Author: LegalEase Solutions
Research Scope:
Our research involved searching case law and statute from all jurisdictions with a special focus on the South Carolina law. A general search of secondary sources was also conducted. We didn’t find any proposition of law allowing the estate to stop foreclosure proceedings.
Our case law search included varied terms such as: “estate standing foreclosure”. Or “estate standing right of survivorship”; mortgage foreclosure AND original owner died AND estate AND stop; mortgage foreclosure AND estate; mortgage foreclosure AND note assumption AND estate; whether the estate has standing to interfere and stop the foreclosure if wife did not transfer the deed to herself; mortgage foreclosure AND estate AND standing AND stop foreclosure; and estate standing probate foreclosure joint ownership; and right of survivorship AND authority to stop foreclose OR right of survivorship AND standing to stop foreclose; forced foreclosure AND standing to stop foreclosure AND estate.
The search terms did not result in anything on point. Most of the cases concerned the foreclosing rights of the mortgagor’s heirs, the rights of the agent of mortgagor, and MERS cases.
Tangential Case Law of Interest:
South Carolina Cases
Mortgages—Title of Mortgagor—Foreclosure—Parties.
Under Gen. St. S. C. § 2299, the legal title upon the execution of a mortgage of real estate remains in the mortgagor, and, when the mortgagor dies leaving his wife and children in possession, the title descends to them, and the premises cannot be sold by the assignee of the mortgage under a power of sale contained in the mortgage without making the mortgagor’s heirs at law parties to the proceedings. Johnson v. Others, 3 S.E. 606, 27 S.C. 309 (S.C., 1887).
- Same—Title of Mortgagor—Power of Sale.
A clause in a mortgage, empowering and authorizing the mortgagee to grant, bargain, and sell the premises at public auction, at which sale the mortgagee shall have the right to become a purchaser, and to execute to the purchaser a conveyance in fee of the premises free and discharged from all equity of redemption, does not have the effect of conveying the legal title to the premises away from themort-gagor and his heirs, but only gives a power of sale, which can only be executed in the name of the principal. Johnson v. Others, 3 S.E. 606, 27 S.C. 309 (S.C., 1887).
- Same—Power of Sale—Revocation—Death of Mortgagor.
Such power of sale is not a power coupled with an interest, and is revoked, and rendered incapable of execution, by the death of the mortgagor. Johnson v. Others, 3 S.E. 606, 27 S.C. 309 (S.C., 1887).
It has always seemed to us somewhat anomalous doctrine that a mortgagor of real estate may include in the mortgage a power to the creditor himself to sell the mortgaged premises without any order of foreclosure in a regular proceeding; such power being entirely ex parte, and carrying, as claimed, not only the right to ascertain the amount due on the mortgage debt, but to judge of the necessity for a sale, its time, place, terms, etc., and to execute title to the premises so sold. This anomaly is more striking in those states, as in South Carolina, where it is expressly provided by statute that a mortgage of real estate is a mere security, and, even after condition broken, the legal title remains in the mortgagor or his heirs. We incline to think that experience in the administration of the law has shown that this effort, by a summary proceeding to avoid litigation and expense, has really increased both, and demonstrated the wisdom of Lord Eldon, when he said: “How can it be right that such a clause shall be inserted in a deed tinder which a party is trustee for himself? * * * Here, too, it must be recollected that this is a clause to be acted upon, not by a middle person, who is to do his duty between the cestuis que trust, —but the mortgagee is himself made trustee to do all these acts.” The same learned chancellor, however, said at the same time: “But it is too much to say that, if the one party has so much confidence in the other as to accede to such an arrangement, this court is, for that reason, to impeach the transaction, ” etc. While, however, the court will not now set aside a power authorizing the creditor, who is the interested party, to sell lands mortgaged, for the reason that it is the contract of the parties themselves, yet all the authorities agree, that, “as such power may be so easily used for purposes of oppression, the courts should scrutinize sales made under them very closely.” Nohinson v. Amateur Ass’n, 14 S. C. 148. From the view the court takes, it will not be necessary in this case to consider whetherthe power of sale went with the mortgage to the assignee Margaret Johnson, nor whether the mode of conducting the sale should have been conformed, as far as possible, to that of ordinary judicial sales, nor whether the vendor, Margaret Johnson, when Pitts failed to comply with the terms of sale, had the right to substitute for him as the last bidder, Simpson, and, without any consideration paid, to accept from him a conveyance for the premises sold. This circuity of conveyance was manifestly designed as the means of carrying back the title to Margaret Johnson, the vendor, and must be considered as substantially the same as if Margaret Johnson, the assignee and vendor, bad bid off the property at her own sale, and then in her own name conveyed it directly to herself. Johnson v. Others, 3 S.E. 606,608-609 27 S.C. 309 (S.C., 1887).
The main question is whether, after the death of the mortgagor, Joshua M. Johnson, leaving his widow and children in possession of the premises, the mortgaged premises could be sold and conveyed by Margaret Johnson in her own name, without any reference whatever to the death of the mortgagor or his heirs at law, some of whom were infants. This must, to a large extent, depend upon the determination as to whose the legal estate was at the time of the death of the mortgagor. There cannot be the slightest doubt that at the time of the death of the mortgagor (so far as the mortgage itself was concerned) the title was in the mortgagor, and at his death descended to his heirs. It is true that, according to the common law, a mortgage was a conveyance of an estate by way of pledge for the security of a debt, and to become void upon the payment of it. But it is quite as clear that in our state, by the act of 1791, (now embodied in section 2299 of the General Statutes,) the legal title, upon the execution of a mortgage, remains in the mortgagor, and ” the mortgagee shall not be entitled to maintain any possessory action for the real estate mortgaged, even after the time allotted for the payment of the money secured; but the mortgagor shall be deemed owner of the land, and the mortgagee as owner of the money lent or due, and shall be entitled to recover satisfaction for the same out of the land by foreclosure and sale according to law.” See Simons v. Bryce, 10 S. C. 368;Warren v. Raymond, 17 S. C. 163. Johnson v. Others, 3 S.E. 606, 609 27 S.C. 309 (S.C., 1887).
The theory that a life tenant cannot allow property to be sold for taxes and then buy the property at the tax sale thereby divesting the remaindermen of their interest is based on the idea that the life tenant receives the income from the property during his life and therefore, out of this income, it is his responsibility to pay the taxes. In the North Carolina case of Miller v. Marriner, 187 N.C. 449, 121 S.E. 770 (1924), the widower, who held a life estate by way of courtesy, bought the property in at a foreclosure sale of a mortgage placed on the property by his deceased wife. He later left the property by will to his widow and her children. Suit was instituted by children of his first wife and the Court quoting Chief Justice Ruffin in Jones v. Sherrard, 22 N.C. 179, 187, stated:
‘In the first place, it is to be observed that the terre-tenant of land, liable to incumbrance, must take care that such incumbrance does not accumulate to the injury of those who are to come after him. But then, in doing this he is not bound to give anything for the relief of the land but what is derived from the land. Therefore, one who is liable in respect of the occupation of land cannot be called on for more than the rents or actual annual value of the premises during this time. To that extent, it is clear a tenant for life must keep down the interest on incumbrances (italics ours), and the reversioner may file a bill to make the rents amendable, and a receiver will be put upon the tenant for that purpose.’ Flowers v. Oakdale Realty & Water Corp., 183 S.E.2d 513, 516 (S.C., 1971).
It is true the general rule seems to be “that adverse claimants are not to be made parties to a foreclosure suit, for the purpose of litigating their title, as between defendants. The only proper parties are the mortgagee and mortgagor, and those who have acquired any interest from them subsequently to the mortgage. Hunt v. Nolen, 18 S.E. 798, 802(S.C., 1893).
Relevant sections of the South Carolina Code of Laws
SC Code of laws, SECTION 29-3-10. Rights and title of mortgagor and mortgagee.
No mortgagee shall be entitled to maintain any possessory action for the real estate mortgaged, even after the time allotted for the payment of the money secured by mortgage is elapsed, but the mortgagor shall be deemed the owner of the land and the mortgagee as owner of the money lent or due and the mortgagee shall be entitled to recover satisfaction for such money out of the land by foreclosure and sale according to law. But notwithstanding the foregoing provision all releases of the equity of redemption shall be binding and effectual in law.
All Jurisdiction Search results
In Harms v. Sprague, 105 Ill.2d 215, 85 Ill.Dec. 331, 473 N.E.2d 930 (1984), the supreme court held that a mortgage executed by one joint tenant did not survive as a lien on the property upon the death of the joint tenant/mortgagor. The court explained as follows:
“A surviving joint tenant succeeds to the share of the deceased joint tenant by virtue of the conveyance which created the joint tenancy, not as the successor of the deceased. [Citation.] The property right of the mortgaging joint tenant is extinguished at the moment of his death. While John Harms was alive, the mortgage existed as a lien on his interest in the joint tenancy. Upon his death, his interest ceased to exist and along with it the lien of the mortgage.” Harms, 105 Ill.2d at 224, 85 Ill.Dec. 331, 473 N.E.2d 930. Maniez v. Citibank, F.S.B., 937 N.E.2d 237, 404 Ill.App.3d 941, 952 (Ill. App., 2010).
In Rodgers, 461 U.S. 677, the Court considered whether § 7403 authorized forced sale of property jointly owned by spouses under Texas’s homestead law when only one spouse owed delinquent taxes. The Court held that forced sale was permitted notwithstanding the non-delinquent spouse’s independent homestead interest in the property under state law: “Whatever property rights [of the non-delinquent spouse] attach to a homestead under Texas law are adequately discharged by the payment of compensation, and no further deference to state law is required.” Id. at 702. Rodgers addressed the interaction of § 7403 and homestead-property rights created under Texas law. In a footnote, the Court distinguished between homestead property and tenancy-by-the-entirety property, noting that there was at that time some authority for the position that “as a result of the peculiar legal fiction governing tenancies by the entirety in some States, no tax lien could attach [to tenancies by the entirety] in the first place because neither spouse possessed an independent interest in the property.” Id. at 702 n.31. The Court further noted that “if the tenancy by the entirety cases are correct, they do no more than illustrate the proposition that, in the tax enforcement context, federal law governs the consequences that attach to property interests, but state law governs whether any property interests exist in the first place.” Id. United States v. Barczyk (6th Cir., 2011)
“The rational construction of these provisions of our Constitution and statute, which `uprooted principles of the common law hoary with age,’ swept away the marital rights of the husband during the life of the wife, and gave enlarged powers to married women, is, not that they lessen the power of the husband over his own interest in an estate by entirety, but that they deprive him of the control over the interest of the wife which he formerly exercised jure uxoris, and confer upon the wife the control of her own interest. The right of the wife to control and convey her interest, we think, is now equal to the right of the husband over his interest. They each are entitled to one-half of the rents and profits during coverture, with power to each to dispose of or to charge his or her interest, subject to the right of survivorship existing in the other. Hiles v. Fisher, 144 N. Y. 306; 43 Am. St Rep. 762; Buttlar v. Rosenblath, 42 N. J. Eq. 651; 59 Am. Rep. 52.”
We have quoted extensively from Branch v. Polk in order that the reasoning of that case may appear, for, as we have said, the legal principles which control the decision of the question here were announced there, although the question arose in a different manner.
We conclude, therefore, that the reason given for the decision in the case of Branch v. Polk, supra, is decisive of the question raised here, and that the interest of either spouse is subject to sale on execution, and, this being true, we do not stop to inquire whether this is the better rule or is supported by the greater weight of authority.
The court below held that the husband’s estate in the land was subject to execution, and refused to quash an execution which had been levied upon it, and that judgment is affirmed. Moore v. Denson, 268 S.W. 609, 167 Ark. 134 (Ark., 1924)
