by: Tenise A. Cook and Smita Gautam

The Servicemembers Civil Relief Act (the “SCRA”), 50 U.S.C. App. § 501 et seq., was enacted “to provide for the temporary suspension of judicial and administrative proceedings and transactions that may adversely affect the civil rights of servicemembers during their military service.” 50 U.S.C. App. § 502(2). The SCRA is an expansion of the original Soldiers’ and Sailors’ Civil Relief Act (the “SSCRA”), and much of the case law interpreting the SSCRA is still applicable to the SCRA today. It applies to members of the armed forced and uniformed services who are currently on active duty, called to active duty for over 30 consecutive days to respond to a national emergency, in active service, or absent from such duty due to sickness, wounds, or leave. 50 U.S.C. App. § 511. It also applies the dependents and legal representatives of those protected by the SCRA. 50 U.S.C. App. § 519. Real estate attorneys should thus be mindful of the many provisions which can impact their practice.

The SCRA contains several provisions affecting mortgages. First, under 50 U.S.C. App. § 527, when a mortgage obligation was incurred before active duty, the interest rate is reduced to 6% during the period of military service and for the following year. To receive this reduction, the servicemember must provide written notice to the creditor, along with copies of the military orders, within 180 days of the end of the service period. The SCRA provides a mechanism by which the creditor can challenge this interest rate reduction, by showing that the servicemember’s ability to meet the interest obligation “is not materially affected by reason of the servicemember’s military service.”

Additionally, 50 U.S.C. App. § 533 provides protections against enforcement of mortgage obligations when they are secured by a security instrument, originated prior to the military service, and where the servicemember remains obligated. If the servicemember’s ability to meet its mortgage obligation is “materially affected by military service,” the court shall (if upon application by the servicemember) or may (if upon the court’s own motion) “stay the proceedings for a period of time as justice and equity require,” or “adjust the obligation to preserve the interests of all parties.” Such an action is required to be filed either during or within one year of military service. The SCRA expressly provides that a foreclosure instituted as a result of default of a mortgage obligation protected under this section is only valid “upon a court order granted before such sale, foreclosure, or seizure with a return made and approved by the court,” or alternatively, upon a written waiver by the servicemember, subject to the requirements of 50 U.S.C. App. § 517(a). The SCRA provides for criminal penalties for violations of this section.

When civil litigation is filed involving any party that is protected by the SCRA, and the servicemember has received noticed of the pending litigation, the court shall (upon application by the servicemember) or may (upon the court’s own motion) stay the litigation for a minimum of 90 days, subject to the conditions in 50 U.S.C. App. § 522. The court has some discretion in determining whether the military service does “materially affect” the servicemember’s ability to participate in the litigation. Cox v. Yates, 96 Ga. App. 466, 466, 100 S.E.2d 649, 651 (1957); see also Mays v. Tharpe & Brooks, Inc. “As a general rule, however, the trial court should grant a stay unless something appears sufficient to show that the rights of the serviceman, as a litigant, will not be materially affected by a determination of the pending litigation.” Shelor v. Shelor, 259 Ga. 462, 462, 383 S.E.2d 895, 896 (1989) (citing Parker v. Parker, 207 Ga. 588, 589(2), 63 S.E.2d 366 (1951)).

Once the court has determined that the servicemember is “materially affected” by their military service as to compliance with a civil court judgment before, during, or within 90 days of the period of military service, the court shall (upon application by the servicemember) or may (upon the court’s own motion) either stay or vacate such judgment, pursuant to 50 U.S.C. App. § 524. A stay under the SCRA may be ordered for the duration of the period of military service and the following 90 days, or set for a timeframe within that period. 50 U.S.C. App. § 525(a). The SCRA also mandatorily tolls applicable statutes of limitation by expressly stating that “[t]he period of a servicemember’s military service may not be included in computing any period limited by law, regulation, or order for the bringing of any action or proceeding in a court . . .” as well as other legal proceedings. 50 U.S.C. App. § 526(a); see Newman v. Newman, 234 Ga. 297, 298, 216 S.E.2d 79, 80 (1975).


Furthermore, 50 U.S.C. App. § 521 specifically protects servicemembers from default judgments. When civil litigation is commenced and the defendant servicemember fails to make an appearance, the plaintiff is required to file an affidavit either with factual support to show whether or not the defendant is currently in military service, or stating that the plaintiff is unable to determine whether the defendant is in military service. If the court is unable to determine whether the defendant is protected by the SCRA, it may require the plaintiff to file a bond to indemnify the defendant against loss or damage as a result of an adverse judgment. If the court determines that the SCRA applies, the court must appoint an attorney to represent the servicemember. In the event that the court-appointed attorney is unable to locate the servicemember, the actions taken by the attorney do not bind the servicemember, nor do they waive any available defenses. Furthermore, under 50 U.S.C. 525, the court-appointed attorney or the court itself may move for a minimum 90-day stay, upon the court’s determination that a defense may exist which requires the presence of the servicemember, or that the court-appointed attorney either has not been able to reach the servicemember or determine whether a defense exists. The court may also vacate a default judgment entered during a period of military service, or within 60 days thereafter, if “was materially affected by reason of that military service in making a defense to the action; and the servicemember has a meritorious or legal defense to the action or some part of it.” The servicemember (or his court-appointed attorney) must move to vacate or set aside judgment within 90 days of the end of the period of military service.

In sum, while the SCRA has limitations in its applicability, the overarching purpose and guiding principles call for it to be construed in favor of the protected individuals. Thus for litigation and foreclosure related purposes, it is imperative to determine whether the SCRA is applicable to any affected parties, in order to avoid the high costs of violating the act. Additionally, it is recommended to seek a waiver or agreement from the servicemember when possible to avoid the high costs and lengthened timelines triggered by SCRA protections.