Category Archives: Recent Cases in Community Association Law

Recent FHA Guidance on Condo Recertification

    Condominium projects must be certified by the Federal Housing Association (FHA) to be eligible for mortgages backed by the FHA. The FHA is the single largest mortgage insurer in the world; thus, the importance of FHA approval for condo projects cannot be overstated.

    Recently, the FHA released new guidance concerning the certification process. Getting a condo project approved is the first step, but maintaining certification is also very important. 
    
    FHA certification expires two years after the project has been approved. A condo project is eligible to seek recertification six months before the certification expires. If the project is not recertified six months after the expiration date, it must seek full certification. The determination of a project’s eligibility to complete the recertification process also depends on when the project received its initial approval.

Initial Approval Prior to January 1, 2000
Full certification is required

Initial Approval After January 1, 2000
    The project is eligible for the streamlined recertification process, which ensures the condo project maintains compliance with FHA standards. For recertification, the following documents are required:    

  • Cover letter
  • Financial documents (one of the following)
    • Budget
    • Reserve study
    • Fannie Mae Form 1037(a), Analysis of Annual Income and Expenses-Operating budge signed by an authorized individual
  • Management agreement (if applicable)
  • FEMA flood map
  • LOMA, LOMR or an Elevation Certificate (if applicable)
  • Evidence of required insurance coverage

For the full FHA recertification packet click here.

    This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

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The Right to Inspect Records

    Pursuant to the South Carolina Nonprofit Corporation Act, members of incorporated community associations are entitled to inspect and copy certain records. The Act distinguishes between automatic access and limited access to records.

Automatic Access
    A member is entitled to inspect or copy these documents at a reasonable time and place. The member must provide written notice at least five days prior to the date the member wishes to view the records. The member is not required to make a showing of good faith or proper purpose, although the member must pay reasonable charges incurred. The following records fall under this category:

  • Articles of incorporation
  • Bylaws Resolutions adopted by the board of directors
  • Minutes of all meetings of members and records of all actions approved by the members for the past 3 years
  • All written communications to members generally within the past 3 years, including the financial statements furnished for the past 3 years
  • A list of the names and business or home address of its current directors and officers
  • Most recent reports required by the Secretary of State

Limited Access
    A member may inspect limited access documents at a reasonable time and place. The member must provide written notice of a demand to copy and inspect at least five days prior to the date the member wishes to view the records. This demand must be made in good faith and for a proper purpose, which must relate to the requestor’s interest in the corporation based on his or her status as a member. It is also necessary for the member to describe with reasonable particularity the purpose and the records sought so the corporation is generally informed of the

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Record Keeping 101

    Most community associations in South Carolina are incorportated, therefore they are governed by the South Carolina Nonprofit Corporation Act . Pursuant to the Act, there are certain requirements that community associations must follow in terms of record keeping. The Act also provides members the opportunity to inspect and copy certain documents within the statutory guidelines. The issue of member inspection will be addressed in a subsequent article.


Meeting Minutes– It is necessary to keep permanent records of all meetings of corporation members and board of directors, a record of all actions taken by the members or directors without a meeting, and a record of all actions taken by committees of the board of directors. The Act does not specify the amount of detail required for these documents.


Accounting Records– The Act provides that corporations must maintain “appropriate accounting records.” Appropriateness depends on the size, nature, and other characteristics of the corporation. Accounting records do not have to be kept permanently, so it is up to the corporation to establish a document retention policy. Community association accounting records will typically include checkbooks, canceled checks, and receipts.


Membership Lists– A corporation must maintain a record of its current members in a form that can easily be put into alphabetical order and shows the number of votes each member is entitled to cast.


Form of Records– Records must be kept in either written form or a form that can be converted into written form in a reasonable amount of time.


Location of Records– A corporation is required to keep the following records at its principal office (or the home of an officer or director):



  • Articles of Incorporation

  • Bylaws

  • Resolutions adopted by the board of directors

  • Minutes of all meetings of members and records of all actions approved by the members for the last 3 years

  • All
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