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Unloading Beasts of Burden: SC’s New Expedited Foreclosure Law

South Carolina’s real estate market is not yet out of the woods from recession woes. According to a June 2013 RealtyTrac nationwide study, South Carolina ranks ninth in the nation for the number of abandoned properties in foreclosure. South Carolina’s ranking is ahead of its neighboring states, Georgia and North Carolina, despite having half as many housing units as these states.   

Part of the reason for this undesirable ranking is that South Carolina only recognizes judicial mortgage foreclosures, which require lenders to foreclose their mortgage liens against real estate through civil actions in the state’s circuit courts. Because the courts’ rosters are still overwhelmed with foreclosure actions related to the recession, lenders are being forced to endure protracted legal proceedings (over one year, on average) to reach a judicial sale for even these abandoned properties. This delay causes significant problems, because lenders cannot maintain or repair the properties during the foreclosure process since the borrower retains title until the foreclosure sale is complete. As a result, these abandoned properties continue to deteriorate while the foreclosure is pending.

To combat this issue, lenders have sought help from South Carolina’s legislature to streamline the foreclosure process to help deal with these abandoned properties. On June 2, 2014, Governor Nikki Haley signed SC S1007 into law, allowing lenders to file a motion asking the court to expedite the foreclosure and sale of an abandoned property.  To qualify for this expedited process, the lender must certify to the court that the property meets the statutory requirements to be considered abandoned. The new law requires the expedited foreclosure to be considered a priority matter under the South Carolina Rules of Civil Procedure, and therefore heard and disposed of by the court as soon as possible. 

The streamlined foreclosure process will be a win-win. It should help free up courts burdened with foreclosure filings and help lenders more efficiently deal with deteriorating properties in order to best salvage these assets. 

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