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American College of Mortgage Attorneys — Partner with the Best®

Formed in 1974, the American College of Mortgage Attorneys (ACMA) is comprised of over 500 lawyers in North America who are experts in mortgage law.

United States

South Carolina

The security instrument used in South Carolina is a mortgage. Deeds of trust are not used. There is no required form, but traditionally mortgages have included granting language followed by a defeasance clause effective upon payment and performance of the secured obligations. Irrespective of whether the mortgage instrument includes granting language, South Carolina is a lien theory state; a mortgage creates a lien on the mortgaged property but is not a conveyance. E.g., Bredenberg v. Landrum, 32 S.C. 215, 223-24, 10 S.E. 956, 959 (1890). No matter what form is used, a mortgage must meet the general requirements for recordability discussed in the following section. In addition, there is authority that a mortgage must be executed under seal. See, e.g., Arthur v. Screven, 39 S.C. 77, 83, 17 S.E. 640, 642 (1893). Accordingly, a mortgage not physically sealed should include a statement such as “This Mortgage is intended to be and shall be construed as an instrument under seal,” or similar language to the same effect. Cf. S.C. Code Ann. &sect; 27-7-30 (2007) (an instrument lacking a seal will nevertheless be construed as sealed if the instrument's wording evinces an intent by the parties to create a sealed instrument).

SECURITY INSTRUMENT USED

In order to be recorded, a mortgage must (i) be signed by the mortgagor, (ii) signed by two witnesses in whose presence the mortgage was executed, and (iii) contain either an affidavit of one of the subscribing witnesses or an acknowledgement. Common practice is to use an acknowledgement - an affidavit of a subscribing witness is used less frequently. S.C. Code Ann. &sect; 30-5-30(B) (2007). An acknowledgement may be in the forms prescribed by South Carolina's version of the Uniform Recognition of Acknowledgements Act (S.C. Code Ann. &sect; 26-3-10, et seq.), including the Statutory Short Forms of Acknowledgment set forth in S.C. Code Ann. &sect;26-3-70 (2007). An alternative statutory form of acknowledgement is set forth in S.C. Code Ann. &sect;&nbsp;30-5-30(C)(2007). An acknowledgement may also be in a form authorized by the laws of the place where the acknowledgement is taken. S.C. Code Ann. &sect; 26-3-50(2) (2007). In order to be recorded a mortgage must also contain a derivation clause setting forth the name of the grantor from whom the mortgagor obtained title and the recording information for the deed by which the mortgagor obtained title. Where the vesting deed to the mortgagor is executed and delivered simultaneously with the mortgage - such that the recording information for the vesting deed is not available at the time of recording of the mortgage - it is sufficient to set forth the name of the vesting deed grantor, and to note that the vesting deed in to the mortgagor is to be recorded, or that the vesting deed is being recorded “simultaneously herewith.” S.C. Code Ann. &sect; 30-5-35(a) (2007). As a practical matter, in most recording offices it is possible to obtain the recording information for the vesting deed at the time of recording, and common practice is to insert by hand the vesting deed recording information into the derivation clause of the mortgage at the time of its recordation. The mortgage must also state the mailing address of the mortgagee. See S.C. Code &sect;&nbsp;30-5-35 (2007). Finally, a mortgage must set forth the county tax map parcel number for the mortgaged property. Mortgages are generally filed at the county level in the county in which the mortgaged property is located. The recording office in most counties is the Register of Deeds. In a few counties, the recording office is the office of the Clerk of Court, and in one county the office is the Register of Mesne Conveyances. Leasehold mortgages are considered mortgages of real estate are recorded in the same manner as mortgages generally. S.C. Code Ann. &sect; 30-5-130 (2007). An exception to the foregoing is that mortgages encumbering property of gas or electric utilities located in multiple counties may be recorded in any one county in which such property is located. The filing of a notice referring to such recorded mortgage may be made in all other counties in which the utility property is located in lieu of recording the mortgage or additional mortgages in each of those other counties. See S.C. Code Ann. &sect; 29-3-80 (2007). A second exception is that mortgages encumbering real property of a railroad company must be recorded in the office of the Secretary of State, and subsequently must be recorded in the real estate records for each county in which the mortgaged property is located. S.C. Code Ann. &sect; 30-11-20 (2007).

RECORDING REQUIREMENTS

South Carolina has an anti-deficiency statutory scheme applicable to mortgage foreclosures actions. These anti-deficiency statutes may be invoked only by defendants in a mortgage foreclosure action against whom a deficiency judgment is sought - the statutes are not applicable where judgment against the borrower or the guarantors is pursued in action other than a foreclosure action. S.C. Code Ann. &sect; 29-3-680(A)(2007); In re Kirven, 180 B.R. 438 (Bankr. D.S.C. 1995); Citizens & S. Nat'l Bank v. Lanford, 313 S.C. 540, 443 S.E.2d 549 (1994). The application of these statutes may reduce or eliminate the amount of any deficiency judgment otherwise obtainable against the mortgagor and any named guarantors. See S.C. Code Ann. &sect; 29-3-680 (2007), et. seq. A waiver of the right to invoke the anti-deficiency statutes is universally required by lenders with respect to commercial mortgages. This waiver is not effective, however, if the mortgaged property is a dwelling place or if the mortgage indebtedness is a consumer transaction. Id. The waiver must be in a statutorily prescribed form and format, and must appear on a page signed or initialed by the waiving party. Id. Common practice is to put the waiver language on the signature page of the mortgage instrument itself and/or the promissory note, and, where there are guarantors, on the signature page of the guaranties. The waiver may also be set forth in a separate document rather than made a part of other loan documents. In order for the waiver to be effective, the waiving party must be given notice “prior to the transaction” that the waiver will be required as part of the transaction. Accordingly, a pre-closing notice that the waiver will be required must be given by the lender to the mortgagor and any guarantors. Lenders typically require the mortgagor and any guarantor to sign an acknowledgment of receipt of the notice prior to closing. There is no guidance as to the meaning of “prior to the transaction” but the general practice is give the notice at least one day prior to the closing date. The better practice, where practical, is to include the notice that a waiver will be required in a commitment letter, hello letter, or equivalent preliminary document.

STATUTES TO BE WAIVED

Provisions allowing the exercise of a power of sale in the mortgage are not enforceable and are not used, except in connection with mortgages of vacation time sharing interests, as discussed below. Provisions allowing a mortgagee to take possession of the mortgaged property on default are not enforceable. See S.C. Code Ann. &sect; 29-3-10 (2007).

UNUSUAL TREATMENT OF STANDARD PROVISIONS

Future advances made pursuant to a future advance clause will generally have priority determined as if such advances were made on the date of the execution of the mortgage, provided that the mortgage has a future advance clause that complies with that S.C. Code Ann. &sect; 29-3-50 (2007). That section requires that the future advance provision state the maximum amount that may be secured at any one time, and disclose whether interest on the mortgage debt will be deferred, accrued, or capitalized. Id. No distinction as to this priority is made between obligatory and discretionary advances. Exceptions to this future advance priority rule are advances made after the filing of certain intervening tax liens, and advances made after a mechanic's lien has been both filed and served on the mortgagee. Id. There is no mortgage tax in South Carolina, and it is common for mortgages to contain future advance provisions with a stated maximum secured amount substantially greater than the amount of the then-contemplated mortgage loan. An open-end mortgage securing future advances can maintain its vitality even though there may be no outstanding balance on the mortgage debt for a period of time. See, e.g., Cent. Prod. Credit Assoc. v. Page, 268 S.C. 1, 8, 231 S.E.2d 210, 214 (1977).

SECURING FUTURE ADVANCES

Advances made pursuant to the terms of a mortgage for taxes, insurance premiums, public assessments, and repairs are, if the mortgage so provides, secured by the mortgage. Such advances will have the same rank and priority as the principal debt secured, except that advances for real estate taxes will be a first lien on the property irrespective of the priority of the mortgage pursuant to which the advance is made. S.C. Code &sect;&nbsp;29-3-40 (2007).

SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL, INCLUDING PAYMENT OF TAXES AND INSURANCE

Deeds of trust are not used in South Carolina, and thus trustees are not used, except in connection with mortgages of time sharing interests. Time sharing interest mortgages may have a trustee and provide for a power of sale, and thus function similarly to a deed of trust. See S.C. Code Ann. &sect; 27-32-300 (2007), et seq.

TRUSTEE UNDER DEED OF TRUST

All foreclosures in South Carolina are judicial and require the institution of judicial foreclosure proceedings in the county in which the property is located. If the property is located in more than one county, then the action may be commenced in either county. See S.C. Code Ann. &sect; 15-7-10 (2) (2005). Out-of-court, self-help remedies are not permitted - provisions purporting to allow a mortgagee to take possession of the mortgaged property on default, for example, are unenforceable. Likewise powers of sale are not used, except with respect to the foreclosure of vacation time sharing interests. All parties having an interest of record in the mortgaged property junior to the mortgage are customarily joined as defendants. In addition, a mortgagee desiring to obtain a money judgment against any guarantors may name them as additional defendants. Mortgage foreclosure actions are nonjury matters (even in cases where a deficiency is sought against the mortgagor or a guarantor). As is the case with litigation generally, the proceedings must be commenced by the filing and service of a summons and complaint in the Circuit Court (the South Carolina court of general jurisdiction). Additionally, the mortgagee must file a lis pendens together with, or not more than 20 days before, the filing of the summons and complaint. S.C. Code Ann. &sect; 15-11-10 (2005). Thereafter, the foreclosure proceeding will be subject to the rules of civil procedure applicable to litigation generally. Although filed in the Circuit Court, foreclosure cases are by rule and tradition typically referred by the Circuit Court to the master in equity for the applicable county, or where there is no standing master in equity in that county, to a special referee. The master in equity, or special referee, as the case may be, is given the power to enter final judgment, with any appeal to be made directly to the South Carolina Court of Appeals and not to the referring Circuit Court. At the conclusion of the litigation, the court will order the sale of the property by a judicial officer, and render a monetary judgment for the mortgage debt. The sale will be by open outcry, following advertisement of the sale in a local newspaper of general circulation once a week for 3 consecutive weeks prior to the sale date. There is an alternative procedure available only for the foreclosure of mortgages on vacation time sharing interests This alternative procedure contemplates a public sale by a trustee under a power of sale, and does not provide for a deficiency judgment. The mortgagee of a time sharing interest may, in lieu of this alternate procedure, conduct a regular judicial foreclosure as is done with mortgages of property other than time sharing interests. See S.C. Code Ann. &sect; 27-32-300 (2007), et seq.

BRIEF DESCRIPTION OF PROCEDURE

A typical uncontested foreclosure action takes between 150 and 240 days, depending upon the caseload in the Court of the county where the foreclosure action is instituted. Contested foreclosure actions can take a year or more to complete.

TYPICAL LENGTH OF PROCEDURE

The method of taking bids at the foreclosure sale varies, depending upon whether the mortgage holder has waived its right to a deficiency judgment. If no deficiency judgment is sought, then the sale is conducted on a designated sale date by public outcry, with the winning bidder identified at the conclusion of the sale. If, however, a deficiency judgment is sought, then the court will take bids on the initial sale date, but reopen the bidding 30 days later to receive upset bids. The mortgage holder is required to bid at the initial sale date, and cannot later raise its bid. As a result, the mortgage holder will be at risk of a later upset bid and should understand that its bid on the initial sale date will be its final bid. There will likely be no bidders on the initial sale date other than the mortgagee - the practical effect of this is that the mortgagee cannot start with a lower bid and bid up. The mortgagee will only have one bid, which it cannot later raise. Irrespective of whether the mortgagee seeks a deficiency judgment, a foreclosing mortgagee may “credit bid,” meaning that the mortgagee may bid at the sale by way of a credit against the mortgage indebtedness rather than by cash bid. Where a credit bid is made, the mortgage indebtedness will be reduced by the amount bid by the mortgage holder. Any bid by a mortgagee in excess of the mortgage indebtedness must be a cash bid as to the excess amount. Although the results of a regularly conducted foreclosure sale are not generally subject to attack based upon the inadequacy of the successful bid, a foreclosure sale may be set aside if the amount of the bid relative to the value of the property shocks the conscience of the court or is accompanied by other irregularities justifying intervention by the court. E.g., Spillers v. Clay, 233 S.C. 99, 104, 103 S.E.2d 759, 761 (1958).

FORECLOSURE BID REQUIREMENTS

A mortgagor has the right to pay in full the mortgage indebtedness up to the time the judicial sale is completed. There is no redemption period or redemption right following completion of the foreclosure sale, other than the right of redemption accorded the United States of America imposed by federal statute.

REDEMPTION PERIOD AND PRICE

South Carolina does not authorize a waiver of the right of redemption or a reduction in the redemption period.

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

At the foreclosure hearing, the Master in Equity will determine the total debt due the lender and may render judgment against the borrower for the total indebtedness, and order the sale of the mortgaged premises. Upon the sale of the premises, the court will credit the amount of the sales proceeds against the judgment debt. Alternatively, the court will not enter a money judgment until the sale is completed, with judgment then entered for the remaining balance of the mortgage debt after application of the sales proceeds. See S.C. Code Ann. &sect; 29-3-660 (2007). As noted above, South Carolina has an anti-deficiency statutory scheme applicable to mortgage foreclosures. See S.C. Code Ann. &sect; 29-3-680 (2007), et. seq. If not waived, these statutes can reduce or eliminate a deficiency judgment. In practice, a waiver of the rights of a mortgagor and guarantor under this statutory scheme is almost always required. The rights to invoke the anti-deficiency procedures cannot be waived, however, with respect to a mortgage secured by a dwelling place or in connection with a consumer credit transaction. To be effective, the waiver of the right to invoke the anti-deficiency statutes must be made in strict compliance with the requirements set forth in S.C. Code &sect;&nbsp;29-3-680 (2007). These waiver requirements include a notification to the waiving parties (the mortgagor and typically any guarantors) prior to closing that the waiver will be required as part of the transaction, and the execution during the transaction by the waiving parties of a document containing a statutorily mandated form of waiver. Although the waiver can be contained in any document, the waiver form must be on a page signed by the waiving party. Id. If not waived, the anti-deficiency provisions authorize the mortgagor and other obligors on the mortgage indebtedness named in the foreclosure to invoke an appraisal procedure. Under this procedure, a panel of appraisers will determine the fair market value of the mortgaged property as of the date of the foreclosure sale. See S.C. Code Ann. &sect; 29-3-720 (2007). This appraiser-determined fair market value is then substituted for the actual sales price paid at the foreclosure sale, and the deficiency is then recalculated as if the appraised value were in fact the amount of the winning foreclosure sale bid. S.C. Code Ann. &sect; 29-3-740 (2007). Even if the right to invoke the anti-deficiency statutes is waived, the bidding process itself is designed to minimize deficiency judgments by maximizing mortgagee bids. As discussed above, a mortgagee seeking a deficiency judgment is required to bid on the initial sale date and cannot later raise its bid. The bidding is then reopened 30 days later for upset bids from bidders other than the mortgagee. The practical result of this bidding procedure is to give a mortgagee an incentive to bid based on the actual value of the mortgaged property - or to at least to bid the minimum amount the mortgagee would be willing to accept in exchange for the mortgaged property. An artificially low bid intended to maximize a deficiency judgment would likely be topped when the bidding is reopened after 30 days.

DEFICIENCIES

A lease that is subordinate to the lien of the mortgage can be eliminated by the foreclosure of the mortgage, if the tenant is joined as a defendant and that relief is sought by the mortgagor. Cf. S.C. Code Ann. &sect; 15-39-880 (2005) (junior liens are terminated by a foreclosure sale). A lease executed subsequent to the date of the mortgage will generally be subordinate. A lease that is not subordinate to the mortgage, such as one executed prior to the date of the mortgage, will not be affected by the foreclosure. By statute, the purchaser at the foreclosure sale will become the successor landlord and be entitled to all rights and benefits under the lease as if the purchaser had been the original landlord. See S.C. Code Ann. &sect; 27-35-50 (2007). But see Cadence Bank, N.A. v. Horry Props., Ltd. Liab. Co., Civil Action No. 4:10-cv-2717-RBH, 2012 U.S. Dist. LEXIS 46675 (D.S.C. Apr. 2, 2012); Joyner v. Greenville Hotel Assocs., Ltd. P'ship, 364 S.C. 237, 612 S.E.2d 727 (Ct. App. 2005) (purchaser not bound by lease absent express assumption or agreement). As a practical matter, in most cases a mortgagor and a tenant will have entered into subordination, nondisturbance, and attornment agreement, under which the lease is subordinated to the mortgage, and in return the mortgagor has contractually agreed not to disturb tenant's possession by way of a foreclosure.

EFFECT OF FORECLOSURE UPON LEASES

The Supreme Court of South Carolina has rescinded the Supreme Court Administrative Order (May 22, 2009), and the revised Order issued in In re Mortg. Foreclosure Actions, 396 S.C. 209, 720 S.E.2d 908 (2011). Those orders mandated certain changes in foreclosure procedures to give effect to the Making Home Affordable Program of the United States Treasury, which Program has since expired. See Supreme Court Administrative Order (May 17, 2023).

CHANGES TO PROCESS RESULTING FROM RECENT LITIGATION, ETC.

Under South Carolina law, any rate of interest may be charged on a non-consumer loan, so long as there is an express, written agreement as to the rate. S.C. Code Ann. &sect; 37-10-106 (2002). Absent such an express agreement the maximum rate is 6%. Note that one effect of this statutory structure is to render references (typically in default rate provisions) to the maximum rate permitted by law meaningless, since there is no maximum rate except as may be agreed by the parties. Maximum finance charges on consumer mortgage loans are regulated by the South Carolina Consumer Protection Code.

USURY CEILING

If the collateral is as-extracted collateral or timber to be cut, or if the financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures, the financing statement is filed in the office where a mortgage on real estate would be recorded. That office in South Carolina is, depending on the County, the Register of Mesne Conveyances, the Register of Deeds, or the Clerk of Court. Generally, in all other cases where perfection may be accomplished by filing, the financing statement should be filed in the office of the Secretary of State of the state in which the debtor is located. S.C. Code &sect;&sect;&nbsp;36-9-301 and 36-9-501 (2003). An exception to the foregoing rule is that the place of filing if the debtor is a “transmitting utility” - a railroad or utility provider - is the office of the Secretary of State of South Carolina, even for fixture filings. S.C. Code Ann. &sect; 36-9-501(b).

LOCATIONS FOR FILING

A mortgage is effective as a financing statement filed as a fixture filing (or as a financing statement covering as-extracted collateral or timber to be cut) if it indicates the goods or accounts covered, if the goods are or are to become fixtures related to the real property described on the mortgage (or, in the case of as-extracted collateral or timber to be cut, is related to such real property), if the mortgage satisfies the other requirements of a financing statement, and if the mortgage is duly recorded. S.C. Code &sect;&nbsp;36-9-502.

SECURITY INSTRUMENT USED AS FIXTURE FILING

Guarantors of the indebtedness secured by a mortgage may be made parties to a foreclosure action and a deficiency judgment may be rendered against them in the foreclosure action. S.C. Code &sect;&nbsp;29-3-660 (2007).

UNUSUAL PROVISIONS OR REQUIREMENTS

Guarantors may waive their rights to invoke the South Carolina anti-deficiency statutes, as noted above.

A guarantor may be sued with the mortgagor as part of a mortgage foreclosure action or may be sued in an action separate from the foreclosure action. If the guarantor is sued in the foreclosure solely for a judgment on the deficiency, the guarantor has no right to a jury trial. Carolina First Bank v. BADD, L.L.C., 414 S.C. 289, 294, 778 S.E.2d 106, 108 (2015). If the guarantor is sued in a separate action, then (absent a waiver) the guarantor is entitled to a jury trial. See, e.g. N. Charleston Joint Venture v. Kitchens of Island&nbsp;Fudge Shoppe, Inc., 307 S.C. 533, 535, 416 S.E.2d 637, 638 (1992). A waiver by a mortgagee in connection with a mortgage foreclosure of its right to a deficiency judgment may result in the discharge of any guarantors. See Fla. Citizens Bank v. Sustainable Bldg. Sols., Inc., No. 2018-UP-255, 2018 S.C. App. Unpub. LEXIS 247 (Ct. App. June 13, 2018); Cf. Coastal States Bank v. Hanover Homes of S.C., LLC, 408 S.C. 510, 521, 759 S.E.2d 152, 158 (Ct. App. 2014) (an act that discharges the underlying obligor may release the guarantor). The assertion of a non-compulsory legal counterclaim by a guarantor in a foreclosure action will waive the guarantor's right to a trial by jury on that counterclaim. Carolina First Bank v. BADD, L.L.C., 414 S.C. 289, 294, 778 S.E.2d 106, 108 (2015). If, on the other hand, the counterclaim asserted by a guarantor is both legal and compulsory, then the guarantor is entitled to a jury trial with respect to its counterclaim, absent an effective waiver of guarantor's jury trial right. In this circumstance, the court may either bifurcate the case, or try the jury claims and nonjury claims in a single proceeding. To the extent there are common questions of fact in the foreclosure claim and the legal counterclaim, the legal counterclaim must be tried first. Johnson v. S.C. Nat'l Bank, 292 S.C. 51, 55, 354 S.E.2d 895, 897 (1987). As a practical matter, the court will likely bifurcate the case since the master in equity does not conduct jury trials. This bifurcation may result in considerable delay in the completion of the foreclosure, since the jury portion (the legal, compulsory counterclaim) must be transferred to the circuit court jury docket for trial by the circuit court. Id. Jury trial waivers are enforceable, but will be strictly construed. See, e.g. N. Charleston Joint Venture v. Kitchens of Island&nbsp;Fudge Shoppe, Inc., 307 S.C. 533, 535, 416 S.E.2d 637, 638 (1992); Beach Co. v. Twillman, Ltd., 351 S.C. 56, 63-64, 566 S.E.2d 863, 866 (Ct. App. 2002). The enforceability of these waivers may require that they are not procured by disparate bargaining power, such that the guarantor had no meaningful choice but to sign the waiver, that the waiver be conspicuous, and that the waiver not be unconscionable. See Branch Banking & Tr. Co. v. Abikhaled, No. 2016-UP-389, 2016 S.C. App. Unpub. LEXIS 469 (Ct. App. Aug. 3, 2016). To be effective, the waiver should be in the guaranty or other documents signed by the guarantor; inclusion of the waiver in the mortgage instrument not signed by the guarantor is likely not effective as to the guarantor. Cf. N. Charleston Joint Venture v. Kitchens of Island&nbsp;Fudge Shoppe, Inc., 307 S.C. 533, 535, 416 S.E.2d 637, 638 (1992)(waiver of jury trial in lease not binding on lease guarantor not a party to the lease). A guarantor is entitled to have the proceeds of a foreclosure sale applied to reduce the mortgage debt. Where liability under a guaranty is limited to a specific amount, however, the guarantor is not entitled to have the foreclosure proceeds applied first to guaranteed amount. Southern Bank & Tr. Co. v. Harley, 292 S.C. 340, 343, 356 S.E.2d 410, 411 (Ct. App. 1987) (modified by Southern Bank & Tr. Co. v. Harley, 295 S.C. 423, 424-25, 368 S.E.2d 908, 909 (1988)). Rather, the foreclosure proceeds will be applied to the “top” or unguaranteed portion of the mortgage debt. Id. Under a guaranty of payment, the mortgagee may sue the guarantor immediately upon default of the debtor. E.g., Peoples Fed. Sav. & Loan Ass'n v. Myrtle Beach Ret. Grp., Inc., 300 S.C. 277, 281, 387 S.E.2d 672, 674 (1989). There is no requirement the mortgagee first pursue the primary obligor or foreclose the mortgage. Id.

SPECIAL PROBLEMS IN ENFORCEMENT OF GUARANTY

A mortgagee has a statutory right to obtain a deficiency judgement in a mortgage foreclosure action. See S.C. Code Ann. &sect; 29-3-660. A mortgagee may, however, waive its right to a deficiency at any time during the foreclosure process. As discussed above, if a deficiency is sought, the bidding process will be bifurcated. There will be initial bidding on the designated sale date, and the mortgagee must bid on this date. Bidding will be reopened 30 days later to receive upset bids, but the mortgagee is may not raise its initial bid. If on the other hand the mortgagee waives its right to a deficiency, then the bidding will be final on the initial bidding date. As noted above, a waiver by a mortgagee in connection with a mortgage foreclosure of its right to a deficiency judgment may result in the discharge of any guarantors. See Fla. Citizens Bank v. Sustainable Bldg. Sols., Inc., No. 2018-UP-255, 2018 S.C. App. Unpub. LEXIS 247 (Ct. App. June 13, 2018). Guarantors of the indebtedness secured by a mortgage may be made parties to a foreclosure action and a deficiency judgment may be rendered against them in that action. Typically deficiency judgments against guarantors are obtained in this manner rather than through a separate action. Unless a waiver of the South Carolina anti-deficiency statute has been properly obtained, a guarantor named in a foreclosure action, like the borrower, will have the right (if not previously waived) to invoke the anti-deficiency statutes discussed above. See, e.g., Standard Fed. Sav. Bank v. H & W, 323 S.C. 24, 27, 448 S.E.2d 558, 560 (1994). If on the other hand the guarantor is sued in an action separate and apart from the foreclosure action, the guarantor does not have recourse to the anti-deficiency statute - the statute only applies to defendants in a mortgage foreclosure action against whom a deficiency judgment is sought. See S.C. Code Ann. &sect; 29-3-680 (2007). A lender may elect to sue on the note or any guaranty without foreclosing on the lien of its mortgage. If the mortgagee proceeds in this manner and reduces his debt to judgment, the mortgagee is free to later foreclose the mortgage, which retains its vitality. In such cases, the judgment is deemed substituted for the promissory note as the evidence of the debt. Lever v. Lighting Galleries, Inc., 374 S.C. 30, 33, 647 S.E.2d 214, 216 (2007) Note that in order for a waiver of the anti-deficiency statute to be effective as to the guarantor, the waiver must be contained in a document signed by the guarantor—the inclusion of the waiver in the mortgage to which the guarantor is not a party will not be effective. See S.C. Code Ann. &sect;29-3-680 (2007); Cf. Anderson Bros. Bank v. Adams, 305 S.C. 25, 28, 406 S.E.2d 173, 175 (1991) (a waiver in a mortgage not signed by a guarantor is not binding on guarantor).

ISSUES AND GUIDELINES RELATING TO SEEKING/OBTAINING DEFICIENCY

An action to foreclose a mortgage must be commenced within 20 years after the “date for the maturity of the lien.” S.C. Code Ann. &sect; 29-1-10 (2007). Presumably, the maturity date referred to is the maturity date of the mortgage indebtedness. If no maturity date is stated in the mortgage, the 20-year limitation period runs from the date of the mortgage. Id. Reflecting the 20-year enforceability of mortgages, the statute of limitations applicable to a promissory note secured by a mortgage is likewise 20 years. See S.C. Code Ann. &sect;&nbsp;15-3-520 (2005). Note that there is no requirement that the maturity date of the mortgage indebtedness be included in the mortgage instrument. In shorter term mortgage loans, it is common not to state a maturity date in order to avoid the possible need for a mortgage modification upon renewal of the mortgage debt. The 20-year limitation period on enforcement of mortgages can be extended if the holder of the mortgage records on the face of the recorded mortgage a note of payment received or acknowledgement of the debt secured by the mortgage. The 20-year statute of limitation will then run from the date of the notation of payment or acknowledge of the mortgage debt. Id. An assignment of a mortgage does not extend the 20-year enforcement period. See Curtis v. Renneker, 34 S.C. 468, 13 S.D. 664 (1891).

STATUTE OF LIMITATION PERIOD

A mortgagee that has received payment in full of the mortgage debt, or a tender of payment in full, must within three months after a request to do so satisfy the mortgage of record. The request may be made by any person having an interest in the mortgaged property or by any person who is a creditor of the mortgagor. The request must be sent to the mortgagor via certified mail or other method that provides for a proof of delivery. S.C. Code Ann. &sect;&nbsp;29-3-310 (2007). A mortgagee that fails to timely satisfy the mortgage after a proper request is liable to the requestor for an amount equal to one-half of the mortgage indebtedness, not to exceed $25,000, plus, at the discretion of the court, actual damages, costs, and attorneys' fees. A mortgage may be satisfied in multiple ways. First, the mortgagee or his attorney or agent may execute a mortgage satisfaction in a statutorily prescribed form. S.C. Code Ann. &sect;&nbsp;29-3-330(B)(3). This is the most commonly used method, and allows the mortgage to be released whether or not the mortgage debt has been paid in full. Second, a mortgagee may write on the face of the original mortgage instrument—in the presence of the recording officer for the county - the&nbsp; statement that “The debt secured is paid in full and the lien of this instrument is satisfied,” and have that statement witnessed by the recording officer. This procedure has several drawbacks - it does not provide for the release of the mortgage lien without the statement that the debt secured “is paid in full,” which may not always be the case. In addition, it requires the physical presentation of the original instrument to the recording officer. S.C. Code Ann. &sect;&nbsp;29-3-330 (B)(1). Third, a mortgage may be satisfied by the mortgagee writing satisfaction language across the face of the original mortgage in the presence of a witness, then recording the original mortgage with the added satisfaction language on its face. S.C. Code Ann. &sect; 29-3-330(B)(2). This approach requires the original instrument, and the commonly used language does not accommodate a release where the debt has not been paid in full. Fourth, a licensed South Carolina attorney may sign an affidavit in a statutorily prescribed form establishing that he obtained written payoff information and made the payoff. S.C. Code Ann. &sect;&nbsp;29-3-330(B(5). A satisfaction of mortgage recorded in error may be rescinded by filing a document of rescission. This rescission does not affect the rights of grantees or lien holders whose interest first appears of record after the recordation of the original satisfaction but before the filing of the document of rescission. S.C. Code Ann. &sect; 29-3-345 (2007).

REQUIREMENTS FOR RELEASE OF LIEN

South Carolina's homestead exemption cannot be asserted against a mortgagee, and therefore need not be waived. People's Bank of Campobello v. O'Shields, 167 S.C. 296,166 S.E. 351, 353 (1932) (“If one mortgages his land, he may not claim homestead in it, as against the mortgage”); Rosenberg v. Lewi, 7 S.C. 344, 350 (1876) ( “there can be no right of homestead as against the claim of the mortgagee”); Homestead Ass'n v. Enslow, 7 S.C. 1, 21 (1875) (“homestead cannot be claimed in mortgaged property until the mortgage is satisfied by payment”). Nevertheless, many mortgage forms contain a generic waiver of such exemptions. The homestead exemption amount is indexed for inflation and is currently $60,975 for a single individual and $121,950 for an individual and spouse owning the homestead jointly.

HOMESTEAD ISSUES

South Carolina is not a community property state, and does not recognize tenancies by the entireties. Spouses without an interest of record in the mortgaged property are not required to join in the execution of a mortgage or execute any waivers in connection with the execution of mortgage. Likewise, spouses without an interest of record in mortgaged property need not be named in foreclosure actions or join in the execution of a deed in lieu of foreclosure.

COMMUNITY PROPERTY

There is no mortgage tax in South Carolina.

MORTGAGE TAX

There is no documentary stamp tax or its equivalent with respect to promissory notes or other evidences of indebtedness. There is a transfer tax imposed in connection with recording of deed; that transfer tax, however, does not apply to (i)&nbsp;deeds from judicial officers to the mortgagee made at the conclusion of the foreclosure or (ii)&nbsp;deeds in lieu of foreclosure made to the mortgagee of record. See S.C. Code Ann. &sect;&nbsp;12-24-40 (2014). Deeds in lieu of foreclosure made to third parties (such as a subsidiary or affiliate of the mortgagee of record) will be subject to the transfer tax. Id. Likewise, deeds resulting from a foreclosure sale to a third party will be subject to the transfer tax. In most cases, the transfer tax amount is $1.85 per $500 of consideration. See S.C. Code Ann. &sect; 12-24-10., et seq.

DOCUMENTARY STAMP TAX AND TRANSFER TAX

South Carolina has no statute addressing choice of law provisions in mortgage transactions, and the South Carolina Courts have not adopted the position of the Restatement (Second) of Conflict of Laws &sect; 139. With respect to whether an interest in land has been created and the nature of that interest, the South Carolina courts hold that the law of the situs of the property applies. See S.C. Dep't of Parks v. Brookgreen Gardens, 309 S.C. 388, 393-94, 424 S.E.2d 465, 468 (1992); Leasing Enters., Inc. v. Livingston, 294 S.C. 204, 206-07, 363 S.E.2d 410, 411 (Ct. App. 1987) (citing with approval Restatement (Second) of Conflict of Laws, &sect; 223&nbsp;(2nd 1988)). A choice of law provision to the contrary as to nature and extent of real estate interests created is unlikely to be enforced. With respect to all matters relating to remedies, the South Carolina courts will apply the law of South Carolina in foreclosure actions. E.g., Thornton v. Dean, 19 S.C. 583, 586 (1883). Likewise, with respect to matters relating to procedure, South Carolina courts will apply the law of South Carolina, as the forum state. McDaniel v. McDaniel, 243 S.C. 286, 289, 133 S.E.2d 809, 811 (1963). As to other choice of law issues, the South Carolina courts generally follow the parties' choice of law, except where the application of that law would result in a violation of the public policy of the State. E.g., Team IA, Inc. v. Lucas, 395 S.C. 237, 248, 717 S.E.2d 103, 108 (Ct. App. 2011). Because there is no clear guidance as to those matters that may be deemed to violate public policy (and no clear demarcation of what constitutes remedial or procedural matters), the announced rule is not clear in its application. Cf. S.C. Code Ann. &sect; 36-1-301 (2003) (providing that the parties' choice of law in the Uniform Commercial Code context will be given effect if there is a reasonable relation between the transaction and the state the law of which is selected). It is common to see “split” choices of law provisions in mortgages reflecting the foregoing.

ENFORCEABILITY OF AGREEMENT OF BORROWER AND LENDER AS TO CHOICE OF LAW PROVISIONS

Provisions allowing the mortgagee to take possession of the mortgage property on default are not enforceable. In most cases, a mortgagee may have a receiver appointed by a court to take possession once a foreclosure action has been filed, but only if the mortgage (or other documents) expressly grant the mortgagee the right to a receiver and grant the mortgagee a lien on or interest in the rents and profits of the property. The appointment of a receiver is discretionary with the court; nevertheless, where there is an assignment of leases and rents a receiver will generally be appointed in a mortgage foreclosure action.

RECEIVERSHIP

No loan broker may assess or collect an “advance fee” from a borrower to provide services as a loan broker. S.C. Code Ann. &sect; 34-36-20 (1987). For purposes of this statute, a loan broker is a person who arranges or attempts to arrange or offers to find a loan of money or line of credit, or to assist another in finding a loan or line of credit, or holds himself out as a loan broker. Excluded from the definition of loan brokers are most institutional lenders and similar regulated entities. Id. Regulations regarding loan applications, loan fees or commitment fees for consumer mortgages are found in the South Carolina Consumer Protection Code.

ANY PROHIBITION OR SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES OR COMMITMENT FEES

There are no special requirements relating to mortgage modifications in South Carolina. Agreements modifying a mortgage should be in writing, supported by consideration, and signed by the parties to be bound. In order to be recorded, mortgage modifications must be executed with the same formalities as a mortgage. Generally, mortgage modifications to accommodate mere extensions and renewals do not result in a loss of priority, since at common law mortgages are deemed to secure renewals without a loss of priority. E.g., Hahn v. Smith, 157 S.C. 157, 164, 154 S.E. 112, 114 (1930). An exception to this rule is where the modification of the mortgage indebtedness is deemed to be a novation. Superior Auto. Ins. Co. v. Maners, 261 S.C. 257, 262, 199 S.E.2d 719, 721 (1973). The general practice is to update title in connection with the execution of a mortgage modification to determine whether there are intervening liens or other matters of title that might impact the mortgage lien's priority and to obtain a title insurance endorsement extending the policy's effective date to the date of the modification agreement's recordation.

MODIFICATION - UNUSUAL PROVISIONS OR SPECIAL REQUIREMENTS

South Carolina imposes a lien for certain environmental penalties. The lien is against the property of the person who has been charged with the penalties. The statute does not indicate what priority the lien will have. S.C. Code &sect;&nbsp;48-1-350 provides in part “all penalties assessed under this chapter are held as a debt payable to the State by the persons against whom they have been charged and constitute a lien against the property of such person &hellip;.”

ENVIRONMENTAL LIEN ISSUES

The South Carolina bar has issued a third party legal opinion report, which is available on the South Carolina Bar website at : <a href="https://www.scbar.org/media/filer_public/61/e4/61e4a4ae-ff43-43f4-bf1f-a8238f711c72/corporate_third_party_legal_report.pdf">https://www.scbar.org/media/filer_public/61/e4/61e4a4ae-ff43-43f4-bf1f-a8238f711c72/corporate_third_party_legal_report.pdf</a> No update to this report is currently planned. LABOR AND MATERIAL CLAIMS (“L&M LIEN”)—PRIORITY ISSUES: <ol>
 <li> INCEPTION OF L&M LIEN:</li>
</ol> The general rule is that a recorded mortgage has priority over subsequently filed L&M liens. S.C. Code Ann. &sect;&nbsp;29-5-70 (2007). For priority purposes as against mortgages, L&M liens do not relate back to the date of the underlying contract or the date the goods or services were provided - priority as against a mortgagee is based on the respective dates of filing and service of the L&M notice of lien compared to the date of filing of the mortgage. Although future advances made under a mortgage (such as construction loan advances) will generally have priority based on the original date of recordation of the mortgage, an L&M lien that is both filed in the appropriate filing office and served on the mortgagee will have priority over advances made under the mortgage after such filing and service. Even though advances made by the mortgagee have priority unless the mortgagee has been served with notice of the L&M lien, lenders customarily perform a title update and/or obtain a date down endorsement with respect to construction loan advances. The class of persons eligible to file L&M liens include (i) a person performing labor or furnishing materials for construction, surveyors, real estate brokers providing commercial leasing services (but not seller or buyer brokers), providers of landscaping services, persons providing rental equipment for use in construction, providers of private security guard services during construction, and architects, to the extent providing construction supervision services. See S.C. Code Ann. &sect; 29-5-10 (2007), et seq. <ol>
 <li> PRIORITY AS TO REMOVABLE FIXTURES:</li>
</ol> General Authority.&nbsp; There is limited authority in South Carolina as to this question. A mechanic's lien claimant only has a claim to the building and structure being constructed and the related land. S.C. Code Ann. &sect; &sect; 29-5-10 & 20 (2007). Thus to the extent removable fixtures are not deemed part of the building or structure, the removable fixtures would not be subject to a mechanic's lien in the first instance. See Kitchen Planners, LLC v. Friedman, 432 S.C. 267, 277, 851 S.E.2d 724, 730 (Ct. App. 2020). To the extent that the removable fixtures were deemed part of the building or structure, those fixtures would subject to the lien of any existing mortgage - the general rule is that a mechanic's lien is not enforceable against a previously filed mortgage. S.C. Code Ann. &sect; 29-5-70 (2007). Manufactured Homes: Historically in South Carolina, a manufactured home was considered to be personal property instead of real property. Typically, perfection of security interests in manufactured homes would be under the Certificate of Title statute (See S.C. Code &sect;&sect;&nbsp;56-19-220(9) and 56-19-620). However, under appropriate circumstances the manufactured home can become a fixture that makes it part of the real property to which it is affixed. S.C. Code &sect;&nbsp;56-19-500 et seq. provides a specific procedure to retire a Certificate of Title to a manufactured home that is affixed to real property and to provide for a procedure by which a manufactured home that is affixed to real property may be subject to a mortgage covering that same real property. If the manufactured home can be considered “affixed” under this statute, a Manufactured Home Affidavit for Retirement of Title Certificate (“Affidavit”) is recorded with the Register of Deeds (or Clerk of Court, if appropriate) for the county in which the manufactured home is located, as though the Affidavit were a deed to real property, with the homeowner (a defined term in the statute) being identified as “grantor.” Thereafter, the manufactured home is treated for all purposes except condemnation as real property. A lien on the home, especially a new home, would generally be reflected in a mortgage on the real property to which is it affixed. However, if any lien is reflected in the Affidavit but not evidenced by a mortgage, a separate Manufactured Home Lien Affidavit can be filed with the Register of Deeds (or Clerk of Court), identifying the owner of the home as the “mortgagor” and the secured party(ies) as the “mortgagee(s).” Any lien on the manufactured home at the time of retirement of the title certificate must be perfected and have priority in the manner provided for a lien on real property. See S.C. Code &sect;&sect;&nbsp;56-19-500 et seq.

LEGAL OPINIONS.

FORM USUALLY REQUIRED BY LENDER

ALTA 3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Zoning -- Unimproved Land ALTA 3.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Zoning - Completed Structure ALTA 3.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Zoning - Land Under Development ALTA 4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Condominium - Assessments Priority ALTA 4.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Condominium - Current Assessments ALTA 5-06 &nbsp;&nbsp;&nbsp;&nbsp; Planned Unit Development - Assessments Priority ALTA 5.1-06 &nbsp; Planned Unit Development - Current Assessments ALTA 6 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Variable Rate ALTA 6.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Variable Rate, Negative Amortization ALTA 8.2-06 &nbsp; Environmental Protection Lien - Commercial ALTA 9-06 &nbsp;&nbsp;&nbsp;&nbsp; Restrictions, Encroachments, Minerals ALTA 9.3-06 &nbsp; Covenants, Conditions and Restrictions ALTA 9.6.06 &nbsp; Private Rights ALTA 9.6.1-06 Private Rights - Current Assessments ALTA 9.7-06 &nbsp; Restrictions, Encroachments, Minerals - Land Under Development ALTA 9.10-06 Restrictions, Encroachments, Minerals - Current Violations ALTA 10-06&nbsp;&nbsp;&nbsp; Assignment ALTA 10.1 &nbsp;&nbsp;&nbsp;&nbsp; Assignment and Date Down ALTA 11 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage Modification ALTA 11.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage Modification with Subordination ALTA 11.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mortgage Modification with Additional Amounts of Insurance ALTA 12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Aggregation ALTA 12.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Aggregation - State Limits ALTA 13.1-06 Leasehold ALTA 14 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Future Advance - Priority ALTA 14.1 &nbsp;&nbsp;&nbsp;&nbsp; Future Advance - Knowledge ALTA 14.2 &nbsp;&nbsp;&nbsp;&nbsp; Future Advance - Letter of Credit ALTA 14.3-06&nbsp; Future Advance - Reverse Mortgage ALTA 15-06 &nbsp;&nbsp; Non-Imputation - Full Equity Transfer ALTA 15.1-06 Non-Imputation - Additional Insured ALTA 15.2-06 Non-Imputation - Partial Equity Transfer ALTA 16-06 &nbsp;&nbsp; Mezzanine Financing ALTA 17-06 &nbsp;&nbsp; Access and Entry ALTA 17.1-06 Indirect Access and Entry ALTA 17.2-06 Utility Access ALTA 18-06 &nbsp;&nbsp; Single Tax Parcel ALTA 18.1-06 Multiple Tax Parcel - Easements ALTA 18.2-06 Multiple Tax Parcel ALTA 19-06 &nbsp;&nbsp; Contiguity - Multiple Parcels ALTA 19.1-06 Contiguity - Single Parcel ALTA 19.2-06 Contiguity - Specified Parcels ALTA 20-06 &nbsp;&nbsp; First Loss - Multiple Parcels Transactions ALTA 22-06 &nbsp;&nbsp; Location ALTA 22.1-06 Location and Map ALTA 24-06 &nbsp;&nbsp; Doing Business ALTA 25-06 &nbsp;&nbsp; Same as Survey ALTA 25.1-06 Same as Portion of Survey ALTA 26 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subdivision ALTA 27&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Usury ALTA 28-06&nbsp;&nbsp;&nbsp; Easement - Damage or Enforced Removal ALTA 28.1 &nbsp;&nbsp;&nbsp;&nbsp; Encroachments, Boundaries and Easements ALTA 28.2-06 Encroachments, Boundaries and Easements - Described Improvements ALTA 28.3-06 Encroachments - Boundaries and Easements - Land Under Development ALTA 29.06&nbsp;&nbsp;&nbsp;&nbsp; Interest Rate Swap-Direct Obligation ALTA 32 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Construction Loan - Loss of Priority ALTA 33-06 &nbsp;&nbsp; Disbursement ALTA 34-06 &nbsp;&nbsp; Identified Risk Coverage ALTA 35-06 &nbsp;&nbsp; Minerals and Other Subsurface Substances - Buildings ALTA 35.1-06 Minerals and Other Subsurface Substances - Improvements ALTA 35.2-06&nbsp; Minerals and Other Subsurface Substances - Described Improvements ALTA 35.3-06&nbsp; Minerals and Other Subsurface Substances - Land Under Development ALTA 36.1-06 Energy Project - Leasehold/Easement ALTA 36.3-06 Energy Project - Leasehold ALTA 36.5-06 Energy Project - Covenants, Conditions & Restrictions - Land Under Development ALTA 36.8-06 Energy Project - Fee Estate - Loan Policy ALTA 37-06 &nbsp;&nbsp; Assignment of Rents or Leases ALTA 39-06 &nbsp;&nbsp; Policy Authentication ALTA 41-06&nbsp;&nbsp;&nbsp; Water - Buildings ALTA 41.1-06&nbsp; Water - Improvements ALTA 41.2-06&nbsp; Water - Described Improvements ALTA 41.3-06&nbsp; Water - Land Under Development ALTA 42-06&nbsp;&nbsp;&nbsp; Commercial Lender Group ALTA 43-06&nbsp;&nbsp;&nbsp; Anti-Taint ALTA 44-06&nbsp;&nbsp;&nbsp; Insured Mortgage Recording ALTA 45-06&nbsp;&nbsp;&nbsp; Pari Passu

ENDORSEMENTS AVAILABLE (AND TYPICALLY REQUESTED, WHEN APPLICABLE, FOR COMMERCIAL LOAN POLICIES)

A borrower has the right to pay a mortgage loan in full without premium or penalty if the amount secured is less than $630,000. S.C. Code Ann. &sect; 37-10-103 (2002); South Carolina State Register Vol. 46, Issue 3 (March 25, 2022). This amount is indexed for inflation, and adjusted periodically by the South Carolina Department of Consumer Affairs. Otherwise, prepayment on a mortgage loan is likely not permitted absent authorization in the loan documents. See Land v. Reese, 136 S.C. 267, 134 S.E. 252 (1926)(dissenting opinion).

LIMITATIONS ON PREPAYMENT

A mortgagee may not require, as a condition of making a mortgage loan, that the mortgagor purchase casualty insurance in excess of the replacement cost of the improvements on the mortgaged property. S.C. Code Ann. &sect; 29-3-70 (2007).

LIMITATIONS ON INSURANCE

The South Carolina Supreme Court has issued a series of unauthorized practice of law decisions requiring the supervision and involvement of an attorney licensed in South Carolina in transactions affecting South Carolina real estate. Under these cases, South Carolina attorneys must review and approve the form of the real estate related documents, and review and approve or supervise the title examination, closing, recordation, and disbursement. These decisions all relate to residential transactions; the extent to which these decisions also apply to commercial transactions is not clear. The Court has, however, been aggressive in sanctioning South Carolina attorneys for participating in transactions in which the required South Carolina attorney participation was not present. Further, the Court has held that mortgages resulting from transactions involving the unauthorized practice of law may be unenforceable. In practice, many mortgage lenders require a certificate executed by their South Carolina counsel, mortgagor's South Carolina counsel, and the title company's South Carolina counsel, documenting compliance with these unauthorized practice of law rules. Mortgage lenders are advised to consult with South Carolina counsel in connection with South Carolina mortgage loan transactions, particularly if the closing is an escrow closing conducted by a title company and not by South Carolina counsel.

REQUIRED INVOLVEMENT BY SOUTH CAROLINA LICENSED ATTORNEYS

South Carolina has enacted a lender liability statute of frauds, providing that no action may be brought on an alleged promise made by lender to make a loan, to defer or forebear in the repayment of the loan, or to renew modify amend or cancel a loan or any provision of the loan, unless there is a writing signed by the lender containing the material terms and conditions of the promise. See S.C. Code Ann. &sect; 37-10-107 (2002). The act is based on the Model Lender Liability Limitation Statute promulgated by the Task Force on Lender Liability Limitation Amendments to State Statutes of Fraud of the Business Law Section of the American Bar Association. The model act is discussed in detail in John L. Culhane, Jr. & Dean C. Gramlich, Lender Liability Limitation Amendments to State Statutes of Fraud, 45 Bus. Law. 1779, 1792 (1990).

LENDER LIABILITY STATUTE OF FRAUDS

South Carolina recognizes the “two fund doctrine.” Under this equitable doctrine, where a creditor holds a lien on two separate properties of a debtor, one of which is also encumbered by a junior lien, the creditor may be required to first pursue the parcel not subject to the junior lien. E.g., Pace v. Still, 167 S.C. 415, 166 S.E. 494 (1932).

MARSHALING

Electronic recording is permitted in South Carolina, but has not yet been implemented in all counties.

ELECTRONIC RECORDING

Where a junior lien holder is inadvertently omitted from a foreclosure action, a separate action can be brought to have the omitted lien extinguished. See, e.g., Green Tree Servicing, LLC v. Adams, 375 S.C. 583, 654 S.E.2d 100 (Ct. App. 2007).

OMITTED LIENHOLDERS

The general rule is that a transfer of a promissory note automatically transfers any mortgage securing the note. E.g., Hahn v. Smith, 157 S.C. 157, 164, 154 S.E. 112, 114 (1930). The better practice, is, however, to execute and record a formal mortgage assignment as well. If this is done in a separate instrument, the assignment must be executed with the same formalities as would be applicable to the execution of mortgage, and include the name of the mortgagor, the name of the mortgagee, the name of the assignee, and the book, page, and recording date of the original mortgage being assigned. See S.C. Code Ann. &sect; 30-7-50 (2007). An assignment of mortgage will not be effective against subsequent purchasers or creditors without notice unless it is recorded. S.C. Code Ann. &sect;&nbsp;30-7-30 (2007). Failure to record, however, will not otherwise affect the validity of the assignment. See BAC Home Loan Servicing v. Kinder, 398 S.C. 619, 731 S.E.2d 547 (2012).

ASSIGNMENT OF MORTGAGES

Due on sale clauses are generally enforceable in South Carolina, on the grounds that a lender has the right to choose with whom it wishes to contract, and that equitable powers are unavailable to force the acceptance of an unwanted debtor. See, e.g., Security Federal Sav. & Loan Assoc. v. Coleman, 284 S.C. 394, 325 S.E.2d 546 (1984). The mortgagee must, however, exercise the due on sale clause within a reasonable time after the transfer of the mortgaged property. See Rakestraw v. Dozier Assocs., Inc., 285 S.C. 358, 360, 329 S.E.2d 437, 438 (1985).

DUE ON SALE CLAUSES

South Carolina recognizes the doctrine of equitable subrogation, which allows a mortgagee that has paid the mortgage indebtedness secured by a third party's prior mortgage to be subrogated to the priority of that paid mortgage, provided certain conditions are met. See ArrowPointe Fed. Credit Union v. Bailey, 432 S.C. 373, 378, 852 S.E.2d 473, 475 (Ct. App. 2020). South Carolina has not adopted the doctrine of a replacement mortgage as set forth in the Restatement (Third) of Property (Mortgages) &sect; 7.3. Id.

EQUITABLE SUBROGATION

Recordation under the South Carolina recording statutes only provides protection against subsequent creditors without notice, i.e., creditors who extended credit after the date of the instrument in question, and who are without notice of the instrument. See S.C. Code Ann. &sect; 30-7-10 (2007). Thus, a mortgagee is not protected by the South Carolina recording acts from priority claims of prior or simultaneous creditors, irrespective of notice, and a mortgagee is not protected against claims of subsequent creditors with notice. See, e.g., Crystal Ice Co. v. First Colonial Corp., 273 S.C. 306, 257 S.E.2d 496 (1979); Prudential Ins. Co. v. Wadford, 232 S.C. 476, 102 S.E.2d 889 (1958). Thus, in transactions known to involve multiple mortgages on a single parcel the time of recording does not necessarily govern priority; rather, priority is determined by common law priority rules, principally first in time, first in right. Accordingly, a mortgagee in transactions involving multiple mortgages is advised to consider formal intercreditor agreements or subordination agreements contractually establishing the desired priorities, and to not rely simply on time or order of recording.

SCOPE OF THE SOUTH CAROLINA RECORDING ACT

Although generally enforceable in South Carolina, subordination agreements are strictly construed. Any change in the senior indebtedness (such as a renewal or extension of such indebtedness) will vitiate the subordination agreement, resulting in a loss of priority for the intended senior lien. See Citizens & S. Nat'l Bank v. Smith, 277 S.C. 162, 163, 284 S.E.2d 770, 770 (1981).

SUBORDINATION AGREEMENTS

Standing timber is considered to be part of the mortgaged property, and a mortgage will effectively grant a lien on all standing timber on the mortgaged property even if not expressly referenced in the mortgage. Epstein v. Coastal Timber Co., 393 S.C. 276, 278, 711 S.E.2d 912, 914 (2011). Compliance with the Uniform Commercial Code is not required to create the lien on standing timber subject to the mortgage. Id.

STANDING TIMBER

After the filing of a master deed, a mortgage lien can only be obtained on the units—a mortgage executed after the master deed purporting to encumber the underlying land will be void. See Resolution Tr. Corp. v. Eagle Lake & Golf Condos., 310 S.C. 473, 475, 427 S.E.2d 646, 647 (1993); S.C. Code Ann. &sect; 27-31-230 (2007). As a result, a mortgage on land to be part of a condominium project executed may need to be amended upon filing of the master deed to substitute a property description referring to the condominium units rather than the land.

MORTGAGES ON CONDOMINIUM PROPERTY

Pre-sale deposits and pre-construction deposits for the purchase of condominium units paid prior to the execution of the construction mortgage may create an equitable lien in favor of the depositing purchasers. Even though not appearing of record, these equitable liens may have priority over a subsequent construction mortgage. See S.C. Fed. Sav. Bank v. San-A-Bel Corp., 307 S.C. 76, 77, 413 S.E.2d 852, 853 (Ct. App. 1992). &nbsp;

South Carolina

Mortgage Law Summary

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Mortgage Law Summary for South Carolina

South Carolina

Mortgage Law Summary

Continue reading theMortgage Law Summary for South Carolina

Continue reading the
Mortgage Law Summary for South Carolina