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South Carolina: Court of Appeals Reviews Service by Publication Statute

Posted By USFN, Wednesday, February 22, 2017
Updated: Friday, February 17, 2017

February 22, 2017

by John S. Kay
Hutchens Law Firm – USFN Member (North Carolina, South Carolina)

The South Carolina Court of Appeals has issued another decision emphasizing the importance of following the service by publication statutes in order to obtain jurisdiction over the party being served. A previous opinion, Caldwell v. Wiquist, 402 S.C. 565, 741 S.E.2d 583 (Ct. App. 2013), established that affidavits requesting service by publication that are defective, and do not meet the requirements of the publication statute, will not be sustained even in the absence of fraud or collusion. This marks the second time that the appellate court has addressed the need for strict compliance with the state’s publication statute; it also marks the second time that this issue has arisen in connection with a foreclosure case.

In this recent opinion, the court confirmed the requirements set forth in Caldwell that a foreclosing plaintiff must meet to obtain an order authorizing service by publication. [Belle Hall Plantation Homeowner’s Association v. Keys, Op. No. 5467 (S.C. Ct. App., Feb. 8, 2017)]. The court found that the publication order obtained by the plaintiff in Belle Hall was based upon an affidavit that was defective on its face; the defendant referenced in the affidavit was not the same defendant listed in the order.

As the affidavit supporting the publication order was flawed, the appellate court affirmed the trial court’s decision to vacate the foreclosure sale because the court lacked personal jurisdiction over the defendant in question. Although its decision was based primarily upon the defect in the service by publication process, the court also took the opportunity to discuss the bona fide purchaser argument raised by the appellants (who had purchased the property in question at the foreclosure sale).

Section 15-39-870 of the South Carolina Code provides that when a property is sold at a judicial sale under a court decree, the proceedings upon which the sale is based are res judicata as to any bona fide purchaser for value without notice. To meet the requirements to be a bona fide purchaser, a party must show “(1) actual payment of the purchase price of the property, (2) acquisition of legal title to the property, or the best right to it, and (3) a bona fide purchase — ‘i.e., in good faith and with integrity of dealing, without notice of a lien or defect.’” (quoting Robinson v. Estate of Harris, 378 S.C. 140, 146, 662 S.E. 2d 420, 423 (Ct. App. 2008).

The purchasers in Belle Hall met all of the requirements except for actual payment. Here, the purchasers had paid the 5 percent deposit on sale day as required by the terms of the court sale. Before paying the balance due on the deposit, however, the purchasers obtained actual notice of the defective service by publication when the defendant filed motions to set aside the sale.

The Court of Appeals is sending the message to foreclosure counsel that the statutory requirements of the civil procedure rules in South Carolina must be strictly followed in order to produce a valid sale result at the end of the foreclosure process.

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Note for consideration of the USFN Award of Excellence: This article is not a "Feature."

 

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