COLUMBIA — They didn’t pay $250 in homeowners association fees. For that, one Midlands couple lost their home of 21 years.
Unbeknownst to Devery and Tina Hale, their $128,000 house in Irmo was sold at auction for $3,000 in 2014.
But Wednesday, the South Carolina Supreme Court ruled in the Hales' favor, sending their case back to the court that handles foreclosures to decide whether their home was sold for too small a price. Still one justice said the new auction winner "bought it for a pittance."
"Homeownership is the quintessential American dream. Purchasing a home is the largest investment that most South Carolinians will make," Chief Justice Donald Beatty wrote in his opinion. "To allow the hard-earned equity to be confiscated by a bidder's minimal investment is unconscionable. This is especially troubling when the foreclosure sale is the result of an HOA lien."
In South Carolina, homeowners associations have the legal right to foreclose on members' homes to collect on delinquent fees. But when the auction price has not met a particular threshold, homeowners have been able to challenge the sale in court.
If the masters-in-equity court rules the sales price of the Hales' home was "grossly inadequate," the family will have recourse to get it back, the court said.
"This is just so great," said Brian Boger, the Hales' lawyer.
Lawyers for the Winrose Homeowners Association and the auction buyer, Regime Solutions LLC of Columbia, did not return messages requesting comment Wednesday.
The Hales' saga started in April 2011, four months after they fell behind on dues, when the Winrose HOA filed a lien on their home.
Three years later the association filed for foreclosure over the unpaid fee. Within five months, Richland County Master-in-Equity Joseph Strickland, the judge in charge of overseeing real estate disputes and foreclosures, ruled the home to be sold at auction.
Two weeks later, the home was sold off to satisfy the fee that had ballooned to almost $2,900 for interest charges and lawyer fees.
The Hales received no notice of the judge's order or that their home was sold at auction after that ruling, according to the Supreme Court opinion. It wasn't until receiving an eviction notice from the new owner the couple realized what had happened.
The justices chided the Hales for not responding to the initial court filing or paying their dues on time. But they noted in their opinion, the Hales paid their past-due bill after the HOA filed its legal action and the law firm representing the HOA sent notice to the couple that the lien had been satisfied.
"I thought that everything was OK after that. The next thing I know, someone is knocking on my door telling me that they bought my home and that me and my family were being evicted," Tina Hale wrote in an affidavit.
The HOA had not withdrawn its lawsuit.
"I think people just don't realize the severity of this, and it's terrible," Boger said.
Though what constitutes a "grossly inadequate" sale price at auction is unclear, South Carolina appeals courts have generally viewed it as 10 percent of a home's value. The issue in the Hales' case was how that winning auction sales price was determined, the opinion said.
Previous judges who heard the case did not consider that the Hales continue to make monthly mortgage payments, Justice John Kittredge wrote. The new buyer, Regime, made no effort to take over the mortgage, the opinion said.
The decision Wednesday requires judges to consider how much equity owners have in a home when deciding if an auction sale price was appropriate. The Supreme Court ordered Strickland to rule again on the initial foreclosure with that in mind.
"What changes is the way these HOA sales are handled," Boger said of the state high court's ruling. "It adds another layer of protection for homeowners. I'm so excited that the court took this on."