July 17, 1990

David M. Axtmann
Hyde County State's Attorney
P.O. Box 187
Highmore, South Dakota 57345

OFFICIAL OPINION NO. 90-27

Redemption from Sheriff's Sale by U.S. Government

Dear Mr. Axtmann:

You have requested an official opinion from this Office with regard to the following factual situation:

FACTS:

On January 29, 1988, a Sheriff's Sale was conducted relative to a Mortgage Foreclosure brought by Federal Land Bank. A third party submitted the high bid which was sufficient to satisfy the Judgment of Federal Land Bank. I have now been contacted by Farmers Home Administration, a Second Mortgage Holder, about Redemption, which they anticipate exercising January 4, 1989. They have requested me to furnish them the amounts necessary to redeem. Pursuant to SDCL 21-52-14, I advised them that they would have to pay the amount of purchase price plus any sums paid by the purchaser to protect his interest in such property as set forth in SDCL 21-52-14 along with interest rate of 12% as specified in SDCL 54-3-5.1 and SDCL 54-3-16. Farmers Home Administration responded by stating they are not bound by South Dakota statutes in regard to interest rates and need only to pay 6%. (See attached Solicitors Opinion). A third Mortgage is held by a private banking institution.

Based upon the above facts, you have asked the following question:

QUESTION:

What interest rate applies to a redemption by Farmers Home Administration of a Mortgage Foreclosure Sale?

IN RE QUESTION:

In essence, you have requested my opinion regarding whether the Farmers Home Administration is subject to SDCL 21-52-14 and 54-3-5.1. SDCL 21-52-14 provides that a redemptioner may redeem foreclosed property by paying certain sums plus interest at the legal rate as specified in SDCL 54-3-5.1. That section provides for payment of interest at a category B rate which is now set at 12% per year. The problem arises because 28 U.S.C. 2410, a statute which permits the United States to be named as a party in a civil action to quiet title or to foreclose a mortgage or other lien, provides that the United States may redeem any property which is the subject of the suit by paying the amount paid by the purchaser at the sale as well as interest on the amount paid at 6% per annum from the date of such sale. Thus, whatever is paid at the time of sale by the purchaser pursuant to SDCL 21-52-14 must be paid by the redemptioner regardless of whether it is the United States Government. In the case of the United States Government, however, from the date of sale the Government, as redemptioner, must pay only those amounts plus a limited rate of 6% interest.

You have furnished me with an opinion from the General Counsel of the Department of Agriculture reminding its offices of this statute. The opinion urges that the State's legal rate is not applicable to the Federal Government, principally because of the Supremacy Clause of the United States Constitution. It is also true that the government cannot be sued without its consent, and since 28 U.S.C. 2410 provides for this consent, the parties who sue the government must abide by the terms of the statute permitting such suit any purchaser also voluntarily entered into the transaction and must be held to know the law.

You have also advised the notice of mortgage foreclosure sale published over the signature of the Sheriff stated that the premises will be sold subject to redemption as provided by law in the State of South Dakota. The fact that a legal publication makes this statement is not, of course, binding on the United States Government, and, in any event, federal law, which is also the supreme law in the State of South Dakota, determines the amount of the interest to be paid by the United States Government.

Finally, you have suggested that since Federal Land Bank noticed the matter and specifically stated that purchase was pursuant to state law that the federal government has adopted the state rate or waived the requirements of 28 U.S.C. 2410. I have not been presented with anything that would give the Land Bank any authority to waive congressional or constitutional requirements.

Sincerely,

ROGER A. TELLINGHUISEN
ATTORNEY GENERAL

RAT:ss