Court of Appeals decides interesting estate case

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From a “dirt” point of view, it seems cases where I am able to agree with the South Carolina Court of Appeals are few and far between these days. But an estate case was handed down on April 3 that should make perfect sense to all dirt lawyers*.

last will and testament

The case involved the will of William Paradeses who lived in Richland County and died in early 2016. The will, which was executed in 2008, was discovered in the home of the deceased shortly after his death.

The will contained a strikeout of Item IV(2), which originally provided for a $50,000 bequest to Fay Greeson, the respondent in this case. Next to the deletion was a handwritten note: “Omit #2 W.D. Paradeses.”  The will also contained a handwritten addition to Item IV(1), which placed a condition on Paradeses’ bequest of his interest in the Saluda Investment Company. That notation stated: “A.D. and J.D. Paradeses will have control until it is sold and no one else.” There were no witnesses to either of these changes. A.D. and J.D. Paradeses agreed to comply with the Testator’s second notation.

Georganna Paradeses, the personal representative, filed a petition for a declaratory judgment seeking an order from the probate court declaring the rights of the parties and the effect of the notations. Faye Greeson filed an answer denying the deletion of her bequest was made by the testator and asserting the deletion failed because of improper attestation. The remaining family answered and alleged the testator made the notations with the intent to change his will.

The probate court found that the addition and deletion were consistent with a codicil and required proper execution. The probate court therefore held that the bequest of $50,000 to Faye Greeson remained valid. The remaining notation on the will was not in dispute.

The Court of Appeals relied on South Carolina Code §62-2-502, which states that a will may be freely modified or revoked by a mentally competent testator until death, and §62-2-506(a), which states that a will may be revoked by executing a subsequent will or by burning, tearing, canceling, obliterating or destroying the document with the intent to revoke it.

The appellants argued that the deletion in the will amounted to a partial revocation, which should have been allowed by §62-2-506(a) despite the absence of witnesses. They cited a 1912 South Carolina Supreme Court case** which held a strikeout in a will amounted to a revocation of the stricken provision.

The Court of Appeals, however, relied on another South Carolina Supreme Court case** that decided changes to a will with both an addition and a deletion were more akin to a codicil, which requires the normal formalities of the execution of a will. The testator’s notes in the case at hand were held by the Court of Appeals to amount to a codicil, and the bequest to Faye Greeson stood.

Dirt lawyers like certainty, and, for that reason, we like this case!

 

*In the Matter of Paradeses, South Carolina Court of Appeals Opinion 5635 (April 3, 2019)

**Citations omitted.

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HOA foreclosures are being challenged on multiple levels in SC

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The HOA won in a recent Court of Appeals case

In January, I blogged about a Federal class action lawsuit filed in Charleston seeking to invalidate non-condo foreclosures by owners’ associations. You can read that blog here but the short version is that the suit challenges foreclosures on the grounds that these non-profit corporations don’t have the power to create liens for unpaid assessments prior to obtaining judicial judgments. Condominium associations established through the Horizontal Property Regime Act have statutory authority to create liens, but the power of non-condo projects is created by restrictive covenants. We’ll have to wait and see how that suit turns out, but if the plaintiffs there are successful, foreclosure practice will change drastically in South Carolina.

gavel house

Our Court of Appeals decided a case* on April 4th that could have made drastic changes in another way. In fact, Richland County’s Master-in-Equity, Joseph Strickland, stated in his order that “the practice of homeowners’ association foreclosures would effectively be eradicated if (the Plaintiffs’) position came to bear.”

This appeal was handled by the law office of my friend, Brian Boger, a Columbia lawyer and well-known champion of consumers’ rights. The appeal argued that the $3,036 successful bid “shocked the conscience” and violated equitable principles. The parties agreed that the home was valued at $128,000. There was a mortgage balance of $66,004, leaving equity of $61,996. The Hales did not argue that there were irregularities in foreclosure process, but instead argued that the low bid should have encouraged the Master to use his gavel to “do equity”.

Comparing the successful bid to their equity using the “Equity Method”, the Hales argued that the bid amounted to 4.8% of the fair market value of the property. The HOA argued, using the “Debt Method”, that the bid must be added to the senior mortgage balance to judge its sufficiency because the successful bidder would have to pay the senior mortgage to have good title. In this case, using the Debt Method, the bid amounted to 54.94% of the fair market value. The Court of Appeals agreed that the Debt Method was the proper method for considering a senior encumbrance in a foreclosure.

The Court found no South Carolina cases that expressly weighed the two methods of judging a bid, but pointed to prior cases that considered the amount of a senior mortgage in the determination and found a 3.15% bid sufficient. One reason the Court of Appeals prefers the Debt Method is that it will result in “fewer set asides”.  In other words, the Court of Appeals is not interested in upsetting the foreclosure practice applecart at this point.

Justice Lockemy dissented, stating that he thought it improper to give a judicial sale buyer credit for assuming a debt it is not legally required to pay. He said the Court’s decision could create a perverse circumstance where a judicial sale bidder purchases property for a de minimis amount simply to capitalize on rental revenue until the senior lienholder forecloses. The majority called this argument a solution in search of a problem because there was no evidence that the successful bidder in this case was engaged in such a scheme and because the successful bidder must satisfy the mortgage to obtain clear title.

Foreclosure practice in South Carolina remains the same…for now.

* Winrose Homeowners’ Association, Inc. v. Hale, South Carolina Court of Appeals Opinion 5549 (April 4, 2018)

Dear History, please stop repeating yourself!

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Hurricane Irma is the third disaster in two years for South Carolina

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Hurricane Irma is the third disaster to pummel our beloved state since this blog was launched in 2014. After the 1,000 year flood in October of 2015, Hurricane Matthew struck in October of 2016. Rebuilding is not complete from either catastrophe.

On my way to work this morning, I passed the remains of several businesses that were destroyed when Gills Creek flooded in 2015. Thankfully, I heard recently that Richland County is about to purchase those properties to turn them into green spaces. Other areas in and around Columbia are still in the rebuilding process or have been completely abandoned. Many homeowners have made their homes bigger, stronger and certainly taller. Others have given up and moved away.

Enter Irma. A friend joked on Facebook that we’re lucky here in South Carolina Irma passed us by. You would never know it passed us by from the many feet of water we’re seeing in pictures of Charleston, Beaufort, Hilton Head, Georgetown, Garden City and surrounding areas. And the pictures and video coming from Florida and the Caribbean, not to mention the pictures and video coming from the Hurricane Harvey disaster in Texas and Louisiana, all show unspeakable damage.

Our company’s home office is located in Jacksonville where surrounding streets are under water. Employees with power are trying to work remotely. Others are out of commission.

A wise man in our building here in Columbia said to me this morning that these disasters bring out the best and the worst in folks. There are looters, but there are many more heroes who have rescued their neighbors in boats. There are neighborhoods without power who are gathering in their streets for impromptu block parties. Chainsaws are chopping downed trees. Supplies and helping hands are being donated. Celebrities and charities are raising millions. I’d like to believe that we’re seeing much more good than bad in people.

Our hearts are breaking for those who have lost so much. Rebuilding will take time, resources and patience. Many have lost everything and are without insurance coverage. Millions are without power and water. Many are in shock.

Dirt lawyers are in an exceptional position to support clients who may not be familiar with the assistance available to them. We have all learned a lot in the last few years. I challenge each of us to continue to educate ourselves and to be available to offer the valuable advice our neighbors and others will need in the days ahead. Local, state and federal governments seem better prepared this time around and seem to be working better to coordinate efforts. Here is a link to the South Carolina Bar’s Key Assistance Numbers. South Carolinians are strong and resilient, and we are stronger and more resilient now than we were for the last disaster.

Let’s once again rise to the occasion, real estate lawyers, and provide the best advice available for our clients and friends who will need it as they sort out, clean up and rebuild.