South Carolina Court of Appeals Protects Junior Lienholder Winning Bidder At Foreclosure Sale

In an unanimous decision, the South Carolina Court of Appeals protected a lender that held a second mortgage lien position when that lender purchased the secured property at a foreclosure sale and the lender’s bid created surplus funds.  See Wells Fargo Bank, N.A. v. William R. Hudspeth, et al., Unpublished Opinion No. 2018-UP-423.  Another creditor, junior to even the second mortgage lien position, argued that the doctrine of merger of title applied to wipe out the second mortgage lien position, which would then allow the judgment creditor to move up in priority position ahead of the second mortgage lien position and claim full entitlement to the surplus funds.  The Court of Appeals disagreed and excluded from operation the merger doctrine in an action involving the foreclosure process.