Court Opinion

ID: 8292470
Source: CourtListenerOpinion
Date Created: 2022-10-17 10:49:56.355028+00
Date Added: 2024-06-11T16:43:54.354861
License: Public Domain

Cureton, Judge (concurring):
I concur fully with the findings and conclusions reached in Part I of the majority opinion. I also agree with my brothers in the majority that the board of appraisers did not abuse its discretion in considering a profit discount in arriving at the true value of the property.
S.C. Code Ann. Section 29-3-720 (1976) sets forth a list of factors to be considered in determining the true value of property being appraised. It is undisputed the board took into account entrepreneurial profit. That is, the appraisers reduced their final valuation to reflect a profit to the purchaser of the property on resale of the property.
The developers argue principles of equity dictate that a profit discount is inappropriate when a mortgagee buys property at a foreclosure sale because the lender will realize a profit upon the resale of the property and also be awarded the amount of the discount as part of the deficiency judgment. They argue further that a discount that permits double recovery to the lender cannot be sanctioned by a court of equity. In support of their position they refer us to the cases of Savers Fed. Sav. & Loan Ass’n. v. Sandcastle Beach Joint Venture, 498 So. (2d) 519 (Fla. Dist. Ct. App. 1986), and Cheltenham Fed. Sav. & Loan Ass’n. v. Pocono Sky Enterprises, Inc., 305 Pa. Super. 471, 451 A. (2d) 744 (1982).
*232A review of those cases convinces me they afford the developers little support for the reason the Florida and Pennsylvania deficiency statutes vary greatly from ours. In both jurisdictions, the mortgagee must apply to the court by motion or separate suit for the entry of a deficiency judgment after a sale of the mortgaged premises. Additionally, in both states the court has broad discretion in either determining whether a deficiency judgment will be entered, Savers Fed. Sav. & Loan, 498 So. (2d) 519, or the amount of the deficiency to be entered. Cheltenham, 451 A. (2d) 744. On the other hand, in South Carolina, a mortgagee whose debt remains unsatisfied after sale of the property is entitled to a deficiency judgment unless the right thereto is waived. Bartles v. Livingston, 282 S.C. 448, 319 S.E. (2d) 707 (Ct. App. 1984).
In Pennsylvania a distinction is also made between a lender who buys property at a foreclosure sale and a third party who buys the same property. When foreclosed property is bought by the lender, the judgment creditor must petition the court to fix the fair market value of the real property sold. 42 Pa. Cons. Stat. Ann. Section 8103. Thus, the lender has the burden of establishing the market value of the property as a prerequisite to recovering a deficiency. Its failure to do so gives rise to the irrebuttable presumption that the lender has been paid in full. In re McGrath’s Estate, 159 Pa. Super. 78, 46 A. (2d) 735 (1946); 59 C J.S. Mortgages Section 782(b) (1949).
The object of our appraisal statute is to insure that a mortgagor’s property is not sacrificed at a forced sale. This is accomplished by substituting the fair value of the property for the price at foreclosure sale as the amount to be deducted from the debt in order to fix the amount of a deficiency judgment. 59 C.J.S. Mortgages Section 782 (1949); G. Osborne, Handbook on the Law of Mortgages Section 335 (2d ed. 1970). Unlike some other deficiency statutes, our Act contains no penalties if the lender is the purchaser at the foreclosure sale. See S.C. Code Ann. Section 29-3-670 (1976).
Apparently because the Pennsylvania statute makes a distinction between a lender as purchaser and others as purchasers, the Cheltenham court thought fair market value should be determined on the basis of “what reasonably the judgment creditor can get out of the property in partial or complete recapture of the loan . . ., but without giving the *233judgment creditor an additional profit.” Cheltenham, 305 Pa. Super, at 480, 451 A. (2d) at 749. The court further stated:
The gross selling price, as determined from the judgment creditor’s viewpoint, seems obviously a higher value than would be offered by an “investor-developer” who is not obliged to take over the property. Such buyer will be induced to buy the property only if his purchase price plus his expected costs will still permit him an attractive profit to compensate him for his knowhow, expertise, risk of loss, and the use of his money. Fundamentally, Henkelman’s testimony as to value, apparently adopted by the lower court, is an expression of his opinion of what a speculative investor would pay for the property, rather than an expression of the “fair market value” as between [mortgagee] and [mortgagors], neither of whom is acting willingly or speculatively. Both are trying to get out of an unfortunate situation on the best basis possible.

Id.

Cheltenham explicitly recognizes that if property is purchased at a foreclosure sale by a nonparty, it is perfectly appropriate to consider an entrepreneur’s profit. I discern nothing in the South Carolina case or statutory law which would require us to treat a mortgagee who purchases at a foreclosure sale differently from a nonparty purchaser. The court recognized in Cheltenham and there was testimony in this case, that an “investor-developer” would be induced to buy the property only if he could make a profit on a resale of it. Further, the appraisers testified that a discount was proper under recognized appraisal principles. I see no reason why a mortgagee who accepts the risk of buying and disposing of or holding property bought at judicial sale should not be entitled to the same discounts as a third party who takes the same risk. Besides, the developers here are not prejudiced by allowing the lender the discount because they would have been in no better position if a third party had purchased the property at the judicial sale.1 For these reasons I would hold an entrepreneur’s profit is a proper element to consider in arriv*234ing at the true value of the property and there was no abuse of discretion by the board of appraisers.

 Indeed, it is assumed that because a third party did not buy the property at the foreclosure sale no one else was interested in purchasing the property at the price paid by the lender.