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A COUPLE lost their home after falling behind on the dues owed to their homeowner’s association (HOA) despite having lived there for decades.
Devery and Tina Hale from Columbia, South Carolina, called their $128,000 house their home for over 20 years.
However, in 2014, it was ripped away from them after being sold at an auction for just $3,000.
The loss of their home came down to a measly $250 which they had failed to pay their HOA.
In January 2011, the couple fell behind on their HOA dues and by April the Winrose HOA put a lien on their home.
Three years later the HOA foreclosed the property due to the unpaid fee which had risen to $2,900 due to interest and legal fees, and the home was destined to be sold at an auction.
When foreclosures take place, it is an opportunity for lenders or HOAs to claw back money that is owed to them.
The property is given to the highest bidder as long as the money paid will cover the debt owed by the previous owners.
The home sold for just $3,000 which was later criticized by the South Carolina Supreme Court after the Hales challenged the sale.
While HOAs in South Carolina can foreclose properties, if it is not sold for a reasonable price, the homeowners can file a challenge.
The Supreme Court ruled in 2019 that the buyer at the auction, Regime Solutions, LLC, “bought it for a pittance,” according to the opinion summary.
The court ruled in favor of the Hales with Chief Justice Donald Beatty saying in his opinion: “Homeownership is the quintessential American Dream.”
Beatty noted that for many, homeownership is the largest investment they will ever make with the Hales accruing over $66,000 in equity in their home.
“To allow the hard-earned equity to be confiscated by a bidder’s minimal investment is unconscionable,” he said.
“This is especially troubling when the foreclosure sale is the result of a HOA lien.”
The court noted that the couple did not receive notice of the auction of their property and it was not until an eviction notice arrived from the new owner that they found out.
The Supreme Court scolded the couple for failing to respond to the first filing of a lien which resulted in the default lawsuit and for failing to pay the money they owed on time.
However, the Hales believed that their debt was paid off as they paid their $250 overdue bill after legal action was taken by the HOA.
They even received notice from the HOA’s lawyers that the lien had been settled.
“I thought that everything was OK after that,” Tina wrote in an affidavit.
WHAT IS A FORECLOSURE?
Foreclosures can take place when lenders take control of a property after borrowers have failed to make their repayments.
Homeowners or borrowers will receive a Notice of Default by their lender triggering the foreclosure process.
Those in HOA communities can also see their homes foreclosed by their HOA for falling behind on fees meaning that even if you keep up on mortgage payments, you can still lose your home.
Before foreclosure, a HOA will put a lien on your property which then allows them to auction it to reclaim unpaid funds.
The sale price of the property can often be much less than they are worth as it only needs to be enough to cover the debts to the HOA or lender and is sold via auction to the highest bidder.
“The next thing I know, someone is knocking on my door telling me they bought my home and that me and my family were being evicted.”
However, the HOA had not withdrawn its lawsuit against the couple.
During the time of the auction, the couple continued to make their mortgage payments every month while the auction winner failed to make any effort to take it over, according to Justice John Kittredge.
The judge who ruled on the auction of the house had failed to take these payments into account and improperly credited the purchaser with assuming responsibility for the mortgage, the court noted.
“When the value of the mortgage is not added to Regime’s winning bid, the bid shocks the conscience of the court,” Kittredge declared.
The court detailed that to decide if a winning bid is “grossly inadequate” two methods are used.
One is the debt method and the other is related to the equity and outstanding mortgage.
“While we do not draw a bright-line rule requiring the use of one method over the other, here, Regime has taken no affirmative steps to assume the Hales’ mortgage,” the court stated.
“As a result, in determining whether the purchase price was grossly inadequate, we find it would be wholly inappropriate to add the value of the mortgage to Regime’s winning bid.
“When the value of the mortgage is not added to Regimes winning bid, the bid shocks the conscience of the court.
“We therefore reverse the judicial sale and remand to the master-in-equity (the Master).”
Brian Boger, the Hales’ lawyer said “this is so great” in response to the ruling and told the Post and Courier that “people just don’t realize the severity of this, and it’s terrible.”
The U.S. Sun has reached out to Boger, the lawyers for the Winrose HOA, and Regime Solutions LLC for comment.
