Creditors' Rights

On April 26, 2019, the Governor of South Carolina signed House Bill 3180 to enact the South Carolina Servicemembers Civil Relief Act. The Act took effect on April 26, 2019 and its provisions are applicable to contracts entered into, extended, or amended on or after July 1, 2019. The Act is intended to expand and supplement the protections of the federal Servicemembers Civil Relief Act. The definition of “military service” will affect South Carolina National Guardsmen who are on active duty for a period of more than thirty days.

South Carolina Department of Revenue Law Change:

The South Carolina Legislature has passed a new law that has far-reaching implications for those searching land records in the state of South Carolina. Traditionally, the South Carolina Department of Revenue has filed tax liens against individual taxpayers for non-payment of state taxes by filing a lien with the county recorder in the county where the taxpayer resides. The tax lien would then become a lien against any real property owned by the taxpayer in that particular county for a period of ten years.

SC Supreme Court Finds Lender’s Loan Application Process Did Not Violate the South Carolina Attorney Preference Statute

In an October 2, 2018 published opinion from the North Carolina Court of Appeals, the Court confirmed that a lender who lost the original promissory note while it was in physical possession of the original note may proceed with a power of sale foreclosure proceeding before the Clerk of Court. In In re Frucella, No. COA 18-212 (October 2, 2018), the homeowners appealed the Clerk’s order authorizing a foreclosure sale for a hearing de novo before a Superior Court judge.

Summer 2018: A few noteworthy legislative actions and some judicial guidance took place in North Carolina over the last several months that are important.

The old Scrivener’s Affidavit Gets Some Teeth

A new statute in North Carolina creates a process by which some legal description errors can be corrected without litigation.

Appellate Court upholds dismissal of Debtor’s claims due to failure make timely payments outlined in a loan modification plan

They say that there’s a time and a place for everything in life. For a while, the North Carolina courts were having quite a time deciding when a loan modification agreement amounted to a mere offer from the lender, and when the agreement became a contract that bound both parties.

North Carolina Session Law 2018-40, which became effective on July 1, 2018, amends portions of N.C.G.S. § 45-21.21. The amendments revise the procedure for postponing a foreclosure sale and set forth a new procedure for canceling a foreclosure sale.

In re: Tacket: Davidson County, North Carolina File No. 17 CVS 1059

In a small county in the Piedmont region of North Carolina (best known for arguably being the ‘Barbeque Capital of the World’), a recent ruling has some foreclosure lawyers scouring their Notice of Foreclosure Sale templates and others wondering if previous foreclosure sales could end … up in smoke.

By John S. Kay
Hutchens Law Firm – USFN Member (SC)

Earlier this month, the North Carolina Court of Appeals rejected a challenge to a foreclosure special proceeding based on res judicata in Roberson v. Tr. Services of Carolina, LLC, No. COA17-1152. In this decision, the Court of Appeals reaffirmed the seminal 2016 Supreme Court decision, Matter of Lucks, limiting the applicability of the doctrine in the context of non-judicial foreclosure.

The Fourth Circuit Court of Appeals recently ruled that the anti-modification provision of 11 USC 1322 does not prevent junior liens that are completely “underwater,” from being stripped, regardless of whether or not the creditor filed a proof of claim. In Burkhart v. Grigsby, 886 F.3d 434 (2018), the Fourth Circuit Court of Appeals held that whether or not a Chapter 13 debtor may strip off mortgage liens is decided by the application of 11 USC § 1322(b) and not 11 USC §506(d).

North Carolina’s Supreme Court Delineates Crucial Differences Between Power of Sale Foreclosures and Judicial Foreclosures

A non-judicial foreclosure by power of sale is the more common, stream-lined method to foreclose a deed of trust in North Carolina. To allow a sale in a non-judicial foreclosure, the court must find the existence of only six factors. One of those six findings is whether there exists a “valid debt of which the party seeking to foreclose is the holder.”N.C. Gen. Stat. §45-21.16(d) (emphasis added).

North Carolina: Amendment to the Substitute Trustee Statute
by Terry Hutchens | Hutchens Law Firm LLP – USFN Member (North Carolina, South Carolina)
and Jim Bonner | Brock & Scott, PLLC – USFN Member (North Carolina)

In response to questions concerning the recent amendment to N.C.G.S. § 45-10: Substitution of trustees in mortgages and deeds of trust, the following overview and guidance are provided.

South Carolina: Bankruptcy Court Moves to Conduit Mortgage Payments Effective October 1, 2016. 

By John B. Kelchner and John S. Kay | Hutchens Law Firm – USFN Member (SC)