## Facts

- In 1980, Joe E. Livingston entered a lease-purchase agreement in California with Leasing Enterprises, Inc. for a forklift.
- In the financing paperwork, Livingston represented that he owned a one-half undivided interest in approximately 37 acres in Oconee County, South Carolina, jointly with his mother, Margaret H. Schlee.
- Livingston defaulted on the agreement, and Leasing obtained an unsatisfied default judgment against him in California in November 1981.
- In May 1984, Leasing filed an action in South Carolina seeking to domesticate the California judgment and to reach Livingston’s claimed interest in the Oconee County property.
- Schlee responded that Livingston had transferred his interest to her years earlier by a quitclaim deed dated October 21, 1977.
- The quitclaim deed was executed in California on a California form, acknowledged before a California notary, and bore only one subscribing witness signature.
- The deed was recorded in Oconee County, South Carolina on April 21, 1983, even though South Carolina required two subscribing witnesses for a deed to be validly executed and entitled to record.
- Leasing argued the deed was facially defective under South Carolina law and therefore ineffective against Leasing as a later lien creditor without notice.
- Livingston did not appear in the South Carolina action and was held in default; the dispute proceeded between Leasing and Schlee.
- A master-in-equity ruled for Leasing and directed that the deed be cancelled of record so Leasing’s domesticated judgment lien could attach to Livingston’s one-half interest; Schlee appealed.

## Issues

1. Whether South Carolina law governs the formal validity and recordability of a deed conveying an interest in South Carolina land, even when the deed was executed and acknowledged in another state.
2. Whether a quitclaim deed affecting South Carolina real property, executed with only one subscribing witness but acknowledged before an out-of-state notary, is entitled to recording in South Carolina and effective against a subsequent judgment lien creditor without notice.

## Decision

- The South Carolina Court of Appeals affirmed the master-in-equity.
- The court applied the law of the situs and held South Carolina law controlled the validity and effect of the conveyance because the land was located in South Carolina.
- Under S.C. Code § 27-7-10 and South Carolina precedent, a deed intended to convey South Carolina real estate must be executed in the presence of and subscribed by two or more credible witnesses.
- Because the deed had only one subscribing witness, it was not entitled to recording under South Carolina law, even though it contained a California notarial acknowledgment.
- A deed that is not entitled to record does not provide constructive notice to later creditors; therefore, it could not defeat Leasing’s claim as a subsequent lien creditor without notice.
- The master properly ordered cancellation of the deed of record to allow Leasing’s domesticated judgment lien to attach to Livingston’s one-half interest.

## Legal Principles

- The validity and effect of a conveyance of real property are governed by the law of the state where the property is located (law of the situs).
- For a deed intended to convey South Carolina real estate to be entitled to record, South Carolina requires execution in the presence of and subscription by two or more credible witnesses. (S.C. Code § 27-7-10)
- An out-of-state notarial acknowledgment does not substitute for South Carolina’s statutory witness requirement when the instrument conveys South Carolina land.
- Even if an unwitnessed or insufficiently witnessed instrument may operate between grantor and grantee, it does not bind a later creditor who lacks notice when the instrument is not recordable and therefore does not give constructive notice.
- Under South Carolina’s recording statute (S.C. Code § 30-7-10), priority protection for recorded instruments presupposes an instrument that is eligible for recording; a facially defective deed cannot cut off the rights of a subsequent lien creditor without notice who properly records.

## Conclusion

Leasing Enterprises, Inc. v. Livingston holds that South Carolina law governs conveyances of South Carolina land and requires two subscribing witnesses for a deed to be entitled to recording; a quitclaim deed executed in California with only one witness, even if acknowledged before a California notary and recorded in South Carolina, was not validly recordable and therefore could not defeat the priority of Leasing’s later, properly recorded judgment lien as a subsequent creditor without notice.


Leasing Enterprises, Inc. v. Livingston, 363 S.E.2d 410 (1987)