Foreclosure procedures in SC

Started by RobertR1 • 4 replies • 1520 views

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RobertR1 (South Carolina)
Posts: 5,164

Posted:

George in particular, but I sure would like to hear some interpretations of the SC Code.

http://www.scstatehouse.gov/CODE/t27c031.htm

Above is the Statute of Law for Condominiums in SC. It is know as the Horizontal Property Act. Of course we also have of CC&R's and they rank just Junior to the Act.

Of interest are sections: 21-31-200, 21-31-210, and 21-31-220.

Specific under 21-31-210, section (a) and (b) deal with collection of unpaid assessments and specific during Foreclosure proceedings. If I read this right, it says ANY uncollectable assessments at the time of title transfer shall become a debt to all the remaining owners in the condo, at the prorata share.

I think I am the only one in my place that even wants to read this, let alone deal with it. If I am right.....of course.

Now I know we have got some sharp folks out there........
I would copy just these sections but they are all connected and that would make the post too long.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Quote:

Posted By RobertR1 on 01/07/2009 7:01 AM
George in particular, but I sure would like to hear some interpretations of the SC Code.

http://www.scstatehouse.gov/CODE/t27c031.htm

Above is the Statute of Law for Condominiums in SC. It is know as the Horizontal Property Act. Of course we also have of CC&R's and they rank just Junior to the Act.

Of interest are sections: 21-31-200, 21-31-210, and 21-31-220.

Specific under 21-31-210, section (a) and (b) deal with collection of unpaid assessments and specific during Foreclosure proceedings. If I read this right, it says ANY uncollectable assessments at the time of title transfer shall become a debt to all the remaining owners in the condo, at the prorata share.

I think I am the only one in my place that even wants to read this, let alone deal with it. If I am right.....of course.

Now I know we have got some sharp folks out there........
I would copy just these sections but they are all connected and that would make the post too long.

The section of the South Carolina horizontal property law that you referenced seems pretty standard to me. In most states that still rely on horizontal property laws it is not much different.

The section you cite simply extinguishes any lien for unpaid assessments in a foreclosure, so that title transfers free and clear. It means that the other owners have to eat the unpaid dues (i.e., the association has to write off the uncollected fees). It is the exception I noted in my posting about liens (particularly in developments to which horizontal property laws do not apply), to wit:

"Now, in many covenant documents there is language for the protection of first mortgagees that extinguishes a lien for unpaid dues if, and only if the mortgage is foreclosed. That is relatively unique to homeowners association dues."

As an aside, a lot of covenant language I have reviewed is clearly intended to mimic sections of horizontal property law that apply only to condos, not to other forms of common interest associations. Without specific statutes in many states, covenant language becomes controlling.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

George,
I am still confused.

21-31-210 specifically says these assessments that are not paid will be assessed to the remaining owners on a pro rata share. Do you then write this money off as the arrears of the remaining members.

In other words if my prorata share of this total arrears is $500.00. is that written off as a bad debt by me. If so, then the Board can give this debt to the Collection Agency and they can ruin my credit rating. I am not sure I want this to happen because I spun up a Board Member. Something I have been known to do.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

I think you are reading more into this statute than is there. I can understand, though, the interpretation you are giving it. The language is a round about way of saying that the association has to absorb the unpaid assessment as an uncollectable (i.e. bad) debt of the association, not individual members.

In figuring out how to cover the debt, the association must prorate the amount among all members.

Basically, it means that the association has the right to tack the bad debt expense on to the amount you owe the association. Your dues goes up to cover the uncollectable dues of foreclosed properties.

I don't know why the particular section uses this language, although I have seen it before in other state's horizontal property statutes. My guess is that there is some good reason it was written this way. (Alternately, it is another example of lawyerese.)

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Damn George, you got me thinking.

This "right of the Board" that you speak of, does this mean they have the option of prorating this? Or does it mean they must do it, but can also selectively use this "bad debt figure" to adjust the budget, or not to adjust the budget or does it mean the Board can ignore the whole thing and just forget it, as they do with other bad debts, and just write it off. Of course I don't know how you can write off a bad debt to a non-profit organization, unless they adjust their budget. I suppose they could adjust the new proposed budget to reflect the deficit of money. It would be nice to see a legal ruling. Anyone know of any state agencies that would provide a case law on this subject. I would be glad to write them.

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