A bill pending before the South Carolina General Assembly, SB 102, would rewrite the procedure most commonly used to collect unpaid property taxes through the sale of real estate and mobile homes. Among other important changes, if enacted, the law would significantly expand the opportunities for mortgagees to receive notice of pending and completed tax sales, allowing lenders and servicers to take timely action to avoid the loss of the property.

As with current procedures, the law authorizes county tax collectors to initiate sales of real and personal property if taxes are unpaid, after which the owner, mortgagee, or other interested party has 12 months to redeem by paying the delinquent taxes with penalties and interest. Under current law, the mortgagee is entitled to notice only when the redemption period has nearly expired. The mortgagee does not receive advance of the sale itself, unless it “opts in” to notice by subscribing to a mortgagee list maintained by the county.

SB 102 would change these procedures by requiring notice to mortgagees of record both at the time that notice of the sale is provided to the homeowner and prior to the expiration of the end of the redemption period. Additionally, the bill would require the county to notify the mortgagee if there are excess proceeds from the tax sale and provide the lender an opportunity to assert a right to the overage, unlike current law which provides for payment of the overage only to the owner of record. Each of these changes would increase the likelihood that the lender is able to protect its interest, either by timely redeeming the property or seeking payment of the excess proceeds to apply to the mortgage debt.

Other significant changes include provisions specifying the records that the county must retain to show its compliance with statutory requirements, as well as a three-year statute of limitations for claims seeking to overturn a tax sale.

The bill is currently referred to the Senate Finance Committee and will bear watching to see if it advances further this session.