I. Foreclosures, Mortgages and the Equity Court

• Library: South Carolina Foreclosure Law Manual (2021 Ed.)

I. Foreclosures, Mortgages and the Equity Court

Foreclosure is a legal process in which the lender/creditor or mortgagee attempts to recover the balance of a mortgage loan from a borrower/debtor or mortgagor, who has stopped making payments or breached a contractual provision of the mortgage loan documents by forcing the judicial sale of the asset or subject real property used as the secured collateral for the mortgage loan. The standard contractual documents in a foreclosure action are the promissory note (legal agreement by which the borrower promises to pay the lender/creditor the money loaned) and the mortgage (legal agreement by which the mortgagor/borrower pledges her real property to the mortgagee/creditor as collateral for the money loaned). The general purpose driving the foreclosure process is to have the mortgaged real property sold at public auction and the proceeds of the foreclosure sale applied against the debt that was used to secure the property.

A suit in foreclosure of a mortgage is an action in equity and the process of a judicial foreclosure in South Carolina is held in the equity court, by a Master-inEquity or Special Referee.² The equity court is a branch of the state circuit court, whose judges are given special authority to hear foreclosure cases, among other matters, by direct authority from the order of reference from the circuit court judge or county clerk of court.³

A. Masters-in-Equity and Special Referees

Rule 53, SCRCP, defines a master as the Master-in-Equity for the county and a Special Referee as a member of the South Carolina Bar to whom a matter has been referred under S.C. Code Ann. § 14-11-60 with the authority to preside as the judge for that specific matter.

South Carolina Code Ann. § 14-11-85 provides that when a case is referred to a Master-in-Equity or Special Referee, final judgment will be entered and any appeals shall be to the Supreme Court or the Court of Appeals. Appeals should be filed pursuant to the South Carolina Appellate Court Rules, and if a stay of the foreclosure action/foreclosure sale is sought, a surety bond may be required.⁴

A county's population will determine whether it has a full-time Master-inEquity, a part-time Master-in-Equity, or a Special Referee. The circuit court may appoint Special Referees for counties employing a Master-in-Equity under certain circumstances, such as if there is a conflict of interest. There is also a provision in the statute for smaller counties to join together to fund the office of Master-in-Equity to serve two or more counties on a per capita population basis.⁵ A Master-in-Equity is a judge of the equity court⁶ and is the equivalent of a circuit court judge presiding in non-jury matters.⁷ The appointment of a Special Referee is usually at the suggestion of the plaintiff's attorney with the consent of any party-defendant who is not in default. Upon appointment, the Special Referee will have all powers of a Master-in-Equity and will be compensated by the parties (generally by the plaintiff). Once the plaintiff has filed and served the summons and complaint, the circuit court may refer the matter to a Master-in-Equity or Special Referee. Rule 53(b), SCRCP, states, "In an action where the parties consent, in a default case, or an action for foreclosure, some or all of the causes of action in a case may be referred to a master or special referee by order of a circuit judge or the clerk of court." The Master-in-Equity or Special Referee has no jurisdiction in a case until the matter is referred. If a party-defendant answers and within ten days thereafter requests (and is entitled to) a jury trial on counterclaims issues that are triable by jury, the matter cannot be referred without her consent. Upon motion of a party, the court can order certain non-jury issues referred to the Master-in-Equity or Special Referee for evidentiary findings or to dispose of non-jury issues.

At one time, upon the referral of a case to a Master-in-Equity or Special Referee, the equity judge would hear the case and issue a report to the circuit court. The court rules, specifically Rule 71, SCRCP, provide that the equity judge enter a final judgment. Masters in Equity and Special Referees routinely issue "Reports on Sale" and "Judgments of Foreclosure and Sale" as a matter of course. The equity judge shall exercise all power and authority which a circuit judge sitting without a jury would have, including but not limited to: making findings of fact and conclusions of law; directing entry of final judgment in the action under Rule 53(b), SCRCP; hearing any issues, including motions, after sale or judgment; issuing any and all orders and supplemental orders, Writs of Assistance; and, hearing any issues involving possession and/or removal of property and appraisal proceedings under Section 29-3-360, et seq. of the South Carolina Code. The equity judge will also file a report (Master's Report on Sale and Disbursements) with the clerk of court as to the receipts and disbursements made after the sale of the property.⁸

B. Order of Reference

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