This case study presents a regulatory taking valuation problem and related materials that can be used to solve the problem.  The problem concerns a piece of property deeded to a woman under the terms of a prenuptial agreement, along with promises to build a luxury residence and develop an upscale residential area on the adjacent property.  After the marriage, the state legislature passed a law to protect the state’s beach habitats that precludes development of the woman’s property.  Although loosely based on the facts of Lucas v. South Carolina, the problem of evaluating the effect of prenuptial agreement in the computation of “just compensation” adds complexity.  What effect the prenuptial agreement would have on the value calculations, whether the prenuptial agreement is “property” subject to the regulatory taking, and whether the “lot method” of valuation of the land would be appropriate are key issues to resolve.





May 10,1998, Ronald Spade, a multimillionaire, married Carla Boysenberry, curator at a local historical society.  In consideration for her signing a prenuptial agreement, Ronald deeded 25 acres of oceanfront property in South Carolina to Carla.  The terms of the agreement included a promise to build a mansion on Carla's property according to her specifications and with a value not less than $15 million:





“Prospective husband, Ronald Spade, has this day of April 12, 1998, made and executed a warranty deed for the following-described real property: a 25 acre parcel in the planned Biwa Estates residential development and further described in attached Exhibit A, which is hereby incorporated by reference, to be conveyed to  prospective wife, Carla Boysenberry, as her separate property. The deed shall be delivered to prospective wife within 14 days of the solemnization of the marriage of the parties.


Prospective husband further agrees that he shall build a residence for prospective wife on the Biwa Estates property deeded to her pursuant to this agreement.  Prospective husband agrees to begin preparing the property for building as soon as the deed is delivered, and to have substantially completed building of the residence within 3 years from the date of delivery of the deed.  Prospective husband further agrees that the residence shall be built according to the specifications of prospective wife and to have a total value of no less than 15 million dollars upon completion.  Prospective husband further agrees to develop any remaining acres of prospective wife’s 25-acre parcel not designated by her for her personal residence along with the remaining 125 acres of the Biwa Estates property not conveyed to prospective wife, as a luxury residential neighborhood, with no residential unit built on a lot of less than one acre….


In consideration of such conveyance and contract to build residence upon the conveyed property, prospective wife does hereby release her marital property rights in all other property, both real and personal, of prospective husband.”



(All the necessary formalities were accomplished in accordance with South Carolina law.)


Carla’s property was the most desirable part of a 150-acre oceanfront tract that Ronald had planned to subdivide and develop into luxury single residential dwellings on 1- and 2-acre lots.  Carla’s home was to be the “crown jewel” in the new “Biwa Estates” neighborhood—she designated  5 acres for her own home, leaving the rest to be developed in later years.  She hoped that one day she might have children and grandchildren living in homes down the street from hers.


As soon as the newlyweds returned from their honeymoon Ronald began preparations to build.  He had already mortgaged other property to finance the project, obtained the preliminary permits, hired an engineering firm to finish the environmental impact statement and surveying, and finished laying out the roads, power, sewer, water, and cable lines in Carla’s portion of the development when the new regulation took effect.  Ronald has estimated that average development costs before construction of homes begins will be $6,000.00 per lot.


The original purchase price of the entire 150 acres when Ronald bought it in January of 1998 was $30 million. The current development plan calls for Carla’s acreage to be divided into a 5-acre lot for herself, with the rest of the tract divided into ten 2-acre lots.  The remaining 125 acres are divided into twenty-five 2-acre lots and 65 1-acre lots, with 10 acres set aside to accommodate roads, marshy areas that couldn’t be filled, topographical irregularities and landscaping.


In November of 1998, South Carolina's legislature amended the laws protecting the state's beach habitats.  The amendment required that the South Carolina Department of Health and Environmental Control re-evaluate the ocean setback and baseline requirements for new construction and promulgate new regulations through the Office of Ocean and Coastal Resource Management.  The new regulations, which took effect immediately upon adoption on February 1, 1999, prohibit construction seaward of the ocean setback line; a good portion of each lot in the entire site of the future Biwa Estates, including Carla’s 25 acres, is seaward of the setback line.


The current value of a 1-acre lot prepared for residential construction in the area: $1.95 million.  Estimated value of the entire 150 acres after the regulation takes effect: $150,000.  Carla brings an action in state court claiming that the state has "taken" her 25-acre property.   She challenges the legality of the new regulation and seeks compensation. 


Assuming that the legislation is valid, is there a regulatory taking of Carla’s property, and if so what is “just compensation”?


In addition to South Carolina law, consider the following cases in preparation for a mediation between Carla and the State of South Carolina:


Francis Raymond, et al v. Chittenden County Circumferential Highway, 158 Vt. 100 (1992) 

Gary M. Clifford v. Alogonquin Gas Transmission Company, 413 Mass. 809 (1992)  



Background Facts


This problem is based on Lucas v. South  Carolina, and the property involved was on the Isle of Palms, just off the coast of Charleston, South Carolina.  Lucas involved 2 residential lots of unspecified acreage, which in 1986 cost a total of $975,000.  The taking occurred in 1988, and the trial court valued Lucas’ property at $1,232,387.50.  Applying the statutory rate of 8% to the original purchase price and compounding continuously for 2 years, from 1988-1990, yields $1,239,470. See Lucas Lot Spreadsheet.  This leads me to believe that Lucas made no significant improvements prior to the taking, and that the current figure for an oceanfront lot in Folly Beach (just south of Isle of Palms) is a comparable surrogate for a current undeveloped lot price for Isle of Palms (there were no listings for any in Isle of Palms).


Neighborhood averages for Isle of Palms:

                 Home Cost                $700,543

                 Age of Homes                17 yrs.

Square Footage                2203 sq./ft.

Lot Size                                1.13 acres

Recent Listings                643

Still for Sale                222


Cost of four-bedroom house (4000 sq. ft.) built in 2000: $1,045,000

Cost of five bedroom house (4400 sq. ft.) on oceanfront property built in 2001: $3.2 million

Number of houses on lots of 10 acres or more available for sale in the area: 0


Current cost of undeveloped oceanfront Lot, .41 acres in nearby Folly Beach: $800,000.

Therefore 1 acre = ~$1.95 million; 5 acres = ~$9.75 million.


Purchase price of 150 acre undeveloped tract of oceanfront property: ?? 

Here I did not find a realistic figure, but made an assumption that “raw land” would be worth approximately one tenth of the eventual per lot cost prior to building.  I base my assumption on my suspicion of a developer’s profit margin (haven’t gotten a clear answer on that one), coupled with the successful allegation that after the taking in Lucas the land was without viable economic use.  I used the Folly Beach figure for a .41-acre lot as a reference point, divided $800,000 by 4 ($200,000), and multiplied by 150, which yields $30 million, a nice round number.


Estimated pre-development costs in Isle of Palms area obtained from John Hassell, Vice President, Real Estate Sales, 843-886-5600, at Dunes Properties of Charleston, Inc., www.dunesproperties.com:


    “A lot of factors have to be considered when figuring the cost of a

development. …  The overall costs could potentially be more than the actual

cost of the land.  Environmental studies and fees particularly for land

previously used for industrial purposes can be costly and time consuming.

Excavation, fill dirt, clearing and storm water run-off can be expensive

considerations and of course site engineering is expensive.  Land planning

and architectural fees; municipal and county impact and permit fees, and

utility hook-ups and top-ins can all be very expensive.  Running water and

sewer lines can be very expensive depending upon how far they have to go and

whether or not the municipality will pay for all or a portion of the costs. …

there are numerous things to consider when estimating the costs of preparing a piece of land for development and each piece is different with different requirements.

    If I had to use a rule of thumb (which is hard to do), in a town such as the

Isle of Palms on land such as we have here (flat and not heavily treed) I

would say a good estimate would be $6000 per unit. If you were to put 4 lots

to the acre, that would give you an overall cost of $8,400,000.”

Case Study - Valuation in Regulatory Taking


The "Takings Clause" of the Federal Constitution’s Fifth Amendment proscribes the taking of private property for public use without just compensation.  See Heller & Krier, "Law of Takings" [based on 112 Harvard Law Review 997-1025 (March 1999)]


What happens when government regulation diminishes the value of private property?  The Supreme Court has construed the police powers of the state as consistent with the "Takings Clause."  Whether a "regulatory taking" occurs, depends, in part, on the reasons asserted by the state for restricting a property owner’s ownership rights.  

To avoid a taking claim, the regulation must "substantially" advance a legitimate state interest. Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987).  However, a regulation designed to prevent "harmful or noxious uses" of property is a lawful exercise of the state’s police power, and the state owes no compensation regardless of the effect of the regulation on the property’s value. Mugler v. Kansas, 123 U.S. 623 (1887). 


Deprivation of all economically beneficial use of property, however, is a "taking" if state legislation restricts or eliminates rights existing before the legislation, regardless of the state’s interest. Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992).


In some instances, a contract gives rise to a property interest that is subject to a regulatory taking, but it is difficult to draw the line between a deprivation of property which is compensable from a deprivation which is merely consequential. Armstong v. United States, 364 U.S. 40 (1960) 364 U.S. 40 (1960); Eastern Enters. v. Apfel, 524 U.S. 498 (1998).


Just compensation.  If a taking is found, the owner is entitled to "just compensation" -- that is, the full monetary equivalent of the property taken. The owner is to be put in the same financial position as if there had been no taking. United States v. Reynolds, 397 U.S. 14 (1970); Houser v. United States, 12 Cl. Ct. 454 (1987).  The value of commercial property raises questions of the property's likely use and the economic feasibility of exploiting the property's value.  See, Whitney Benefits, Inc v. United States, 18 Cl. Ct. 394 (1989) (valuation of coal-producing property).


Judicial procedures.  A "just compensation" case is ripe after a regulatory taking only when the regulatory agency has arrived at a final definitive position and all review has been exhausted. Williamson County v. Hamilton Bank, 473 U.S. 72 (1985) (action not ripe when developer had not applied for variances to applicable ordinances). 


If the state provides an adequate procedure for seeking review and just compensation, the property owner must first use this procedure.  The practical effect of this "exhaustion of remedies" rule is that the property owner's only recourse after losing in state court is to seek an appeal to the U.S. Supreme Court, since any independent action seeking compensation in federal court would be barred on the grounds of res judicata (claim preclusion). 





I.                Administrative Remedies


The South Carolina Department of Health and Environmental Control may argue that Carla can apply for a variance from the regulation and if successful obtain a special permit to build seaward of the baseline.  Under  S.C. Code §48-39-290, Carla may apply for a permit to build a golf course, a public pier with a restaurant, or a even residence if it does not exceed 5000 heated square feet and is located “as far landward on the property as practicable” and does not incorporate an erosion control device into its design.  If granted a permit, Carla would have to agree “to remove the structure from the active beach if the department orders the removal” and “the use of the property authorized under this provision, in the determination of the department, must not be detrimental to the public health, safety, or welfare.” Id.


Of course, a single house probably will not satisfy Carla’s dynastic of as-yet-unborn generations living in Biwa Estates, and the typical house of only 5000 square feet in the area is worth in the neighborhood of $3 million, not the $15 million mansion Carla bargained for.  (Also, it will not compensate her for the loss of profits the ten potential residences to be built on the other lots.)  But it may well prevent a finding that her property has been deprived of any economically viable use.



II.                Regulatory Takings—Requirements


There is a regulatory taking when:

(1)   there was a denial of economically viable use of the property as a result of the  regulatory imposition;

(2)   the property owner had distinct investment-backed expectations; and

(3)   the interest taken was vested in the owner, as a matter of state property law, and not within the power of the state to regulate under common law nuisance doctrine”

McQueen v. South Carolina Coastal Council, 329 S.C. 588 (1998). 


Carla’s most difficult hurdle will be the first part of the test, given the chance (however slight) that she might be granted a variance upon application.  But the value of her 25 acres before the taking, even without the mansion, was $48.75 million; after the taking its value dropped to $25,000.  Without a significantly profitable variance Carla has a good chance of proving a regulatory taking has occurred.


Carla fulfills the second part of the test easily, as she has clearly foregone significant marital property rights in the expectation of receiving valuable property that she hoped to develop as a family residence.  The third part of the test is also fairly easy for her, as the ante-nuptial agreement was in effect before the taking occurred. 

Compare Virginia Beach v. Bell, 255 Va. 395 (1998), cert. denied, 525 U.S. 826 (1998)(Where city’s Coastal Primary Sand Dune Zoning Ordinance pre-dated landowner’s acquisition of property, denial of development permit did not constitute a taking against city despite claim of loss of all economically beneficial use).


But “While the landowner is entitled to compensation based upon the most advantageous use to which the land might be put, still, it cannot be presupposed that the land has already been put to such use.” Carolina Power & Light Co. v. Copeland, 258 S.C. 206 (1972).  Ronald had only just begun to develop her 25 acres, and though there were plans to build her house within three years, there was no definitive time table or even numbers and sizes of lots drawn for the remaining 20 acres.  In such a case the usual rule in South Carolina is to value the land’s purchase price and add the value of the improvements completed at the time of the taking. See


Lindsey v. South Carolina Tax Com'n,  302 S.C. 274 (1990)(Held: valuation of unfinished subdivision was appropriately performed by county board of assessment appeals by use of raw land valuation added to value of improvements completed pursuant to taxpayer's construction contract for roads and utilities in subdivision.)


In order for the landowner to be fully compensated, the government must put the owners in as good a position pecuniarily as if their land had not been taken. Phelps v. United States, 274 U.S. 341 (1927).


The measure of damages is the value of the land at the date of taking plus resulting injury to remaining property offset by benefits to remaining property. South Carolina State Hwy. Dept. v. Carodale Associates, 268 S.C. 556 (1977) , see also S.C. Code § 28-2-370, Carolina Power & Light Co. v. Copeland, 258 S.C. 206 (1972).  But

“Taking jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated.” Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978).  This means, for example, that Carla will probably not be able to claim a different value determination for the 5 acres where her house was to be built than the valuation for the remaining 20 acres with no immediate plans for development. "Evidence may be adduced showing only the naturally adapted uses of the property in its present condition. The owner's actual plans or hopes for the future are completely irrelevant. Such matters are regarded as too remote and speculative to merit consideration." (citing Nichols on Eminent Domain, Vol. 4, p. 152)” South Carolina State Highway Dept. v. Westboro Weaving Co., 244 S.C. 516 (1964). (But I included the calculation anyway.)  “Generally, in establishing the fair market value of the condemned property, it is permissible to use expert testimony based on "comparable" sales in the area. This includes the price paid for similar property in the vicinity within a reasonable time of the condemnation hearing. S.C. Code Ann. § 28-2-340(A)(5) (1991).” City of N. Charleston v. Claxton, 315 S.C. 56 (1993)


In South Carolina, injury to or loss of business is not considered an element of damages unless a statute specifically allows it.  This is just another way of stating the general rule against purely economic consequential damages.  “The lower court properly refused to allow loss of business as an independent element of damage in this case, and properly limited the consideration by the jury of such testimony to its effect upon the market value of the property.” South Carolina State Hwy. Dept. v. Bolt, 242 S.C. 411 (1963)  The actual value of the land taken, of course, means the market value thereof.  And "[m]arket value of property taken or injured for public use means the fair value of the property as between one who wants to purchase and one who wants to sell, its present value at a sale which a prudent owner would make if at liberty to fix the time and conditions of sale, not what could be obtained for it at a forced sale or under peculiar circumstances, nor a value obtained from the necessities of another. 20 C. J. 727."Id., (quoting Howell v. State Highway Department, 167 S.C. 217, 166 S.E. 129 (1932)).



III.           The Lot Method of Valuation.


The “lot” method of valuation uses the per lot price of an already developed subdivision to arrive at a figure for the whole property, and almost always fixes a higher value than one based on historic costs and improvements.  While not favored in South Carolina, it is not completely disallowed:

Next, the City contends that the trial court erred in admitting testimony of value, based in part, on speculative development plans. It is well settled that compensation is not limited to the value of the property as used by the owner at the time of condemnation. Rather, the owner is entitled to the value of the property under its most advantageous or profitable use, including any use reasonably anticipated in the near future.

Carolina Power & Light Co. v. Copeland, 258 S.C. 206, 188 S.E.2d 188 (1972). Cf. South Carolina State   Highway Dept. v. Westboro Weaving Co., 244 S.C. 516, 137 S.E.2d 776 (1964) (testimony regarding potential future improvements for which funds had not been appropriated was too speculative and remote to be admissible).

Carla can argue that the prenuptial agreement makes the development plans sufficiently certain to be considered; it can just as easily be argued that she has certain plans to build only one house, and that only that lot should be valued so highly.


The lot method is typically allowed when the property is already partially developed, i.e., improvements have been made to prepare for construction, actual construction of some houses, already subdivided into lots

Clifford v. Alogonquin Gas Trans. Co., 413 Mass. 809 (1992).  Where there is only a draft of development plans and permit, but no actual expenditures or construction the lot method has been disallowed; “development potential” is accounted for in the original price of the land.  Francis Raymond, et al v. Chittenden County Circumferential Highway, 158 Vt. 100 (1992). (Note that loss of business damages are allowed in Vermont, but only for existing business. Here, there is no “fixed and established business”—Carla is not in the business of developing subdivisions. Raymond v. Chittenden County, 158 Vt. 100 (1992).)




IV.           Value of Ante-Nuptial Contract


Under Eastern Enters. v. Apfel, 524 U.S. 498 (1998), Carla must first establish that she has an independent property right, which she clearly does.  The she must argue that the State has taken that right without just compensation.


Carla’s difficulty will be in showing that the frustration of Ronald’s promise to build her a mansion is not  a mere consequential loss.  It is difficult for courts to draw the line between a deprivation of property which is compensable from a deprivation which is merely consequential. See, Armstong v. United States, 364 U.S. 40 (1960) 364 U.S. 40 (1960)(government’s destruction of the value of mechanic’s liens held a taking since acquisition was for a public use; whether or not the Government’s intent and purpose was to extinguish liens, the government was the beneficiary).  “The United States Supreme Court has formulated a three-step inquiry for determining whether a law violates the federal Contract Clause. As a threshold matter, the law being challenged must actually impair the contract at issue. Second, the impairment must be substantial.  Finally, unless a law that substantially impairs a contractual obligation is "reasonable and necessary to carry out a legitimate governmental purpose," the law violates the Contract Clause.” Ken Moorhead Oil Co. v. Federated Mut. Ins. Co., 323 S.C. 532 (1996)  Mere destruction of the property that is the subject of the contract is not sufficient. Omnia Commercial Co. v. United States, 261 U.S. 502 (1923) (government taking the subject matter of private contract so as to render performance impossible does not take the contract—loss not compensable).


Generally, there is no impairment where the statute affects only future contracts between private parties. Ogden v. Saunders, 25 U.S. 213 (1827).  This is contract was in existence before the regulation took effect.  But, when a state acts to impair a purely private contract, "courts properly defer to legislative judgments as to the necessity and reasonableness of a particular measure." United States Trust Co., 431 U.S. 21. 


In determining the extent of impairment to a contract, one must "consider whether the industry the complaining party has entered has been regulated in the past." Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400 (1983).  Given a history of regulation and the foreseeability of further regulation, the Supreme Court found no substantial impairment to the contract.  With Lucas on the books and the Spades sophisticated parties who consulted counsel, it could be argued that zoning restrictions on coastal lands were entirely foreseeable, and that Carla will not be compensated despite the hardship to her in the event Ronald is excused for non-performance.  See also, Alston v. City of Camden, 322 S.C. 39 (1996) (a statute or ordinance can be said to substantially impair a contract when it alters the reasonable expectations of the contracting parties); Mibbs, Inc. v. South Carolina Dep't of Revenue, 337 S.C. 601 (1999)337 S.C. 601 (1999)(once a legitimate public purpose behind the regulation. Once a legitimate public purpose has been identified, the next inquiry is whether the adjustment of contractual rights is based upon reasonable conditions and is of a character appropriate to the public purpose).

V.            Statutes Governing Valuation


The South Carolina statutory interest rate for regulatory takings is fixed at 8% S.C. Code § 28-2-420.  This interest rate will be applied to the value of the time of the property from the time of the taking until the judgment. South Carolina legislature has decreed an 8% interest rate to be assessed from date of taking. S.C. Code § 24-2-420(a), SCDOT v. Falkenberry, 337 S.C. 140 (1999)  (After judgment, the general post-judgment interest rule applies.)  The date of valuation of property subject to regulatory taking is the date of the taking S.C. Code § 28-2-440. 


Under S.C. Code § 28-2-510, the prevailing party may recover attorney fees. “This determination is based on a comparison of the verdict and the highest valuation of the property given by each party at trial. Id. The trial judge found that the Claxtons prevailed. The City argues that it prevailed and that it should be awarded attorney fees.” City of N. Charleston v. Claxton, 315 S.C. 56 315 S.C. 56 (1993)(plaintiff “prevails” where government agency argued an absolute ceiling for damages and jury award exceeded that amount, despite fact that award was closer in dollar amount to agency’s valuation of case).


VI.           Solution


If the court finds that Carla’s land is too undeveloped and/or that plans for development are too speculative, they will adopt the value of the “raw” land, add any improvements, and subtract the value left after the taking.  In this case, the existence of the contract specifying a term of three years for completion of her house renders at least that much of the plan reasonably certain. As for the rest, there is not even a division into lots, so it seems logical to give her the value of improvements only for her own residence, since those are the only improvements that appear to have been made.


Purchase price of 150 acres:  $30 million.  Divided by  6 = $5 million purchase price for Carla’s 25 acres.  Her land is described as the ‘best’ of the parcel, but I decided not to make any assumptions of greater worth in its undeveloped state.


Value after taking (without variance) = $150,000, divided by 6 = $25,000.


Raw land + improvements: $5 million purchase price + $6000 improvements - $25,000 = $4,981,000.


If the court accepts that the plan for the subdivision is sufficiently underway, it may use the going market price for comparable property-the lot method of valuation.


1-acre lot = $1.95 million.  Multiplied by  25 acres = $48.75 million.  Perhaps the assumption that a 2-acre lot will be worth twice what a 1-acre lot is worth (and so on) is simplistic, but it could just as easily be true that a 2-acre lot is worth more than twice what a 1-acre lot is worth given a scarcity of large lots.  (This assumption makes the actual division of the entire parcel less important.)  But this method has already taken into account the value of improvements to the property, and so the final figure is simply


$48,750,000 - $25,000 = $48,725,000.


If the prenuptial contract is considered “taken” property, its value will have to figured in as well.  The “total value” of the house would probably include the lot it’s on, so that will have to be taken into account:


Raw land + improvements + value of contract– remaining value –value of 5-acre lot =

$5 million purchase price + $6000 improvements - $25,000 = $4,981,000.

Value of 5-acre lot = 1/5 of purchase price = $1 million

$4,981,000 - $1,000,000 = $3, 981,000


Lot method value + value of contract –remaining value –value of 5-acre lot =

$48,750,000 - $25,000 = $48,725,000.

Value of 5-acre lot = $9.75 million

$48,725,000 - $9,750,000 = $38,975,000


Calculate interest from time of taking (February 1, 1999) to time of valuation (May 11, 2001) =  2.277778 years.

See Solution Spreadsheet: The results of each method of valuation, with 8% compounded continuously:


Raw land + improvements – remaining value =  $6,332,102

                Lot method value – remaining value = $61,941,714

                Raw land + improvements + value of contract– remaining value = $5,060,851

                Lot method value + value of contract –remaining value = $49,547,015


Assigning weights to the following variables could enable the parties to come to an agreement between these wide-ranging results from the different valuation methods:


Chance that court will dismiss on the basis of availability of variance

Chance that court will find on the basis of possible variance that property is not without economic value

Chance that court will find development too speculative to use lot method

Chance that court will award Carla attorney’s fees


Sadly, I am out of time and mental capacity to discuss this here—I leave that for the reader’s edification.



Other References




92 A.L.R.2d 772 Changes in purchasing power of money as affecting compensation in eminent domain proceedings:

“in Howell v. State Highway Dept. (1932) 167 SC 217, 166 SE 129, both infra § 5[d], the courts also subscribed to the concept that market value at the time of taking meant market value in ordinary times, and not in time of inflation, depression, panic, or other abnormal conditions.”



8 A.L.R.4th 1202 Assemblage or plottage as a factor affecting value in eminent domain proceedings. (No SC cases)  Deals with severance of property into sections for calculation of value, affect of contiguity of pieces of property on value, etc.  This shouldn’t really be an issue here—with additional facts, can value Carla’s property separately, plus, it’s in her name and have to have unity of ownership of parcels before severance/contiguity applies.



Prenuptial_Agreement: Am. Jur. Legal Forms 2d  § 139:76.


South Carolina has not adopted the Uniform Premarital Agreement Act, but 17 states including North Carolina have.  The form agreement used as a basis for the agreement in the problem follows the UPAA. 


South Carolina requires prenuptial agreements to be recorded, but this does not affect enforcement as between husband and wife, only subsequent purchasers of the property. S.C. Code Ann. §20-5-50(citing Fripp v. Talbird (S.C. 1833).


N.C. Gen. Stat. § 52B-2. Definitions


      As used in this Chapter:


      (1) "Premarital agreement" means an agreement between prospective spouses made in contemplation of

   marriage and to be effective upon marriage.


      (2) "Property" means an interest, present or future, legal or equitable, vested or contingent, in real or

   personal property, including income and earnings.



N.C. Gen. Stat. § 52B-5. Effect of marriage


A premarital agreement becomes effective upon marriage.


Am. Jur. Legal Forms 2d  § 139:76.





Prospective ________[husband or wife] has this day made and executed a ________[warranty] deed for the following described real property:  ________ [insert address and legal description] to be conveyed to  prospective ________ [wife or husband] as ________[her or his]  separate property. The deed shall be delivered to prospective

________[wife or husband] within ________ days of the solemnization of  the marriage of the parties.

Prospective ________[husband or wife] further agrees that prospective  ________[wife or husband] shall be paid the sum of ________ Dollars  ($________) on the death of prospective ________[husband or wife]. To secure such payment, prospective ________[husband or wife] has this day assigned to prospective ________[wife or husband] a policy of life insurance issued by ________[insurer] and bearing policy no. ________, in the amount of ________ Dollars ($________). Should prospective

________[wife or husband] be unable to collect on the policy, or if for any reason it should be forfeited, then prospective ________[wife or husband] is to be paid the mentioned sum out of the estate of prospective _________[husband or wife].


In consideration of such conveyance and future payment of money, prospective ________[wife or husband] does hereby release  ________[her or his] marital property rights in all other property, both real and personal, of prospective ________[husband or wife].


Prospective ________[wife or husband] further agrees that in the event  ________[she or he] should be survived by prospective  ________[husband or wife], the one-half of the residence property this day conveyed shall revert to prospective ________[husband or wife] on ________[his or her] payment to ________[her or his] estate the sum of

________ Dollars ($________), and prospective ________[wife or husband] agrees to make and execute a will carrying out that agreement.

NOTES to Prof. Palmiter:


I revised the intro text you gave with the initial problem; why reinvent the wheel.  Obviously, I was unable to supply some of your original links to edited text.  I figured I would include the revision to save you some time on your own.  I deleted the reference to the federal bill—it appears to have died in committee, as bill-tracking on the House of Representatives website turns up nothing.


I spent a lot of time coming up with facts for the problem.  And I don’t know what it is about the listing for the 5-bedroom house, but the link now takes me to a different listing every time I click on it.  I gave up on fixing it, because I think the site just cycles them.  For what it’s worth, if you browse the listings, it won’t take you very long to find the house I used.


I found no cases saying “a contract is considered a property right when….”  I found many on “impairment of contract” which covered the same kind of facts, except of course that none of the claims could get past the state’s legitimate purpose for the regulation.  If there’s a good ALR on the subject, I didn’t find it.  There are several on eminent domain and regulatory takings, some very specific.  I wasn’t really able to use them in the way we talked about (7 courts say this, 3 courts say that) because either South Carolina law was specific, or the cases were too dissimilar factually.  Perhaps this was just not the problem for that approach; perhaps it required several more days of research that I didn’t have to spend.


The book Game Theory and the Law is good.  You might want to require it next time, at least for the law students that take the course.  I only wish I had read it sooner—I thought I would have time to make some sexy tables and flowcharts, but even with an extra 40 odd hours, alas, it was not to be.