "Home purchase documents" means all written agreements related to a residential real estate transaction, including:

       (a) purchase agreements;

       (b) construction contracts;

       (c) warranty documents;

       (d) closing documents; and

       (e) any addenda or incorporated materials.

    (5) "Dispute resolution provision" means any clause requiring arbitration, mediation, or otherwise limiting or prescribing the forum or method for resolving disputes.

    (6) "Legal waiver" includes any provision that waives the right to a jury trial, the right to bring an action in court, or any other substantive or procedural right otherwise available under law.

 

    Section 27-50-330. A dispute resolution provision in a home purchase document is unenforceable if it conflicts with another provision of law regarding:

       (1) the required forum;

       (2) the governing rules; or

       (3) the process for initiating or conducting a claim.

 

    Section 27-50-340. (A) A seller shall provide the buyer with all home purchase documents containing any dispute resolution provision or legal waiver no later than the earlier of:

       (1) execution of the purchase agreement; or

       (2) ten calendar days before closing.

    (B) Delivery must include the complete and final form of the documents, not summaries or excerpts.

    (C) A material change to a dispute resolution provision or legal waiver after delivery requires:

       (1) redelivery in compliance with this section; and

       (2) a new acknowledgment by the buyer.

 

    Section 27-50-350. (A) A dispute resolution provision must:

       (1) identify a specific forum accessible to the parties;

       (2) provide sufficient information to initiate a claim, including:

           (a) name of the administering organization, if any;

           (b) applicable rules or instructions to access them;

           (c) a clear method for initiating proceedings; and

       (3) not impose conditions that make the process impracticable or inaccessible.

    (B) A dispute resolution provision that does not meet the requirements of subsection (A) is void and unenforceable.

 

    Section 27-50-360. (A) A seller must provide written disclosure of any legal waiver no later than the earlier of:

       (1) execution of the purchase agreement; or

       (2) ten calendar days before closing.

    (B) Disclosures must:

       (1) be in a separate, clearly labeled document;

       (2) use plain language; and

       (3) identify each legal waiver and its effect.

    (C) Legal waivers first presented at closing are presumed void and unenforceable unless the seller proves by clear and convincing evidence that the buyer had meaningful opportunity to review and voluntarily agreed.

    (D) Any dispute resolution provision, arbitration clause, or legal waiver not compliant with this article is void ab initio and unenforceable.

    (E) Invalidity of a provision does not affect the enforceability of other nonconflicting provisions.

 

    Section 27-50-370. (A) A dispute resolution provision or legal waiver must be:

       (1) set forth in a separate document or separately titled section; and

       (2) signed or initialed separately by the buyer.

    (B) Inclusion solely within a larger document without separate acknowledgment renders the provision void and unenforceable.

 

    Section 27-50-380. (A) A buyer may bring an action in circuit court to enforce this article.

       (B) The court may:

           (1) declare any noncompliant provision void and unenforceable;

           (2) award actual damages;

           (3) award reasonable attorney's fees and costs; and

           (4) grant any other relief deemed appropriate.

 

    Section 27-50-390. (A) An attorney licensed to conduct a residential real estate closing in this State may not proceed with a closing unless the seller has complied with all requirements of this article and may subject the attorney to disciplinary action under the Rules of Professional Conduct for noncompliance.

    (B) A closing conducted in violation of this section does not waive the buyer's rights under this article and may render noncompliant provisions void and unenforceable.

 

SECTION 3.  This act takes effect upon approval by the Governor and applies to residential real estate transactions entered into on or after that date.

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