Download This Version in Microsoft Word format
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 29-3-635 SO AS TO PROVIDE NO CAUSE OF ACTION FOR FORECLOSURE OF A REAL ESTATE MORTGAGE MAY BE COMMENCED IF THE ALLEGED DEFAULT WAS BASED SOLELY ON A FAILURE TO PURCHASE OR MAINTAIN FLOOD INSURANCE COVERING THE MORTGAGED PROPERTY; TO PROVIDE NO CAUSE OF ACTION EXISTS FOR FORECLOSING A REAL ESTATE MORTGAGE WHEN THE ALLEGED DEFAULT WAS BASED SOLELY ON A FAILURE TO PURCHASE OR MAINTAIN FLOOD INSURANCE COVERING THE MORTGAGED PROPERTY; TO PROVIDE REMAINING PROVISIONS IN A MORTGAGE REMAIN IN FULL FORCE AND EFFECT DESPITE A FAILURE TO PURCHASE OR MAINTAIN FLOOD INSURANCE COVERING THE MORTGAGED PROPERTY; AND TO PROVIDE COMPLIANCE WITH THESE PROVISIONS DOES NOT CONSTITUTE A WAIVER OF ANY OTHER RIGHTS OR TERMS OF A MORTGAGE AND DOES NOT ESTOP A MORTGAGOR OR MORTGAGEE FROM ASSERTING THOSE OTHER RIGHTS.
Whereas, the South Carolina General Assembly finds that the Biggert-Waters Flood Insurance Reform Act of 2012 has had the practical impact of invalidating provisions of real estate loans and mortgages, specifically the conditions assumed by both mortgagors and mortgagees at the time of contracting; and
Whereas, the South Carolina General Assembly finds that the unconstitutional invalidation of assumed conditions of contract between parties requires remedial action to protect lenders from being forced to bring foreclosure actions and consequently threaten the banking system with ownership of nonperforming real estate that has become unmarketable or may become unmarketable. Now, therefore,
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Article 7, Chapter 3, Title 29 of the 1976 Code is amended by adding:
"Section 29-3-635. (A) No cause of action for foreclosure of a real estate mortgage may be commenced if the alleged default was based solely on a failure to purchase or maintain flood insurance covering the mortgaged property.
(B) No cause of action exists for foreclosing a real estate mortgage when the alleged default was based solely on a failure to purchase or maintain flood insurance covering the mortgaged property.
(C) Remaining provisions in a mortgage remain in full force and effect despite a failure to purchase or maintain flood insurance covering the mortgaged property.
(D) Compliance with the provisions of this section does not constitute a waiver of any other rights or terms of a mortgage and does not estop a mortgagor or mortgagee from asserting those other rights."
SECTION 2. This act takes effect upon approval by the Governor.
This web page was last updated on January 22, 2014 at 2:22 PM