Property foreclosures are far from rare in our region. In fact, a recent analysis from the credit reporting agency Experian found that South Carolina has the 7th highest foreclosure rate of any state in the country. For national banks and mortgage service providers operating in South Carolina, it is crucial that they have a basic understanding of our state’s foreclosure laws. Here, our Columbia, SC foreclosure attorneys provide an overview of three key things that national mortgage lenders should know about the foreclosure process in South Carolina.
- South Carolina is a Judicial Foreclosure State
South Carolina is a judicial foreclosure jurisdiction. In other words, mortgage lenders in South Carolina do not have a ‘power of sale’. A creditor cannot foreclose on a property by itself; state law requires mortgage lenders operating in South Carolina to take the borrower to court and — through a lawsuit — prove that they have the right to foreclose on a property. With a judicial foreclosure, the borrower has the right to raise defenses and file a counterclaim. As in other judicial foreclosure states, counterclaims are not uncommon in South Carolina. Lenders initiating a foreclosure must always be prepared to defend against a counterclaim. Our attorneys can help.
- South Carolina Follows the ‘Hammer Rule’
In foreclosure cases, some states give borrowers a ‘right to redemption’. Essentially, redemption is the ability of a borrower to buy back a property that has been foreclosed upon even after the foreclosure sale has already been completed. The right to redemption lasts for a pre-specified period of time, which varies from state to state. However, there is no right to redemption in South Carolina. Instead, the state follows the ‘Hammer Rule’. Once a foreclosure sale is complete, the homeowner’s rights to the property are fully extinguished.
- Deficiency Judgements are Permitted
Under South Carolina law (S.C. Code Ann. § 29-3-660), mortgage lenders have a right to seek a deficiency judgement after a foreclosure sale. A deficiency exists when the foreclosure sale price is insufficient to satisfy the full amount that the borrower still owes. For example, if the borrower owes $225,000 on their mortgage and the property is foreclosed on and sold for $210,000, a $15,000 deficiency remains. In South Carolina, lenders have a right to hold the borrower personally liable for that gap.
However, borrowers have appraisal rights in deficiency claims. If the fair market value of the property is deemed greater than the actual sales price, then that figure will be used for calculating any potential deficiency. So if the fair market value of the property was actually determined to be $230,000 instead of the $210,000 it was sold for, then there is no deficiency.
Contact Our Columbia, SC Foreclosure Lawyers Today
At Crawford & von Keller, LLC, our foreclosure lawyers have extensive experience representing national firms in South Carolina courts. With more than seven decades of collective legal experience, our attorneys are effective advocates for our clients. For a fully private consultation, please do not hesitate to contact us today. With an office in Columbia, we handle foreclosure cases throughout South Carolina.