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Why Incorporate?

    Although there is no requirement in South Carolina mandating community association incorporation, it is nevertheless strongly advisable. There are many benefits to incorporation, and I have summarized a few important considerations below.

    First, incorporation acts to protect association members individually by creating a “corporate shield.”  This shield blocks members’ personal assets in the event that the association becomes liable for large sum.  Just like in every other business, association members have to contemplate the potential for liability and the need to protect their individual interests.

    A second advantage of incorporation is that it gives an association the ability to borrow money from a financial institution. Getting a loan may be necessary for a struggling association in light of today’s economic hard times and high rates of assessment delinquency.  Even if your association has adequate reserve funding and seems financially secure, a loan may be necessary to avoid astronomical special assessments in the event of an emergency. 

    Third, when issues or questions arise an incorporated association can turn to the South Carolina Nonprofit Corporation Act and applicable corporation case law to find solutions and procedural guidelines.  This can provide peace of mind to a concerned association when confronted with uncertain situations.

    The fourth, and probably most important reason to incorporate a community association has to deal with the association’s ownership of property.  An incorporated association can hold the fee title to real property in its own name, without the need of an expensive trust.  This can save the association a great deal of money and also simplify the title to common area property.
    
    If your association is unincorporated or if you are unsure of its legal status, you may want to consider further exploration of the benefits of incorporation and the process of filing the appropriate paperwork with the Secretary of State.

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