Real Property – Mortgages – Foreclosure Sale – Law of the Case – Equities

In this mortgage foreclosure sale case, because the special referee determined there were alleged irregularities in the events preceding the sale, yet the respondent-Mortgagors did not present any evidence of irregularities with the sale proceeding itself, the special referee abused its discretion.

We reverse the special referee’s order vacating the judicial sale.

Mortgagors claim the mortgaged property was their residence and was therefore subject to a 2011 administrative order regarding loan modification; however, Mortgagors failed to appeal a ruling in this case that the 2011 administrative order did not apply because the mortgage was a business line of credit. Consequently, the law of the case was that the 2011 administrative order did not apply, and the special referee erred in subsequently finding that the 2011 administrative order applied.

Where the appellant-Buyers (1) satisfied their bid in full, (2) received the deed pursuant to an order from a special referee, and (3) purchased the property in good faith and without notice of defect, the Buyers were bona fide purchasers without value without notice. The buyers determined from filings that (1) Mortgagors did not respond to the Mortgagee’s pleadings, (2) the special referee determined Mortgagors were in default, (3) the 2011 administrative order did not apply, and (4) they had no notice of any alleged irregularities in the underlying lawsuit.

Mortgagors’ claims of defective service in the underlying foreclosure action did not affect Buyers’ status as bona fide purchasers for value without notice. We are required to presume the proceedings leading to the foreclosure sale were sufficient. Therefore, we conclude the special referee erred in not affording Buyers protection under S.C. Code Ann. § 15-39-870 as bona fide purchasers for value without notice and by not determining res judicata barred Mortgagors’ claims. Accordingly, we reverse the special referee’s finding that Buyers were not bona fide purchasers for value without notice.

The special referee also erred in weighing the equities of each party’s potential loss in vacating the foreclosure and setting aside the judicial sale. The referee should have examined whether the sale was accompanied by other circumstances warranting the interference of the court. Because the special referee determined there were alleged irregularities in the events preceding the sale and Mortgagors did not present any evidence of irregularities with the sale proceeding itself, the special referee abused its discretion. Accordingly, we reverse the special referee’s determination that the equities weighed in favor of vacating the foreclosure and setting aside the sale.

Finally, where Buyers’ bid amount was 32 percent of what Mortgagors paid for the subject property and 33 percent of the assessed value, the bid amount was greater than ten percent, which is the percentage our appellate courts have generally applied to determine adequacy of a sale price at a judicial sale absent other circumstances. Accordingly, we reverse the special referee’s finding that Buyers’ bid amount was unacceptable because it shocked the conscience.

Reversed.

Buffalo Creek Investments, Inc. v. Pettus (Lawyers Weekly No. 011-031-23, 10 pp.) (James Lockemy, A.J.) Appealed from Lancaster County (Wilson Davis, Special Referee) Walter Keith Maretns for appellants; Stephen Pettus, pro se; Christopher Gravley, pro se. South Carolina Court of Appeals