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Category Archives: Recent Cases in Community Association Law

Community Within a Community Upsets Neighbors

    Here’s a recent Post and Courier article concerning Battery Gaillard, a West Ashley subdivision.  Several doctors in the neighborhood formed an LLC and purchased a lot on which they intend to build a private swimming pool and tennis courts for their exclusive use.  The lot is not adjacent to any of the doctors’ property, which brings up zoning and CC&Rs issues. Neighbors are also raising eyebrows at the commercial ownership of the lot.  Both sides have engaged counsel for what may prove to be a very interesting lawsuit.
    
    It is interesting to note that a South Carolina statute requires local planning agencies to inquire as to the existence of restrictive covenants before issuing a permit.  S.C. Code Ann. § 6-29-1145.  

    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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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.

    This site and any information

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Residential Development Owner Has No Obligation to Pay Sewer Fees


    The Court of Appeals reversed the master’s holding which allowed Dorchester County to bill the development owner for tenants’ sewer charges. Tranquil Properties, Inc., v. Dorchester County, 387 S.C. 474, 693 S.E.2d 24 (2010).

    This case involves a planned development in Dorchester County consisting of 40 individual units. Title to 39 of the units and the common areas was transferred to Tranquil Properties in 2006, subject to easements, restrictions and covenants of record. Each of the four buildings in the development connects via a feeder line to the main sewer tap located under a slab in the common area. Originally, the development used a private septic tank system, but later switched to the public sewer system.


    Prior to 2007, the County billed each unit individually for sewer use. However, in June of that year the County suddenly began billing Tranquil Properties directly for the entire development’s service. In response, Tranquil Properties brought a declaratory judgment action against the County.


    The master-in-equity referred to the original association covenants. Based on the association’s ability to assess fees “to promote the recreation, health, safety and welfare of the residents and for the improvement and maintenance of Common Areas,” the master determined that as owner of the common areas and successor to the association, Tranquil Properties had the responsibility to provide sewer service to its tenants.


    The court of appeals, however, determined that it was “too great a leap” to require Tranquil Properties to pay monthly sewer service. The court strictly construed the original covenants, and in doing so, found that there was no specific mention of this requirement. The court concluded by finding “no basis in the covenants to redirect that obligation.”


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

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HOA President Sues Members


    A San Antonio homeowners’ association is in the middle of a courtroom battle with fees already reaching $80,000.  The president of the association filed suit after several dissatisfied members held a special meeting to oust her.  Evidently the president closed board meetings to the association members and failed to respond to members’ requests to review documents (this right was discussed in a previous article).  Members feel that the president is abusing her power by keeping board business heavily guarded and using intimidation to maintain her control.


    The president contends that the special meeting was invalid for want of sufficient votes and she brought suit to stop it.  She also explains that the meetings were closed because they were “getting out of control.”  The association members are enraged at the costly litigation expenses, which will end up coming out of the association’s wallet.

    An association’s bylaws provide the responsibilities of board members and the proper course of action if these responsibilities are not being fulfilled.  Although litigation can sometimes be necessary, it is typically a last resort. Associations can also consider alternative dispute resolution such as arbitration and mediation to come to an amicable resolution of problems that cannot be resolved within the association. 

    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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* These articles and related content on this website are provided without warranty of any kind and in no way consitute or provide legal advice. You are advised to contact an attorney specializing in Association Management for legal advice related to your specific issue and community. Some articles are provided by thrid parties and online services. Display of these articles does in no way endorse the products or services of Community Association Management by the author(s).

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