South Carolina news has been flooded with stories of the Murdaughs in recent
months. The outcome of the murder trial for Richard Alexander Murdaugh,
Sr., commonly referred to as Alex Murdaugh (“Alex”), will
certainly affect the future of the family property. Margaret B. Murdaugh
(“Maggie”) is the titled owner of Moselle. One may be asking,
how did she come to take the title, and do the circumstances of her ownership
have any relevance?
The Murdaugh Estate, dubbed “Moselle” by the family, straddles Colleton County and Hampton County. The
property is comprised of eight tracts of land totaling more than 1,700
acres. According to tax records, the Murdaughs adopted Moselle as their
primary home sometime in 2020.[1] In 2016, Alex transferred Moselle to Maggie for the consideration of “$5.00
and love and affection.” This consideration amount is referred to
as a nominal purchase price.
It is not unusual to see a transfer between family members citing a nominal
purchase price. These transfers are typically indicative of a property
being gifted to a family member or close friend or as means of asset protection
within families. While transferring property to a spouse or other family
member may be one way to protect assets from creditors, this strategy
can be problematic in a few ways.
Prior to transferring Moselle to Maggie, Alex took out multiple mortgages
from Palmetto State Bank secured by the property. The mortgages contain
a “Due on Sale or Encumbrance” clause indicating that the
lender may demand the entire balance of the loan be paid when any part
of the property is sold or transferred. However, this specific transfer
is afforded protection from the “Due on Sale” clause by a
federal law called the
Garn-St Germain Depository Institutions Act of 1982. This Act prohibits lenders from exercising their rights under due-on-sale
clauses in nine circumstances, one being the transfer of ownership to
the spouse. Per this exception permitted in the Act, the mortgagee, Palmetto
State Bank, could not have accelerated the mortgages on Moselle solely
based on the 2016 transfer from Alex to Maggie.
It is important to note that South Carolina Code prohibits the transfer
of assets, including the conveyance of land, to defraud creditors. This
transfer may have a court wondering if Alex was attempting to avoid his
creditors and protect Moselle from judgments. This law is rooted in the
Statute of Elizabeth to protect both current creditors and potential judgment
creditors. A transfer made in anticipation of litigation can be invalidated
if the court determines that the Grantor’s intent was to hide assets
from creditors. Should Alex be convicted in the current trial, it will
be up to the court to determine whether the 2016 transfer of Moselle was
fraudulent or valid.
Conclusion
Moselle is a vast property with a history of complex real estate transactions.
The title to Moselle reflects Margaret B. Murdaugh as its owner, however,
the title was statutorily passed to her heirs at the time of her death,
which would include her spouse and children. Depending on the outcome
of the pending trials and litigation against Alex Murdaugh for alleged
criminal and financial wrongdoing, the ownership of Moselle may continue
to be complicated and remain in limbo until the outcome of those legal
actions is determined.
If you own property with a mortgage and would like to transfer title, at
Finkel Law Firm we can help you determine your rights to do so. Please
do not hesitate to contact Danielle Bennett at 843-577-5460 to schedule
a consultation.
Transferring Property Subject to a Mortgage: Garn-St Germain
You may be considering transferring the title to your real property but
aren’t sure if you are allowed if you still have a mortgage. Many
South Carolina mortgages include “due on sale” clauses hindering
property transfers without the lender’s consent. These clauses say
that the entire balance on your mortgage becomes due if you sell or transfer
the property securing the mortgage loan. The Garn-St Germain Depository
Institutions Act of 1982 affords some protections to property owners that
may otherwise be subject to the due-on-sale provisions in their mortgage.
In 1982, Congress enacted the Garn-St Germain Depository Institutions Act
it prohibited lenders from exercising their due-on-sale clauses in nine
specific situations.
For loans secured by residential[2] real estate, the lender may not force a sale upon transfers in the following
circumstances:
- The creation of a subordinate lien (such as a second mortgage);
- The creation of a loan for household appliances;
- A transfer on the death of a joint tenant;
- Leases of three years or less not containing an option to purchase;
- A transfer to a relative resulting from the death of a borrower;
- A transfer to the spouse or children of the borrower;
- A transfer to a spouse resulting from a decree of a dissolution of marriage,
legal separation agreement, or from an incidental property settlement
agreement;
- A transfer into an inter vivos trust in which the borrower is and remains
a beneficiary; or
-
Any other transfer or disposition described in regulations prescribed by
the Federal Home Loan Bank Board.
If you’re considering transferring an interest in the property with
a mortgage, Finkel Law Firm LLC can advise you of your rights. Please
do not hesitate to contact Danielle Bennett at 843-577-5460 to schedule
a consultation.
[1] South Carolina allows residents to apply for a reduced tax rate on their
primary home, incentivizing owners to update their primary residence designation
with the county tax office when they move.
[2] 12 U.S.C. § 1701j-3(d)(8). “With respect to a real property
loan secured by a lien on residential real property containing less than
five dwelling units . . .”