SOUTH CAROLINA GETS ITS “ACTS” TOGETHER

South Carolina Homeowners Association Act

and

Department of Consumer Affairs Services for Homeowners and Homeowners Associations Act became law on May 17, 2018

 

After years of trying, the South Carolina legislature has passed significant legislation regulating various aspects of homeowners association governance and administration. The South Carolina Homeowners Association Act and The Department of Consumer Affairs Services for Homeowners and Homeowners Associations Act became law when they were signed by the governor on May 17, 2018. These are the key provisions of both Acts that apply now to all homeowners associations in South Carolina.

South Carolina Homeowners Association Act

  1. In order to be enforceable, all governing documents for a homeowners association must be recorded in the public registry of the county where the property is located. To continue to be enforceable, governing documents not recorded prior to May 17, 2018 must be recorded by January 10, 2019. “Governing documents” includes declarations, master deeds or bylaws or any amendments to the declaration, master deeds or bylaws.
  1. Rules, regulations and amendments to rules and regulations are effective upon their passage or adoption but must also be recorded in the public registry in the county where the property is located by January 10 of the year following their adoption or amendment. Homeowners associations in existence on May 17, 2018 must record their rules, regulations and any amendments thereto by January 10, 2019.
  1. In addition to recording, rules, regulations and amendments must be made accessible to homeowners association members upon request. These can be provided by electronic mail or other method at the option of the homeowners association as long as the method selected ensures actual notice. Homeowners associations may satisfy their obligation to make rules and regulations accessible by posting them in a conspicuous place or by making them available on an internet website where they may be downloaded.
  1. The Act appears to exempt the recording of governing documents and rules and regulations from the usual requirements of witnesses and acknowledgements under Section 30-5-30.
  1. The Act includes requirements that relate to homeowners association budgets but expressly provides that the budget provisions DO NOT apply to homeowners associations that are incorporated under the South Carolina Nonprofit Corporation Act. Since most associations are incorporated under the Nonprofit Corporation Act, the budget requirements will not likely affect many homeowners associations.
  1. The document and record production of provisions of the Nonprofit Corporation Act are made applicable to all unincorporated homeowners associations. The Act provides that the purpose of making those sections applicable is to allow “homeowners access to inspect and copy a homeowner association’s annual budget and homeowner’s membership list.” It is not clear if inspection rights are limited to these documents.
  1. Magistrate courts are given “concurrent” jurisdiction (presumably with the Circuit Court) to adjudicate monetary disputes “arising under” the Act, but it is not clear what monetary disputes might arise under the Act.
  1. The Act expressly provides that it may not be construed to conflict with the provisions of the Nonprofit Corporation Act.

 

Department of Consumer Affairs for Homeowners and Homeowners Associations Act

  1. The Department of Consumer Affairs is authorized to include information regarding homeowners association complaints (including forms) and educational materials on its website.
  1. The Department of Consumer Affairs is required to receive and record data from all calls and written complaints from homeowners or homeowners associations that it receives. The Department is required to gather information on every complaint and to provide each complaint to the homeowners association or the homeowner complained against.
  1. By January 31st of each year, the Department is required to provide a report of the data collected and the complaints received to the Governor, to the General Assembly and to the public through the Department’s website.
  1. The Department is not authorized to take any other action regarding homeowner or homeowners association’s complaints. The Department is expressly prohibited from promulgating regulations or issuing guidelines concerning homeowners association administration, governance or governing documents and from serving as an arbiter in disputes between the homeowner and homeowners association.

Amendments to Residential Property Condition Disclosure Requirements

In addition to these two new Acts, Section 27-50-40(A) of the S.C. Code has been amended to clarify the disclosure obligations of real property owners who are seeking to sell their property, including their obligations to disclose the existence of a homeowners association.

All South Carolina homeowners associations need to act now to record all their existing but unrecorded governing documents and rules and regulations. January 10, 2019 is a hard deadline for recording those documents. The law is not clear as to the effect of a failure to record existing unrecorded governing documents and rules and regulations on or before that date.

 

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Please contact Timothy G. Sellers if you have any questions about this post.