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SCBA Involved in Several Key Legislative Issues in ‘16 Neil Rashley SCBA General Counsel
T
he South Carolina General Assembly adjourned sine die on June 2, 2016, ending its two-year session. Overall the General Assembly was rather busy passing many bills affec ng banking; including SCBAsupported bills concerning patent trolls, evalua on of real property and powers of a orney. The General Assembly will return on Jan. 10, 2017, to begin the next session. The following is a summary of the most important bills to South Carolina banks.
Bank Evalua ons of Real Property When the federal banking agencies adopted the 2010 Interagency Guidelines on Appraisals a conflict occurred between the Guidelines and South Carolina law. The guidelines Rashley allowed banks to use an evalua on for certain real property transac ons instead of an appraisal, without the need of a licensed appraiser. However, South Carolina law s ll required that a licensed appraiser must be used on all real estate transac ons. The South Carolina Bankers Associa on brought this problem to the a en on of the South Carolina Real Estate Appraisers Board and worked with the board to provide a licensing excep on for bank employees. The board agreed and H5023 was introduced providing that a bank employee that is not licensed could perform an evalua on for a real estate transac on to the extent allowed by federal law. H5023 is effec vely immediately. Patent Trolls For a number of years, en 12
es known
as patent trolls have plagued banks and other businesses across the na on by sending demand le ers to banks and other businesses claiming ques onable viola ons of a patent and then threatening li ga on. These en es technically own the patent but have no specific evidence of infringement and they are simply a emp ng to extort exorbitant license fees from these businesses. For banks the claim o en involves processes within their ATMs or mobile banking services. The bank then is le with a difficult decision – spend more than $1 million to defend itself against a specious patent infringement claim or pay the troll the exorbitant license fee. On June 6, 2016, Gov. Haley signed H3682, the South Carolina Bankers Associa on’s bill concerning patent trolls into law, making South Carolina the 30th state to enact this law that combats the problem of patent trolls. Introduced by Rep. Kirkman Finlay, H3682 creates a state law cause of acon – Bad Faith Asser on of Patent Infringement – that allows targeted South Carolina businesses, including banks, to affirma vely protect themselves in South Carolina courts when targeted by one of these en es. One of the difficul es in defending a patent case is that a bank would have to travel to the home state of the troll to try the case. This adds considerable expense to the li ga on. With H3682, the bank can now file suit in South Carolina and assert that the asserted claims are false. Hopefully, though with H3682, patent trolls will now see South Carolina as an unfavorable place to send their le ers and there will be li le need for any li ga on. Powers of A orney For two years the South Carolina Bar worked on upda ng South Carolina’s power of a orney laws. The Bankers Associa on par cipated in this work along
with other bankers and a orneys that represent banks. Ul mately it was decided that it was best for South Carolina to adopt the Uniform Powers of A orney Act. S778 was introduced and incorporated most of the Act including a provision advocated by the Bankers Associa on allowing banks to request opinions of counsel when a power of a orney is presented. Overall S778 sets out the du es and requirements for valid durable powers of a orney in South Carolina and establishes uniform defini ons and procedures for signing these documents. South Carolina is now one of 19 states that have enacted the Uniform Act. It is effec ve Jan. 1, 2017. Fiduciary Access to Digital Assets As the world becomes increasingly digital, laws also need to reflect these changes. In the area of fiduciary management of assets, state laws, including South Carolina’s, did not clearly allow fiduciaries access to digital assets. S908 was introduced and adopts the Revised Uniform Fiduciary Access to Digital Assets Act. The Act extends the tradi onal power of a fiduciary to manage tangible property to include management of a person’s digital assets such as computer files, web domains and virtual currency. But the law also restricts a fiduciary’s access to electronic communica ons such as email, text messages and social media accounts unless the original user consented in a will, trust, power of attorney, or other record. Eighteen states have now enacted this uniform act. ABLE Accounts H3768 establishes the South Carolina Able Savings Program that allows for the crea on of IRS 529 accounts as a way to allow individuals with a disability and their families to save private funds to support the individual with a disability. See Legislature, Page 24