While coronavirus is out, your tenants get to stay in … but your lender can’t take it
On March 18, 2020, South Carolina Supreme Court Chief Justice Donald Beatty issued an Order stating, in part, “that all evictions currently ordered and scheduled statewide shall be rescheduled for a date not earlier than May 1, 2020.”* The Order further stated that until the South Carolina Supreme Court directs otherwise, no court shall accept an application seeking to evict a tenant or schedule a hearing related to an eviction. However, the Order did provide that a case-by-case exception could be made for matters that involve “essential services” or harm to a person or property.
While this Order does provide a little more information than the Order it supersedes, it still leaves a few questions unanswered. First, the Order makes no distinction between residential tenants or commercial tenants. Given the broad language, it seems plausible that it applies to any eviction, regardless of the type of tenancy. Next, the Order makes no reference to limiting a landlord’s ability to collect or assess past due rent, send default notices, or provide written notice of termination of the lease. This omission would seem to imply that a landlord may take non-judicial actions with respect to a lease, but not attempt to evict a tenant in default through judicial means until further court order. Of course, it would be imperative that a landlord giving notice of a default do so according to the terms outlined in the lease agreement, while also paying special attention to any other sections that may be applicable (for further discussion on this, see this post.)
While this Order might be problematic for landlords seeking eviction, it may also be problematic for lenders seeking foreclosure. The Order also prohibits a Master-in-Equity from having a foreclosure hearing, a foreclosure sale, or evicting individuals after a foreclosure. Additionally, the Order limits a Master-in-Equity from proceeding “in any other manner regarding foreclosures”, which is somewhat vague and leaves another question as to whether a foreclosure action could even be filed during the time the Order is in place (procedurally, a foreclosure action is filed with the Circuit Court and later referred to a Master-in-Equity or Special Referee, so an argument could be made that a foreclosure action could be filed with the Court and the Defendant served, so long as you refrain from referring it to the Master until after the Order is lifted). Again, the Order makes no distinction as to residential or commercial foreclosure actions.
Perhaps most importantly, there is no time period as to when a new eviction or foreclosure action may proceed. While it does provide that any previously filed action will not be heard before May 1, 2020, the Order leaves the question unanswered as to when a new eviction filing may be made or when a Master-in-Equity may proceed with a foreclosure action. Another unanswered question is whether a landlord may still recovery attorney’s fees or statutory damages provided by the South Carolina Landlord Tenant Act. Generally, if a tenant’s actions in failing to vacate are not “in good faith” or a violation of the Landlord Tenant Act, a landlord may recover attorney’s fees and in some cases damages. Here, there is no indication if a landlord will be entitled to such relief during this period.
Finally, is issuing this type of Order something that the South Carolina Supreme Court has the power to do? Simply put, yes, if the South Carolina Supreme Court determines a certain act should (or should not be) taken in the lower courts, it has the power to say so. The South Carolina Supreme Court is the highest court in South Carolina and is responsible for rules governing all courts in this state. While an eviction proceeding or a foreclosure action would not be filed with the South Carolina Supreme Court, as provided by Article V, Section 4, of the South Carolina Constitution, the Supreme Court does govern and control the courts in which a party would file these types of actions.
Overall, the Order leaves some ambiguity, perhaps on purpose. If you have any specific questions about the Order and its possible effects, I would recommend that you seek the advice of an attorney who can help understand any unique facts or circumstances that might apply.
On April 2, 2020, Chief Justice Beatty issued a statement that indicated the moratorium on evictions and foreclosures is scheduled to end on May 1, 2020. The statement also reminded people to pay rents and mortgages if financially able and that the Order “did not relieve people of their personal responsibilities or financial obligations”.
Thereafter, on April 30, 2020, Chief Justice Beatty issued another update allowing eviction and foreclosure proceedings to resume May 15, 2020. However, if the real estate “is subject to the restrictions of the Coronavirus Aid, Relief, and Economic Security Act, the eviction or foreclosure proceeding shall terminate without any action taken”. The most recent Order additionally provides guidance to Judges on how to hold hearings to limit large gatherings.
This post has been prepared by Robinson Gray Stepp & Laffitte, LLC for informational purposes only and does not constitute legal advice. For more information, contact attorney Chris Boguski.