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The Vacation Rental Act (SC Code §27-50-210 et seq.)

A “vacation rental” refers to a rental period of less than 90 days in duration.  Most commonly, “vacation rental” situations are weekly rentals of a resort condominium.  The sale of residential property rented for periods of less than 90 days where that/those rental(s) is/are managed by a third-party management company or are self-managed falls under the South Carolina Vacation Rental Act (hereinafter the “Act”). 

The core rule is as follows

The purchaser of a residential property subject to a vacation rental takes title subject to the vacation rental agreement* and the vacation rental management agreement** for all vacation rental periods that begin no later than 90 days after the purchaser’s deed is recorded. 

            *the “vacation rental agreement” refers to the written rental agreement between the management company and the tenant.

            **the “vacation rental management agreement” refers to the written agreement between the seller and the management company.

The Act imposes duties on the seller and the purchaser as follows:

As to the seller:

  1. Prior to contract ratification, the seller must disclose in writing that the property is subject to the existence of a rental management agreement and must also disclose all rental reservations.  In part, this means the seller must reveal the existence of the rental management agreement in section VII of the Residential Property Disclosure.
  2. Within 14 days after contract ratification, the seller must disclose the purchaser’s name and address to the rental management company.  This must be done in writing. 
  3. Within 14 days after the closing, the seller must disclose the purchaser’s name, address and the date the deed was recorded to the rental management company.  This must be done in writing. 

As to the Purchaser:

  1. As stated above, the purchaser must honor all vacation rental periods beginning within 90 days after the deed is recorded.
  2. If the purchaser does not wish to honor rental reservations which begin after the 90 day protected period, he should direct the management company to notify the affected tenants and to effect a return of any deposits paid by those tenants.  These refunds must be made within 45 days after the deed is recorded.

Comments:

  1. The Act specifically states a seller’s failure to disclose a “vacation rental agreement” (the agreement between the management company and the tenant) does not void the sales contract.  The failure of a seller to disclose the existence of a “vacation rental management agreement” (the agreement between the seller and the management company) presumably does allow a purchaser to void the sales agreement if the purchaser wishes to do so.
  2. Though the Act requires existing rental reservations be honored during the 90-day protected period and requires the purchaser accept the existing rental management company as the manager of those existing rental reservations, the purchaser is not bound to allow the existing management company to book further rental reservations during the 90-day protected period.  In other words, if the purchaser prefers using a new management company, the existing management company’s involvement will be limited to the management of rental reservations it arranged.   
  3. Though the purchaser of a property subject to the Act must honor rental reservations beginning within 90 days after the deed is recorded, some purchasers may wish to avoid even these rentals if it is possible to do so.  In these situations, the seller may ask the management company to move those reservations to other available units.  The management company is not required to do this, but many will or will at least make the effort.

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