Bulletin: SC000005

Date:
January 05, 1995
To:
All Issuing Agents in South Carolina
RE:
Homeowners' Association and Adverse Possession

Dear Associates:

Homeowners' Associations

First Federal v. Bailey (Davis Advance Sheet No. 21, Page 16) Homeowners' Association obtained judgments against owner for unpaid assessments pursuant to covenants authorizing liens for unpaid assessments. In an action to foreclose by the mortgagee, the Association claimed that its liens should have priority over the mortgage being foreclosed. It was the contention of the Association that the judgments should relate back to the date of the recording of the covenants that was prior to the recordation of the mortgage being foreclosed. The Court of Appeals held that the Association's judgments constitute liens only from the time the amounts of the respective assessments represented by the judgments were fixed and became due. In the present case, this was after the recording of the mortgage and, therefore, the mortgage was superior.

This ruling is consistent with Section 27-31-210 that provides that amounts due to the Association "constitute a lien on such apartment prior to all other liens except only,...(ii) mortgage and other liens, duly recorded, encumbering the apartment." Regarding fees due to or assessments made by the Association prior to the recordation of a mortgage, the statute is not clear as to the relative positions of the mortgage lien and the Association lien. However, this case seems to be saying that the priority of the Association lien is determined by the date of assessment.

Underwriting Guideline:

Remember that the Condominium Endorsement (ALTA 4) and the PUD Endorsement (ALTA 5) provide to the mortgagee affirmative coverage for homeowner association fees and assessments. Therefore, inquiry should always be made with the association as to the status of the owner's account before closing a transaction.

Adverse Possession:

Perry, et al v. Heirs at Law, Etc. (Davis Advance Sheet No. 20, Page 8) - Citing Lusk v. Callaham, 287 SC 459, 339 SE2d 156, the Court of Appeals had ruled that a claim of adverse possession does not lie under a mistaken belief that the property is one's own and with no intent to claim against the property's true owner. The Supreme Court notes that the Lusk case was applied improperly in that Lusk involves a boundary line dispute. When the dispute is over the entire tract of land, as in the present case, a mistaken belief of ownership may satisfy the element of hostile possession where adverse possession is asserted.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
1.28 Adverse Possession
 
3.40 Condominiums
Exceptions Manual:
SC Adverse Interests
 
SC Condominiums
Forms:
ALTA Endorsement 4 (Condominium)
 
ALTA Endorsement 5 (Planned Unit Development)