On Folly Beach, a buyer who pays for a house with a strong rental history gets the house. The investment short-term rental license that produced that history ends when the property transfers, and the buyer cannot inherit it. As of early October 2026, the city's code says this in plain terms, and a moratorium in place until February 19, 2027 has closed most of the usual routes to a new license. So a listing's rental history describes how the seller used the house. It is not an asset that comes with the deed.
What the code says happens at transfer
Folly Beach re-enacted its short-term rental chapter, Chapter 117, as Ordinance 028-26, passed September 15, 2026. The non-transferability rules sit in Section 117.02(D), and they are thorough:
- Investment licenses and medical-hardship investment licenses end when the property transfers.
- Owner-occupied licenses also end on transfer.
- A spot on the investment waitlist ends on transfer as well.
- An investment license also ends if the property loses its 6% property tax assessment status, and an owner-occupied license ends if the property loses its 4% status.
The code defines a transfer as an assessable transfer of interest that triggers a reappraisal for tax purposes. A normal arm's-length sale is the clearest example.
What the buyer can get is a provisional license. It ends 90 days after it is issued, or after the last eligible rental period if that comes sooner, and it cannot be transferred. The moratorium describes these provisional licenses as the ones needed to comply with the South Carolina Vacation Rental Act. In practice, that means the bookings the seller already disclosed can be honored. Once they are done, the income stops unless the new owner gets a license of their own.
Where a new owner's license would come from
The city caps investment short-term rental licenses at 800. Licenses in good standing can keep renewing even when the total is above the cap, and new ones are offered from a waitlist. The waitlist rules on the city's page shape a buyer's odds more than the cap does:
- You must be the owner of record on the date you apply, so you cannot join until after closing.
- Phase One licenses are awarded by property acquisition date. Phase Two licenses, which opened October 1, 2024, are awarded in the order applications came in.
- The city issues only one license per owner. When one property is awarded, that owner's other properties come off the list.
- You have 60 days to apply after the city notifies you, or you lose your place.
- You lose your place if you sell the property.
How long the line is today is the hardest question to answer. The most recent count the city published was a snapshot from November 2024: 152 Phase One entries and 15 Phase Two entries. At that point the city said no licenses were available for the 2024 license year. We found no public 2026 count of active investment licenses or current waitlist length. Live 5 reported in 2024 that a new buyer faced an unknown wait. Any underwriting that counts on a license arriving by a certain date has no published timeline behind it.
Two other details matter during due diligence. Properties in the Marsh Island and Conservation zoning districts are not eligible for any short-term rental license, so joining the waitlist from there will not lead to one. A vacant lot can be registered, but the city grants no license until a dwelling has a certificate of occupancy.
The moratorium narrows the paths until February 19, 2027
On August 14, 2026, Charleston County Circuit Judge Thomas Rode struck down the voter-approved cap and the rental registration fee. He found that a referendum was the wrong way to adopt an ordinance affecting business licensing and tax revenue, and that the fee was an unauthorized tax. On August 19, council voted 5–1 to appeal and 5–1 to move a moratorium forward, with Blair "Doc" Holladay dissenting. Mayor Chris Bizzell explained why:
"The moratorium is more about limiting our exposure going forward just so that if licenses do come in the interim while this appeal is being processed, we're in good shape legally there."
Council adopted Ordinance 027-26 on August 26 by a 4–1 vote. It stops approval of new short-term rental business licenses, with nine exceptions. Read from a buyer's side, they sort like this.
| Moratorium exception | Does it help someone buying in an ordinary sale? |
|---|---|
| Renewals of licenses legal as of August 19, 2026 | Only for the existing owner. The license ends at transfer. |
| New licenses from inheritance | No, unless the property is inherited |
| New licenses from medical hardship | Only if the code's hardship definition applies |
| Provisional licenses under the Vacation Rental Act | Yes, for disclosed bookings, up to 90 days |
| Non-assessable transfers of properties licensed as of August 19 | Not for a standard sale, which is assessable |
| Waitlist offers made because licenses fell below 800 | Only for owners already on the list |
| Licenses for renting a legal residence up to 72 days a year | Yes, if the home is the buyer's legal residence |
| Approvable applications submitted before August 26, 2026 | No, that window has closed |
| Licenses reinstated by the Hearing Officer for denials before August 14 | No |
For a buyer closing this fall, two paths remain. One is the 90-day provisional tail. The other is the owner-occupied license, capped at 72 rental nights a year and tied to the property's 4% status. The moratorium also directs the mayor to propose any changes to the rental rules to council on or before February 19, 2027, the day the moratorium expires unless council repeals or extends it.
The litigation keeps the rules provisional, not absent
In parallel, council re-enacted the 800 cap by ordinance through the regular legislative process and dropped the registration fee. Ordinance 028-26 passed first reading 6–0 on September 8. It passed second reading September 15, with Holladay the lone vote against. The old fee was 1.75% of rental income. The standard city business license still applies, which the Post and Courier reported as a $245 minimum plus $2.75 for each additional $1,000 earned.
On September 22, council voted 4–3 to agree to the plaintiffs' request for direct review by the South Carolina Supreme Court. The court still has to certify the case before it can hear it. A proposed class action filed by David Chandler and 622 East Cooper LLC seeks refunds of the old registration fees. As of a September 4 report, no class had been certified. The city received four bids for its short-term rental study and has scheduled the contract award for an October 13 work session. A buyer who prices in the cap disappearing on appeal is betting on a court timeline and on whatever council adopts after the study. The ruling itself leaves the city free to pass caps through the standard legislative process.
What carries forward is the property's physical fitness to rent
The license does not convey, but the property's physical setup does, and that setup decides whether a future license can be used. A rental registration requires:
- at least one on-site parking space for each rented bedroom
- a site plan showing the septic tank and drain field, if the home has one
- certification that the septic system is protected from parking
Maximum overnight occupancy is two people per bedroom plus two more per dwelling. On August 11, council approved Ordinance 025-26, which makes failing to inspect a septic system a violation of the rental ordinance. Violations count as strikes. Three strikes in a rolling 12 months can lead to suspension, revocation or nonrenewal, and civil fines can reach $500 per day. An investment license also has to be used at least 28 nights a year to stay in good standing.
There is a builder's angle here as well. An existing license can be renewed for a replacement home on the same site if ownership stays the same, the new home has the same or fewer heated square feet and bedrooms, and the license stays in good standing from demolition through the final certificate of occupancy. An owner who rebuilds can keep a license. A buyer who purchases in order to rebuild cannot.
Reading the August 2026 numbers with that in mind
Charleston Trident Association of Realtors data for Folly Beach in August 2026 shows a thin month. Four detached homes closed, at a median of $1,332,500, compared with $2,075,000 on three sales in August 2025. Days on market rose from 71 to 138, inventory fell from 50 to 20, and new listings dropped from 13 to 3. Year to date through August, 50 detached homes closed, compared with 29 a year earlier, and the median was $1,187,500, compared with $1,350,000. Attached homes had a median of $762,500 in August 2026, compared with $835,000, and spent 95 days on market, up from 60. Those sellers received 97.3% of original list price.
CTAR itself warns that percent changes can look extreme with samples this small. No study has yet separated how much of this comes from the cap. Measuring the cap's effect on housing since January 2022 is part of what the city's study is meant to do. Sam Meader, who owns The Rathershacks with his wife, told Live 5 the cap has stagnated property values. That is an owner's view, not a measured result. What the code does establish is narrower: in any Folly sale this fall, the price buys a house and, at most, 90 days of the seller's bookings.
FAQ
Can a buyer take over the seller's existing bookings? Yes, through a provisional license that covers disclosed bookings. It ends after 90 days or after the last eligible rental, whichever comes first.
Can I join the waitlist while I'm under contract? No. Applicants have to be the owner of record on the date they apply and must provide a copy of the deed.
Does inheriting a property keep the license alive? Heirs who inherit from someone who owned the property on February 7, 2023 can apply for an investment license within 90 days of the official transfer, and inheritance licenses are exempt from the moratorium. Talk to your own counsel about how this applies to a specific estate.
When could the rules change? The study contract is scheduled for award on October 13. The moratorium expires February 19, 2027 unless council extends it. The appeal depends on whether the Supreme Court takes the case.
If you are weighing a Folly Beach purchase with rental income in mind, or deciding when and how to sell one, St. Germain Properties can review license status, provisional booking schedules and on-site requirements with you before an offer is written. Request a Private Consultation, and we will go through the transfer rules for your specific address.
