Regions Bank v. Wingard Properties, Inc.
394 S.C. 241
| S.C. Ct. App. | 2011Background
- Regions Bank recorded a mortgage on Lot 38 in November 2006 as part of a $7,000,000 construction loan to Wingard.
- Covington had a buy-contract with Wingard for Lot 38 and delivered a $276,700 down payment by check on October 20, 2006.
- Wingard did not deposit Covington’s down payment until November 14, 2006, the day after Regions Bank recorded its mortgage.
- Regions Bank knew of Covington’s purchase agreement and down payment amount before advancing funds, yet did not require deposit timing as a condition of the loan.
- Trial court awarded Covington a first-priority equitable lien of $286,700 superior to Regions Bank’s mortgage, finding substantial equity in Covington’s favor.
- Regions Bank argued Covington’s down payment funds were not deposited timely and that equity should follow the law, favoring the first-filed mortgage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Covington’s equitable lien supersedes Regions Bank’s mortgage. | Covington | ||
| prior contract and known interest justify priority. | Regions Bank | ||
| first to-file rule and recording statute control unless there is collusion. | Covington entitled to first-priority equitable lien. | ||
| Whether Regions Bank had notice of Covington’s equity affecting priority. | Regions Bank knew Covington’s contract and down payment amount. | Regions Bank had no obligation to subordinate absent contractual terms; no collusion proved. | Equity intervened due to Regions Bank’s knowledge of Covington’s interest. |
| Whether permissible to consider forfeiture likelihood in equity balancing. | Forfeiture likelihood supports Covington’s priority. | Forfeiture should not bar foreclosure relief if not certain. | Substantial likelihood of forfeiture supports Covington’s priority equity. |
| Whether Regions Bank’s failure to name Covington in the foreclosure action violated equity. | Regions Bank should be required to do equity; Covington’s intervention was proper. | Intervention was permissible and prejudice inadequate to defeat relief. | Equity did not require reversing on this basis; intervention allowable. |
Key Cases Cited
- South Carolina Fed. Sav. Bank v. San-A-Bel Corp., 307 S.C. 76, 413 S.E.2d 852 (Ct.App. 1992) (bank priority defeated by known preconstruction purchaser interests)
- Crystal Ice Co. of Columbia, Inc. v. First Colonial Corp., 273 S.C. 306, 257 S.E.2d 496 (1959) (recording statute protection defeated by notice of prior purchase money mortgage)
- First Fed. Sav. & Loan Ass’n of S.C. v. Finn, 300 S.C. 228, 387 S.E.2d 253 (1989) (equitable liens require express or implied contract with property as security)
- Buckley v. Shealy, 370 S.C. 317, 635 S.E.2d 76 (2006) (equity’s broad power to effectuate just results in balancing remedies)
- Elliott v. Snyder, 246 S.C. 186, 143 S.E.2d 374 (1965) (forfeitures are not favored and equity can relieve against them)
- Lewis v. Lewis, 392 S.C. 381, 709 S.E.2d 650 (2011) (de novo review of equity findings; credibility still matters)