Disclaimer: This article is for educational purposes only and does not constitute legal advice. Always consult a qualified attorney for guidance on your specific situation.
Detailed Answer
When a sheriff’s sale or foreclosure in South Carolina produces surplus funds—money remaining after the secured debt and sale expenses are paid—the court must determine which creditors or lienholders have valid claims before distributing those funds. To identify potential claimants, follow these steps:
1. Review the Public Records for Real Estate Liens
- Visit the County Register of Deeds where the property is located. Search the land records for:
• Mortgage or deed of trust filings
• Mechanic’s liens under SC Code §29-5-10 (scstatehouse.gov/code/t29c005.php)
• Homeowners’ association liens or other specialty liens - Note the recording dates. In South Carolina, lien priority generally follows the order of recording. A lien recorded after the mortgage securing the debt on which the sale was based is “junior” and attaches to surplus funds.
2. Check for Judgment Liens
- Judgment creditors may file a lien by docketing their judgment in the county where the property sits. Under SC Code §15-39-30, judgment liens attach to real property and rank by docketing date (scstatehouse.gov/code/t15c039.php).
- Search the civil judgments index at the County Clerk of Court’s office or online portal to find any judgments against the debtor.
3. Search UCC Financing Statements
- Secured creditors in personal property file Uniform Commercial Code (UCC) financing statements with the South Carolina Secretary of State. These statements create liens on personal property and sometimes on proceeds of sale.
- Use the Secretary of State’s online search tool or visit sos.sc.gov/Business-Services/UCC to check for filings under SC Code §36-9-501 (scstatehouse.gov/code/t36c009.php).
4. Verify Tax Liens
- South Carolina imposes property tax liens automatically on real estate under SC Code §12-51-40 (scstatehouse.gov/code/t12c051.php).
- State and local governments also record income tax or special assessment liens. Visit the county tax collector or the SC Department of Revenue’s website to confirm any outstanding tax claims.
5. Watch for Lis Pendens Notices
- A lis pendens filed under SC Code §15-11-10 alerts all purchasers to pending litigation affecting title (scstatehouse.gov/code/t15c011.php).
- Search the circuit court’s lis pendens docket to uncover disputes that could create later liens on the surplus.
6. File a Formal Claim for Surplus Funds
- Any junior lienholder or creditor must file a claim with the clerk of court in the county of sale. Verify deadlines in the sale order; typically, claims must be submitted within 30 days of notice.
- If no valid claims arise within the statutory period, surplus funds may revert to the former owner.
By systematically searching these public records and following statutory procedures, you can identify all entities with potential claims to surplus funds and ensure the court distributes proceeds correctly.
Helpful Hints
- Use online portals first; many counties offer free access to deed and judgment indexes.
- Note precise recording dates—priority often hinges on timing.
- Consult a title professional for a comprehensive lien search report.
- Track filing deadlines in the sale order to protect your claim.
- Keep copies of all search results and filed documents for your records.