THE STATE OF SOUTH CAROLINA 

In The Supreme Court 

Winrose Homeowners' Association, Inc. and Regime 

Solutions LLC, Respondents, 

v. 

Devery A. Hale and Tina T. Hale, Petitioners. 

Appellate Case No. 2018-001238 

ON WRIT OF CERTIORARI TO THE COURT OF APPEALS 

Appeal From Richland County 

Joseph M. Strickland, Master-in-Equity 

Opinion No. 27934 

Heard September 24, 2019 – Filed December 18, 2019 

REVERSED AND REMANDED 

Kathleen C. Barnes, of Barnes Law Firm, LLC, of 

Hampton; and Brian L. Boger, of Columbia, for 

Petitioners. 

Eric C. Hale and Elias Fain, both of Clarkson & Hale, 

LLC, of Columbia, and Stephanie C. Trotter, of McCabe, 

Trotter & Beverly, PC, of Columbia, for Respondents. 

JUSTICE KITTREDGE: Homeowners Devery and Tina Hale purchased their 

home (the Property) twenty-one years ago and have made timely mortgage 
payments ever since, accruing over $60,000 in equity in the Property, which has a 

fair market value of $128,000. However, after failing to pay $250 in homeowners' 

association dues to Winrose Homeowners' Association, Inc. (the HOA), the HOA 

foreclosed on the Property, and a third-party purchaser, Regime Solutions, LLC 

(Regime), bought it for a pittance. The Hales now challenge the judicial sale, 

arguing the winning bid price of approximately $3,000 was grossly inadequate 

compared to the value of the Property. 

There are two methods used to determine whether a winning bid at a foreclosure is 

grossly inadequate. One method assumes the foreclosure purchaser will become 

responsible for the mortgage on the property and thus adds the value of the 

outstanding mortgage to the winning bid, whereas the other method does not. 

While we do not draw a bright-line rule requiring the use of one method over the 

other, here, Regime has taken no affirmative steps to assume the Hales' mortgage. 

As a result, in determining whether the purchase price was grossly inadequate, we 

find it would be wholly inappropriate to add the value of the mortgage to Regime's 

winning bid. When the value of the mortgage is not added to Regime's winning 

bid, the bid shocks the conscience of the court. We therefore reverse the judicial 

sale and remand to the master-in-equity (the Master). 

I. 

In April 1998, the Hales bought the Property for $104,250 and assumed the 

obligation to pay HOA dues. The HOA's covenants and restrictions provided: 

If the [HOA dues] assessment is not paid within thirty (30) days after 

the delinquency date, the assessment shall bear interest from the date 

of delinquency at the rate of eight percent per annum, and the [HOA] 

may bring legal action against the owner personally obligated to pay 

the same or may enforce or foreclose the lien against the lot or lots; 

and in the event judgment is obtained, such judgment shall include 

interest on the assessment as provided and a reasonable attorney's fee 

to be fixed by the court, together with costs of the action. 

Petitioners fell behind paying their dues in January 2011. As a result, in April 

2011, the HOA filed a lien against the Property in connection with the unpaid dues. 

The HOA subsequently filed a foreclosure complaint seeking the sale of the 

Property in exchange for satisfaction of $566.41 in principal and interest. 

Petitioners failed to answer or otherwise respond to the complaint, so the HOA 

submitted an affidavit of default. Following the affidavit of default, the Hales 

received no further notice of any proceedings or orders, including the judgment of 
 

 

foreclosure or the foreclosure sale. See Rule 71(a), SCRCP ("Only parties who 

have appeared and filed pleadings in the [foreclosure] action shall be entitled to the 

usual notice of hearings and other proceedings . . . ."); Rule 77(d), SCRCP 

("Immediately upon the entry of an order or judgment the clerk shall serve a notice 

of the entry by first class mail upon every party affected thereby who is not in 

default for failure to appear . . . ."). 

Nonetheless, at some point after the HOA filed its complaint but before the Master 

entered a default judgment against the Hales, the HOA sent the Hales a bill for 

$250 in connection with their past due regime fees. The Hales promptly paid the 

bill, thinking the payment resolved the matter. In fact, the law firm representing 

the HOA sent the Hales a notice that the lien had been satisfied. The HOA, 

however, did not withdraw its suit. 

Three months after the HOA filed the affidavit of default, the Master entered a 

default Judgment of Foreclosure and Sale against the Hales, calculating the amount 

due to the HOA as $2,898.67, which was comprised of: (1) $250 in principal due;1 

(2) $80.87 in interest; (3) $542.80 in litigation costs, such as service and filing 

fees; and (4) $2,025 in attorney's fees. As a result, the Master authorized a judicial 

sale of the Property at public auction, noting the sale would be subject to senior 

encumbrances, including a mortgage. As noted above, the Hales were not served 

with this order. See Rule 77(d), SCRCP. 

Two weeks later, the Property was sold at public auction, again without notice to 

the Hales. Regime was the highest bidder with a bid of $3,036.2

 Regime then 

sought a rule to show cause seeking to evict the Hales from the Property. 

Having at last received notice of the proceedings via Regime's efforts to evict 

them, the Hales filed a motion to vacate the foreclosure sale, arguing the winning 

bid of $3,036 was so grossly inadequate as to shock the conscience of the court 

compared to the Property's fair market value of $128,000. Through an affidavit, 

Tina Hale explained the reason for the Hales' default: 

1

 Specifically, the Master listed $500 in principal due, but credited the Hales for 

their $250 payment made after the HOA filed its complaint but before the order 

was filed. 

2

 By that time, the amount due to the HOA had increased to $3,011.58. Therefore, 

Regime's bid resulted in a surplus of $24.42. 
 

When we were served with the lawsuit to take away our home, I put 

the papers in a drawer and forgot about them. Some time after that, 

we received a bill from the HOA asking for the $250.00. I paid that 

without a problem. In November, we received a letter from the law 

firm of [the HOA] telling us 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. 

At the subsequent rule to show cause hearing, the primary issue was whether and 

how to account for the senior mortgage in evaluating Regime's winning bid as a 

percentage of the Property's value. The Master apparently did not consider the fact 

that the Hales continued to make their monthly mortgage payment, and Regime 

had made no effort to assume responsibility for the senior mortgage. Ultimately, 

the Master denied the Hales' motion to vacate the sale, relying on this Court's 

plurality opinion in Arrow Bonding Co. v. Warren3

 and adopted the fiction that 

Regime had paid an "effective sales price" of $69,040, consisting of the successful 

bid ($3,036) plus the outstanding balance on the mortgage ($66,004). The Master 

reasoned this method of calculation of debt was appropriate because Regime was 

theoretically required to assume the mortgage in order to re-sell the Property.4 As 

a result, the Master found the effective sale price ($69,040) was approximately 

54% of the Property's fair market value ($128,000), and therefore it did not shock 

the conscience of the court. 

On appeal, a majority of the court of appeals' panel affirmed. Winrose 

Homeowners' Ass'n, Inc. v. Hale, 423 S.C. 220, 813 S.E.2d 894 (Ct. App. 2018). 

3

 399 S.C. 603, 732 S.E.2d 622 (2012) (plurality opinion). 

4

 In fact, the Hales demonstrated that Regime's business model is not to assume the 

senior mortgage, instead either (1) allowing the senior lienor to (re)foreclose on the 

purchased property, or (2) quitclaiming the foreclosed property back to the original 

homeowners in exchange for a hefty fee. See Pet'r's Br. at 12 n.4 ("An updated 

search of the Richland County public records shows that between November 4, 

2013 and October 11, 2016: (1) Regime [] purchased 38 properties as to which a 

bank later foreclosed, meaning Regime [] did not pay off the [senior] mortgage; (2) 

Regime [] purchased 15 properties that it quitclaimed back to the owners for a 

profit between $2,911 and $13,984 per property; and (3) Regime [] purchased 6 

properties of which it is still the owner of record and there is still an open 

mortgage."). Regime has not disputed or otherwise responded to these allegations. 
 

 

 

Chief Judge Lockemy dissented, finding it was nonsensical to credit Regime for 

the balance of the outstanding mortgage because Regime had not actually assumed 

or made any attempt to assume the mortgage on the Property: 

A buyer at a judicial sale in which a senior lienholder is not a party 

takes the property subject to that lien, but the buyer is not responsible 

for its payment. The evidence in this case shows [the Hales] have 

continued to pay the mortgage for a home for which they have no title 

because they will suffer the severe consequences of default if they do 

not. The buyer [(Regime)] has paid nothing. I do not believe it 

proper to give a judicial sale buyer credit for assuming a debt which it 

is not legally required to pay. 

Id. at 222–23, 813 S.E.2d at 900 (Lockemy, C.J., dissenting). We granted the 

Hales' petition for a writ of certiorari to review the court of appeals' decision. 

II. 

A judicial sale will not be set aside due to an inadequate sale price unless: (1) the 

price was so grossly inadequate as to shock the conscience of the court; or (2) an 

inadequate—but not grossly inadequate—price at the sale is accompanied by other 

circumstances from which the court may infer fraud has been committed. 

Singleton v. Mullins Lumber Co., 234 S.C. 330, 351, 108 S.E.2d 414, 424 (1959); 

see also BFP v. Resolution Tr. Corp., 511 U.S. 531, 542 (1994) ("[I]t is 'black 

letter' law that mere inadequacy of the foreclosure sale price is no basis for setting 

the sale aside, though it may be set aside []under state foreclosure law . . . if the 

price is so low as to shock the conscience or raise a presumption of fraud or 

unfairness." (emphasis omitted) (some internal quotation marks omitted)); In re 

Krohn, 52 P.3d 774, 781 (Ariz. 2002) (en banc) (distinguishing between an 

inadequate price and a grossly inadequate price, and explaining a mere inadequate 

price must be accompanied by "some element of fraud, unfairness, or oppression," 

whereas a grossly inadequate price, standing alone, is prima facie proof of 

unfairness (emphasis omitted) (citing Restatement (Third) of Prop.: Mortgages § 

8.3));5

 Restatement (Third) of Prop.: Mortgages § 8.3(a) (October 2019 Update) 

("A foreclosure sale price obtained pursuant to a foreclosure proceeding that is 

5

 Our court of appeals has made a similar distinction. See E. Sav. Bank, FSB v. 

Sanders, 373 S.C. 349, 358, 644 S.E.2d 802, 807 (Ct. App. 2007). 
 

otherwise regularly conducted in compliance with applicable law does not render 

the foreclosure defective unless the price is grossly inadequate."). 

South Carolina courts have not established a bright-line rule for what percentage of 

the sale price must be met with respect to the actual value of the property in order 

to shock the conscience of the court. However, as the court of appeals recently 

noted in an unrelated case, "a search of South Carolina jurisprudence reveals only 

when judicial sales are for less than [10%] of a property's actual value[] have our 

courts consistently held the discrepancy to shock the conscience of the court." 

Bloody Point Prop. Owners Ass'n, Inc. v. Ashton, 410 S.C. 62, 70, 762 S.E.2d 729, 

734 (Ct. App. 2014) (citation omitted). Because the parties have not argued for us 

to either formally adopt this threshold or choose a different threshold (as other 

states have done), we will analyze the sale of the Property using the 10% threshold 

as the measure of whether the sale shocked the conscience. But see Restatement 

(Third) of Prop.: Mortgages § 8.3 cmt. b ("Generally, [] a court is warranted in 

invalidating a sale where the sale price is less than 20[%] of fair market value and, 

absent other foreclosure defects, is usually not warranted in invalidating a sale that 

yields in excess of that amount."); id. at Reporter's Note cmt. b (collecting cases 

from other jurisdictions that use different thresholds, ranging from 10% to 40% of 

the value of the foreclosed property).6 

III. 

As alluded to above, there are two methods used to calculate whether a bid price is 

so grossly inadequate as to shock the conscience. The first method is known as the 

Debt Method, as it focuses on the amount of debt a foreclosure purchaser must 

incur before gaining a free-and-clear title to the foreclosed property. Under the 

Debt Method, the outstanding mortgage is considered a "debt" that must be 

assumed by the foreclosure purchaser before receiving a free-and-clear title, 

thereby freeing the purchaser to resell the foreclosed property to a third-party. 

6

 It is worth noting that our appellate courts have never had the opportunity to 

consider a case in which the winning bid amounted to between 10% and 30% of 

the actual value of the property, and thus have not had an opportunity to set a 

different threshold. But see Poole v. Jefferson Std. Life Ins. Co., 174 S.C. 150, 

159–60, 177 S.E. 24, 28 (1934) (discussing with approval a case in which the 

Court affirmed the circuit court's decision to set aside a foreclosure sale with a 

winning bid of approximately 26% of the actual value of the property, although the 

Court did not use the "shock the conscience" language (citing In re Ragland, 172 

S.C. 544, 174 S.E. 592 (1934))). 
 

 

Thus, the Debt Method is a ratio comparing the foreclosure purchaser's total debt 

related to the property (i.e., the winning bid plus the amount of the outstanding 

mortgage) to the fair market value of the property. Here, using this method of 

calculation, a court would acknowledge Regime had paid (or will have to pay in 

the future) approximately 53.9% of the Property's value.7 

In contrast, the second method of calculation is known as the Equity Method, as it 

focuses on the amount of equity the foreclosure purchaser stands to gain through 

the foreclosure sale. Under the Equity Method, the outstanding mortgage is 

considered a liability that devalues the purchased property, meaning the 

outstanding mortgage is subtracted from the fair market value of the property 

rather than added to the winning bid price. Thus, the Equity Method is a ratio 

comparing the winning bid price to the amount of equity (i.e. the fair market value 

minus the amount of the outstanding mortgage) in the foreclosed property. Here, 

using this alternative method of calculation, Regime has only paid approximately 

4.9% of the Property's value—a percentage that falls below the 10% necessary to 

shock the conscience of the court, which would require us to overturn the sale.8 

No appellate court in South Carolina has ever held courts must apply one method 

of calculation over the other. See, e.g., Arrow Bonding, 399 S.C. at 606 & n.5, 732 

S.E.2d at 624 & n.5 (applying the Debt Method, but specifically noting the parties 

had not challenged the propriety of this method of calculation on appeal, and the 

Court therefore would not consider alternative ways of calculating the percentage 

of the foreclosure sale, such as the Equity Method); see also Winrose Homeowners' 

Ass'n, 423 S.C. at 227, 813 S.E.2d at 898 ("Arrow Bonding does not conclusively 

establish whether the Debt or Equity Method is the law in South Carolina."). 

Nonetheless, in most circumstances, a foreclosure purchaser will assume any 

obligation to pay outstanding senior liens in order to obtain free-and-clear title to 

the property. In those cases, it follows the Debt Method should be used. 

7

 Specifically, supposing Regime assumed the Hales' mortgage, its total debt 

incurred to obtain the Property would be $69,040 (the $3,036 winning bid plus the 

$66,004 outstanding mortgage), which is $53.9% of the Property's fair market 

value of $128,000. 

8

 Specifically, Regime's $3,036 winning bid price is 4.9% of the $61,996 of equity 

in the Property (the $128,000 fair market value minus the $66,004 outstanding 

mortgage). 
 

 

However, we reject the notion of a categorical, blind application of the Debt 

Method in all instances for exactly the circumstances presented in this case. Here, 

despite the foreclosure sale, the Hales have continued paying their mortgage and, 

thus, have continued to substantially reduce the amount of the outstanding senior 

lien. Just as Chief Judge Lockemy observed, it would be absurd under these 

circumstances to apply the Debt Method and give Regime credit for assuming the 

amount of the outstanding mortgage—it has taken no affirmative steps to legally 

obligate itself to take on the debt. Accordingly, the facts of this case demonstrate 

why, under certain circumstances, applying the Equity Method is the only logical 

option. 

Under the Equity Method, Regime's bid accounted for approximately 4.9% of the 

value of the Property, which was far less than the 10% threshold we have looked to 

in the past. As a result, under the circumstances presented in this case, Regime's 

winning bid was so grossly inadequate as to shock the conscience of the court. We 

therefore set aside the foreclosure sale and remand to the Master for further 

proceedings, including accounting for the fact that the Hales have continued to pay 

the mortgage on the Property. Regardless of their previous default, we order the 

Master and the parties to give notice of any further proceedings to the Hales to 

ensure they are given an opportunity to participate.9 

IV. 

We note our concern about this foreclosure proceeding. A foreclosure proceeding 

is a solemn judicial proceeding. While the HOA had the legal right to pursue 

collection of the debt owed, including foreclosure of the Property to satisfy that 

debt, this foreclosure action quickly morphed into a proxy to capitalize on a small 

debt. We are especially troubled by Regime's participation in a foreclosure 

proceeding to accommodate its business model of leveraging a nominal debt to 

secure an exorbitant return from homeowners who fear the prospect of eviction.10 

9

 The issue of failing to give notice to the Hales of the foreclosure proceedings and 

sale is one of potential concern to the Court, despite the Hales' failure to respond to 

the initial summons and complaint. However, the absence of notice was not raised 

by the parties as an issue in this case, and we therefore do not address it. In any 

event, our reversal of the judicial sale renders the notice issue moot. 

10 Once they were aware the Property had been sold at a foreclosure sale, the Hales 

offered $9,000 to Regime to settle the approximately $3,000 debt. In response, 

Regime offered to let the Hales keep their home in exchange for a payment of 

$35,000. We acknowledge that settlement negotiations may not be considered "to 
 

Regime's manipulation of the foreclosure proceeding is perhaps best illustrated by 

its practice of not following the typical foreclosure course and assuming 

responsibility for the senior mortgage. 

However, Regime would not have had an opportunity to engage in its questionable 

business practices had the HOA and its attorney not chosen to pursue foreclosure 

in the first place. The Hales were minimally in arrears on their HOA dues, yet the 

HOA foreclosed on a $128,000 home in its eagerness to collect the outstanding 

$250—an overdue amount less than 0.2% of the fair market value of the home, 

notwithstanding the amount of the outstanding mortgage. The true nature of this 

foreclosure action is illustrated by the service and filing fees (which are more than 

double the amount of the principal due) and attorney's fees (which were eight times 

the amount of the principal due). 

Similarly, at the initial hearing on Regime's rule to show cause, the circuit court 

commented the HOA's attorney's law firm "ha[d] become a pioneer in that whole 

effort [to treat defaulted regime fees as ruthlessly and quickly as defaulted 

mortgages] and ha[d] yet to convince anybody . . . that there's anything wrong with 

what [it was] doing." In response, the HOA's attorney brazenly bragged her firm 

had already received seven judgments in favor of various HOA clients in their first 

two to three years of business. 

A foreclosure proceeding is a last resort, not a business model to be swiftly 

invoked for the purpose of exploiting property owners. We do not countenance the 

improper use of foreclosure proceedings by the HOA, its attorney, or Regime. It is 

the utilization of the Equity Method (in terms of determining the effective sale 

price of the Property) that restores an objective measure of reasonableness to the 

facts presented and achieves a proper resolution of this matter. 

V. 

Our decision today should not be read as a shift toward providing relief to 

homeowners despite their own poor choices, in particular here, falling behind on a 

minimal amount of HOA dues and subsequently failing to respond to the summons 

and complaint. Rather, there are serious consequences to default, and had the 

HOA and Regime pursued foreclosure in the normal course and made affirmative 

prove liability for or invalidity of the claim or its amount." Rule 408, SCRE. 

Here, the settlement negotiations are referenced as evidence of Regime's 

manipulation of a foreclosure procedure to engage in strong-arm tactics. 
 

efforts to assume the Hales' mortgage, this case could have turned out very 

differently. 

However, under the unique facts of this case, the Hales have demonstrated 

Regime's winning bid price at the foreclosure sale—standing alone, as the 

outstanding mortgage cannot logically be added to it—is so grossly inadequate that 

it shocks the conscience of the court and cannot be sustained. For the foregoing 

reasons, we vacate the judicial sale of the Property and reverse and remand to the 

Master for further proceedings consistent with this opinion. 

REVERSED AND REMANDED. 

HEARN, FEW and JAMES, JJ., concur. BEATTY, C.J., concurring in a 

separate opinion. 
CHIEF JUSTICE BEATTY: I concur in the conclusion that the bid in this 

case is grossly inadequate and shocks the conscience. I would go a step further and 

adopt the Equity Method of determining an adequate sale price for residential 

property in a foreclosure action. Additionally, I would require that a homeowner, 

who is in default, receive notice of the date and time of the foreclosure sale. 

Homeownership is the quintessential American dream. Purchasing a home is 

the largest investment that most South Carolinians will make. To allow the hardearned 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.