Recent South Carolina Ruling Deems HOA Foreclosure to “Shock the Conscience”

Recent South Carolina Ruling Deems HOA Foreclosure to “Shock the Conscience”

Unbeknownst to many homeowners—even those who live within the purview of a homeowner’s association, or “HOA”—a South Carolina homeowner’s association has the legal right to foreclose on its members’ properties in order to collect unpaid fees and assessments.

An HOA’s right to foreclose on an individual’s home has recently been limited, however. In a December 2019 ruling from the South Carolina Supreme Court, an HOA foreclosure in Richland County was deemed to be unconscionable, leading the state’s Supreme Court to reverse the decision and remand the case to the Master-in-Equity to be argued and decided again. The Boger Law Firm is honored to have represented the homeowners’ of this action alongside South Carolina attorney Kathleen Barnes.

South Carolina HOA Lien Leads to Foreclosure

Over two decades ago, Devery and Tina Hale purchased their home in Irmo, South Carolina. The couple had been making timely mortgage payments ever since their purchase, and had accrued over $60,000 equity in the property as a result.

In 2011, the couple fell behind on their homeowner’s association dues, accruing a bill of $250. As a result, the HOA filed a lien on the Hales’ property. The Hales’ troubles did not end there; the homeowner’s association subsequently filed an action for foreclosure, seeking the sale of the Hales’ property to satisfy the outstanding HOA balance of $566.41. The Hales inadvertently failed to respond to the Complaint, and counsel for the HOA subsequently filed an affidavit of default. Following this action, the Hales received no further notice with regard to the lawsuit. While the lawsuit was pending, the HOA sent the Hales a bill for $250.00 for the past-due regime fees. The Hales paid this bill promptly, and even received a notice from the law firm representing the HOA that the lien had been satisfied. What the Hales did not know, however, was that although the HOA satisfied the lien, it did not withdraw the lawsuit.

Shortly after the satisfaction of the judgment, the Richland County Master-in-Equity entered a Judgment of Foreclosure and Sale against the Hales, entitling the HOA to a little under $3,000 in damages–$2,000 of which was attributed to attorney’s fees for the law firm representing the HOA. The Hales were never served with the Master-in-Equity’s order, and were thus unaware that their home was to be sold at public auction.

A Couple’s Battle to Save their Home from HOA Foreclosure

Devery and Tina Hale’s home of twenty-one years—a home valued at $128,000—was purchased at public auction by Regime Solutions, LLC in 2014 for just $3,036.

Having received no notice of the Master-in-Equity’s order allowing the property to be sold, the news of losing their home came as a shock to the Hales. According to an affidavit submitted by Tina Hale, “[i]n November, we received a letter from the law firm of [the HOA] telling us that the Lien had been Satisfied . . . . I thought that everything was OK after that. The next thing I know, someone is knocking on my door telling me that they bought my home and that me and my family were being evicted.”

Once the Hales were aware that their home had been purchased from the foreclosure sale, the family offered Regime Solutions $9,000 to re-purchase their home. In return, Regime Solutions offered to sell the Hales’ property back to them for the sum of $35,000. The Hales filed a motion to vacate the sale shortly after, arguing that Regime Solutions’ winning bid was grossly inadequate in comparison to the value of the home.

South Carolina Supreme Court Overturns Sale of Hales’ Home

In December of 2019, the South Carolina Supreme Court issued an opinion reversing the decision of the Master-in-Equity and remanding the case to be re-heard. In its opinion, the Supreme Court stated that Regime Solutions purchased the Hales’ property for less than 5% of the property’s value, and went on to say that “Regime’s winning bid was so grossly inadequate as to shock the conscience of the court” and that Regime Solutions “bought [the property] for a pittance.”

The Court further stated that it was “especially troubled by Regime’s participation in a foreclosure proceeding to accommodate its business model of leveraging a nominal debt to secure an exorbitant return from homeowners who fear the process of eviction,” and referenced Regime Solutions’ $35,000 counter-offer to the Hales “as evidence of Regime’s manipulation of a foreclosure proceeding to engage in strong-arm tactics.

In his concurring opinion, South Carolina Supreme Court Chief Justice Donald Beatty stated that “[t]o allow the hard-earned equity to be confiscated by a bidder’s minimal investment is unconscionable.”

To read the full opinion from the South Carolina Supreme Court, click here.

Facing an HOA Foreclosure? Call Today

The Boger Law Firm is honored to have been able to assist the Hales in saving their home from HOA foreclosure. If you are a South Carolina homeowner and find yourself in the middle of an HOA foreclosure, the team of attorneys at the Boger Law Firm are standing by to help you with your case. To speak with a member of our legal team about HOA foreclosures today, fill out an online contact form or call (803) 252-2880 today.


HOA Foreclosures Exist–Here’s What You Should Know

If you are a homeowner in South Carolina, your property may be governed by a homeowner’s association (HOA). As a member of an HOA, you are likely subject to monthly or yearly assessments to the association. If you find yourself in a sticky financial situation, paying your HOA dues may be low on your list of priorities. It’s critical to make these payments, however, as failure to do so can actually put your homeownership in jeopardy.

The Power of the South Carolina HOA

A homeowner’s association is a nonprofit organization which collects monthly or yearly dues—otherwise known as assessments—for the upkeep of the neighborhood or subdivision. Don’t be fooled into thinking that your HOA is just a neighborhood group that keeps the pool cleaned and the lawn mowed, however; in South Carolina, homeowner’s associations have a great deal of power. The authority of your HOA is laid out in governing documents called bylaws, and the rules put in place for homeowners are established in the HOA’s covenants, conditions and restrictions (CC&Rs).

When it comes to homeowner’s associations, there’s one important fact to take away from this article: unless your HOA’s assessments are specified as optional, they absolutely must be paid. The repercussions for nonpayment can be much more severe than a stern letter from the association or nasty stares from the HOA’s board members.

HOA Liens

In South Carolina, homeowner’s associations can place a lien on your property if you have not paid your association dues or fail to pay any fines levied against you for nonconformity with the HOA’s CC&Rs. If you don’t pay off the lien, then you won’t be able to sell your home in the future, or will have to satisfy the lien from the proceeds of your home sale.

HOA Foreclosures

The most significant power that your HOA has is one that is not common knowledge to homeowners—in South Carolina, your homeowner’s association can actually initiate an action for foreclosure of your home for nonpayment of your HOA assessments or unpaid fines. Put another way, your homeowner’s association has the power to take your home away from you if you do not pay your assessments or fines.

To make matters worse, an HOA foreclosure does not eliminate your mortgage obligation; rather, your lender will expect you to make your regular monthly mortgage payment for a home that you don’t own anymore. Failure to make your mortgage payments can lead to another foreclosure action by your lender.

While HOA foreclosures seem like an anomaly, these actions do occur, and they happen more frequently than you might think. In fact, there are law firms in South Carolina whose sole business is to foreclose on homes on behalf of homeowner’s associations.

Facing Foreclosure From Your HOA? Contact Us Today

If your South Carolina property is being foreclosed upon by your homeowner’s association for delinquent assessments or fines, it’s critical to seek legal assistance as soon as possible. The Boger Law Firm is dedicated to helping those who are facing HOA foreclosures, and have fought on behalf of clients facing foreclosure for over a decade. Don’t wait until it is too late to get the help you need to save your home—to schedule an appointment to speak with a member of our legal team about your foreclosure today, fill out an online contact form or call (803) 252-2880 today.