USA – SOUTH CAROLINA Law and Practice Contributed by: Matt Norton and Christian Kolic, K&L Gates
3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders Foreign banking organisations are subject to regulation at the federal level, with the nature and extent of the regulation depending upon whether the foreign banking operation is char - tered in the USA or abroad. Although there are several potentially applicable exemptions for mortgage lenders, foreign lend - ers 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 transaction 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 commercial finance. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security There are no mortgage taxes, transfer taxes or documentary taxes imposed on the granting of mortgages or other security in real estate inter - ests. 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 properties. Customarily, the governing body of a borrowing entity will adopt a resolution (or act by written consent) making a determina - tion that the granting of the particular security is in the best interest of the entity and in further- ance 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 con - tractually. Once these preliminary matters are accomplished, the mortgage lender must bring a judicial foreclosure action in order to realise upon the mortgaged property. This foreclosure action will result in a public auc - tion sale by the court of the mortgaged property. The mortgage lender may “credit bid” at the sale. Sale of the mortgaged property under a power of sale is not permitted; a judicial foreclosure pro - ceeding is required. Likewise, a mortgage lender on default by the borrower is not entitled to take possession of the property. Establishing Priority In order to establish the priority of the mort - gage over interests of competing creditors, the mortgage lender must record the mortgage in the applicable county’s real property records. Competing creditors claiming an interest in the mortgaged property must be named as defend - ant parties in the judicial foreclosure action; the public sale will be free and clear of those junior claims and interests. Appointing a Receiver Assuming the loan documents have the nec - essary provisions, the court may enforce assignments of leases, rent and profits by the appointment of a receiver in connection with the foreclosure proceedings. The court may author - ise the receiver to collect rents and other profits derived from the property and, after deducting costs of operation of the property and the receiv - er’s fees, to disburse the remaining proceeds to
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