USA – SOUTH CAROLINA Law and Practice Contributed by: Matt Norton, Parker Havis and Aaron Lay, K&L Gates
cause the public sale by the court of the mortgaged property. The proceeds of that sale will be applied to reduce the borrower’s indebtedness secured by
pledge of the equity interests in the real estate owning entity by the owners of those interests. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders Foreign banking organisations are subject to regula - tion at the federal level, with the nature and extent of the regulation depending upon whether the foreign banking operation is chartered in the USA or abroad. Although there are several potentially applicable exemptions for mortgage lenders, foreign lenders may be required to obtain a certificate of authority to transact business in South Carolina. South Carolina counsel should be consulted as to whether the trans - action may be structured so as to avoid the need for a certificate of authority. There is effectively no usury in South Carolina and no other interest rate regulation with respect to com - mercial finance. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security There are no mortgage taxes, transfer taxes or docu - mentary taxes imposed on the granting of mortgages or other security in real estate interests. 3.5 Legal Requirements Before an Entity Can Give Valid Security South Carolina entities are empowered to do all things necessary or convenient to carry out their business and affairs, including the mortgaging of their proper - ties. Customarily, the governing body of a borrowing entity will adopt a resolution (or act by written consent) making a determination that the granting of the par - ticular security is in the best interest of the entity and in furtherance of the business purposes of the entity 3.6 Formalities When a Borrower Is in Default A mortgage lender seeking to enforce its rights after a borrower default first must take any steps required by the loan documents. For example, the lender must give any notice as of right to cure or demand letters as may be required contractually. Once these preliminary matters are accomplished, the mortgage lender must bring a judicial foreclosure action in order to realise upon the mortgaged property.
mortgage. Deficiency
Whether the borrower is potentially liable for any defi - ciency remaining after the sale is determined by the terms of the financing documents. Moreover, South Carolina has an anti-deficiency statute that allows a borrower to use an appraisal process to potentially reduce or eliminate any deficiency judgment. A bor - rower’s rights under this anti-deficiency statute may be waived, but the waiver must meet a number of statutory and procedural requirements, including the giving of a notice in a prescribed form prior to the transaction and the execution of a waiver in a pre - South Carolina does not recognise private enforce - ment of mortgages, such as by way of a power of sale. Further, a lender is not entitled to take possession of the mortgaged property after default – a lender’s remedy is limited to judicial foreclosure. In a judicial foreclosure, a receiver may be appointed by the court to take possession of the property and collect rents for the benefit of the lender, but only if the appropri - ate language is contained in the mortgage loan docu - ments. scribed form as part of the transaction. Private Enforcement of Mortgages Lenders are advised to consult South Carolina coun - sel to ensure that the financing documents include the necessary receivership provisions. Assignment In addition to a mortgage, borrowers are generally required to execute an assignment of the leases, rents and profits of the property. South Carolina counsel should be consulted to ensure the adequacy of any such intended assignment. To the extent there is sig - nificant non-real-estate collateral located on the prop - erty (such as machinery and equipment), a borrower may grant a personal property security interest in that non-real-estate collateral. Finally, security can also be taken at the equity level of the real estate owning entity. This is done by way of a
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