LEAD LETTER OF THE WEEK

Letter | South Carolina needs an HOA law

March 23, 2014 

I am writing to express my appreciation and full support for The Sun News’ recent editorial, which discussed the urgent and pressing requirement for an HOA law in South Carolina. There is no question among reasonable people (those who have been associated with HOAs) that there is a need for some basic regulations regarding these organizations.

For some reason South Carolina has resisted passing a law that establishes badly needed rudimentary laws and regulations regarding Homeowners Associations in South Carolina. Several states have laws regulating and/or establishing standards for these entities which affect a great number of homeowners in our state who in some cases are subjected to almost unlimited and unfair power with no effective recourse.

One must first understand there are two types of associations; homeowner controlled and developer controlled entities. The first type of HOA, homeowner controlled, has several issues to address regarding regulation but in this case it is critical the homeowners have a voice in the election of the board and can replace them if they believe their interests are not being upheld. Homeowner controlled associations take control once the developer completes the development or otherwise turns control over to the homeowners per his discretion. Regulations regarding these associations should include setting standards for the governing documents required, open meetings, external financial audits, critical votes required by all members, access to information, annual meetings, copies of documents, and free and open elections. I am sure many homeowners are not aware of the dues structure, the rules and regulations, financial condition, and other basic issues of the HOA prior to purchasing their home, which leads to unnecessary confusion and conflict.

The more dangerous and undemocratic of the two is the developer-controlled association in which the developer legally establishes extremely one-sided rules and regulations to essentially relegate the homeowners who purchased property in the development to their dictatorial power. In most cases the unwary homeowner doesn’t find out about this situation until the closing on their property, as this information is rarely disclosed and attorneys are reluctant to explain them at closing. There are currently few or no limits on the developer’s power in these agreements and it can extend for periods of 20 years or more with no limitations. These documents are rarely discussed and/or explained prior to purchase of the property.

Unethical and immoral developers take great advantage of these legal documents to dictate HOA policy to their personal advantage; raise dues, implement special assessments, hold secret board meetings, appoint boards made up of their associates, and allocate finances with no accountability, oversight, or knowledge of the property owners. And, of course the developers will then ensure they exempt themselves from the financial burdens they unilaterally establish.

The developer can buy and sell the property at will and pass these documents on the next owner with little or no regard for the property owners who bought property in the subdivision. A just HOA law would set limits on the power of developers, time limits on development, establish representation on the board, and institute a set of reasonable rights for homeowners who own property in these developments. The law would also require all documents (including a recent audited financial statement) provided to homeowners three days prior the purchase versus hiding them in the vast stack of documents that are impossible to read at a typical home closing.

As we have seen over the years, there is no question there are many abuses by unscrupulous developers and homeowners’ boards in South Carolina. Now time to act and pass an honest and fair bill to all involved in this issue. There is a significant hole in the current law that must be filled by forward thinking lawmakers with a positive step forward in this state. There is a reason many states have these laws and it is time for South Carolina to correct our problem and improve the situation for all.

Legislating a fee to be paid by association or homeowners isn’t required at this point, at least not as a first step to passing a meaningful law. If the law is violated there is currently a legal system in place to air grievances, either through arbitration or legal action if the law is violated or ignored. Establish the law, set regulations, and open the home buying process to scrutiny and competition by intelligent purchasers who are provided accurate information. Again a key provision would be to require documents be provided for review and explanation to the unsuspecting homeowner prior to purchase of the property.

The writer lives in Conway

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