Did the South Carolina AG decide whether a homeowners association violated its bylaws or voting rules?

Official title

Regarding Home Owner Associations (HOAs) operating under the South Carolina Nonprofit Corporation Act as per Section 33-31-171 of the Act.

Requester

The Honorable R. Shannon Riley, Member, House of Representatives

Plain-English summary

In 2013, the Attorney General responded to a homeowner's questions about a nonprofit association's tax district initiative, board appointments, fee collection, and voting. The office did not decide whether the board violated its governing documents or whether votes were counted properly. It said those matters involved facts or private legal advice beyond the opinion process. It forwarded some concerns to its civil section for review and noted that nonprofit voting provisions could yield to different rules in an association's articles or bylaws.

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did the opinion find that the HOA board improperly created the special tax district?
A: No. The office declined to determine the facts and forwarded that concern to its civil section for review.

Q: Did it decide whether owners of multiple lots had too many votes?
A: No. It said interpreting the association's covenants, articles, and bylaws for that dispute required private legal advice or factual review.

Q: Did it tell the board to pursue unpaid association fees?
A: No. The office characterized that request as legal advice to a private nonprofit and recommended private counsel.

Q: Did state nonprofit voting rules apply regardless of bylaws?
A: The opinion said nonprofit corporations had to follow the law, but pointed out that several voting provisions applied unless the articles or bylaws provided otherwise. It did not determine what this association's documents required.

Background and statutory framework

The opinion described the Attorney General's limited role in issuing legal opinions and its separate authority to investigate certain nonprofit violations. It distinguished general state nonprofit rules from applying an association's own documents to disputed conduct. The office did not adjudicate the homeowner's allegations.

Citations and references

• Section 33-31-171 of the South Carolina Code, discussed for nonprofit investigations.
• Section 33-31-721 and related voting provisions, discussed for rules that can depend on articles or bylaws.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/june-26-2013/
• Original PDF: https://www.scag.gov/wp-content/uploads/2013/07/riley-r-s-os-9620-6-26-13-homeowners-association-sc-nonprofit-corporation-act.pdf

Original opinion text

ALAN WILSON
A1TORNEY GENERAL

June 26, 2013
The Honorable R. Shannon Riley
Member, House of Representatives
6309 Highway 35 No11h
Hodges, South Carolina 29653
Dear Representative Riley:
Attorney General Alan Wilson has referred your letter of February 8, 2013 to the Opinions section for a response. The following is our understanding of your question presented and the opinion of this Office concerning the issue based on that understanding.

Issue: As quoted by your constituent included in your letter:

"It is my understanding your office may provide Law opmzons regarding Home Owner Associations (HOAs) operating under the South Carolina Nonprofit Corporation Act as per Section 33-31-171 of the Act. The enclosure addresses ~pecific concerns I have with our Board's handling of a Special Tax District (STD) and voting rights matter. We are an incorporated nonprofit HOA consisting of single-family homes located in the County of Greenwood, SC. We are governed by the South Carolina Nonprofit Corporation Act, Articles of Incorporation, CCR&Es, Bylaws, and a BoD. Our Board compensates a property management company for limited administrative services and periodic legal opinions concerning Association matters. Our Subdivision consists of 264 lots. ... I respectfully request an opiniOn by your Office regarding the [the following questions}:

1) Did the [Harborside Subdivision Homeowner Association, Inc. 's] Board contravene the intent of Section 33-31-1021 of the South Carolina Nonprofit Corporation Act by not notifying our members or taking a vote prior to implementing the [2011 Special Tax District] initiative [suggested by Greenwood County Council]? 2) Is it lawful and ethical for our [Harborside Subdivision Homeowner Association, Inc. 's] Board to assign S TD [Special Tax District} Commissioners from within the [Harborside Subdivision Homeowner Association, Inc. 's} Board, or should they have assigned Commissioners from outside the Board? 3) Should the [Harborside Subdivision Homeowner Association, Inc. 's] Board aggressively p ursue collection of the full amount off ees legally owed to our Association IA W Article III (b) of the Association 's bylaws and its Resolution 2012-02; and should that action include carrying forth legal proceeding under Law for a right-to-cure lien on the properties that would compel payment of all accrued amounts in arrears once the property is transferred or sold? Although costly, those actions can be bundled to reduce cost. R EMBERT

c. D ENNJS BUJLDING • POST OFFICE Box I I549 • C OLUM BIA • SC 292 I 1- 1549 • TELEPHONE 803- 734- 3970 • FACSIMILE 803-253-6283

The Honorable R. Shannon Riley
Page 2
June 26, 2013

4) Our Covenants state "in the event a Lot is owned by more than one person, all persons owning one Lot shall together have one vote on Association matters. " Our Covenants are silent as to voting policy by persons owning more than one Lot. Our Covenants also state that voting rights will be IA W the articles of incorporation and bylaws. However, we had no bylaws in the Board's first year. Such being the case, I believe we should have followed the Covenant Language Cited Above. The Covenant language seems clear that only one vote is allowed on Association matters. That guidance changed once our bylaws were written. However, prior to the adoption ofBy laws I was informed the Board would allow an owner owning multiple properties one vote for each property owned. !f in fact that did occur, it may have been done in violation of the language and intent of our Covenants. Is the above summary accurate with respect to cumulative and non-cumulative voting protocol, or is it ambiguous? 5) Did the Board contravene the voting intent in our Covenants by allowing multiple votes to be cast by a property owner ow[n]ing multiple Lots prior to the creation of bylaw allowing that practice? 6) Should our [Harborside Subdivision Homeowner Association, Inc. 's] Board be following the definitions and voting guidance specified in Sections 33-31-720, -72 1,-723, and -725 of the S. C. Nonprofit Corporation Act? "

Answers:
Before this Office attempts to answer your constituent's questions, let us clarify, as you acknowledged in your letter, thi s Office gives legal opinions and is not authorized to investigate factual disputes in such opinions.

1) This Office does not answer factual questions, so this Office will not address the facts as presented. This Office only issues legal opinions. Op. S.C. Atty. Gen., 1996 WL 599391 (September 6, 1996) (citing Op. S.C. Atty. Gen., 1983 WL 182076 (December 12, 1983)). This Office cannot serve as legal counsel or give advice to private nonprofit corporations. Our investigations pursuant to S.C. Code Section 33-31-171 are for violations of a non profit's charter or other laws of this State. It appears what you are asking for in this question is an investigation and therefore will be forwarded to the civil section of this Office for review. 2) Please see Answer 1. 3) This question is really asking for legal advice, which we recommend hiring a private attorney. 4) Again, this question is ultimately asking for legal advice for a private nonprofit corporation. However, we will forward your question concerning v iolation of your Covenants to the civil section of this Office. 5) As stated above, this question is ultimately asking for legal advice for a private nonprofit corporation. However, we will forward your question concerning violations of your Covenants to the civil section of this Office. 6) The simple answer to your question is yes, nonprofit corporations have to follow the law. However, as you may have already noted, S.C. Code Section 33-31-721 (a) says " [u]nless the articles or bylaws provide otherwise .... " The same is said in S.C. Code Sections 33-31-722 (a) and -723 (a). Therefore, whether or not your nonprofit corporation has specified otherwise in its

The Honorable R. Shannon Riley
Page 3
June 26, 2013

articles or bylaws will determine what parts of the definitions and voting guidance are used. Examination of your nonprofit corporation's articles and bylaws would only be proper as a part of an investigation pursuant to S.C. Code Section 33-31-171 or else by your private counsel. As this Office stated in a prior opinion: This Office agrees with the statement ... the 'HOA [Homeowner's Association] should be under all the laws, rules and regulations that [the state of South Carolina] and the federal government already have in place.' Neither management companies nor HOAs may act contrary to the laws of this state; such entities must operate within the boundaries set forth in our Code of Law and remain bound to any contractual obligations created. However, the determination as to whether [the management] v iolated any code of law is factual in nature and thus, beyond the scope of this opinion and better addressed by a court. Op. S.C. Atty. Gen., 20 I 0 WL 2678696 (June 2, 2010) (citing Ops. S.C. Atty. Gen., 2006 WL 2849809 (September 14, 2006); 2006 WL 2382449 (July 19, 2006); 2006 WL 1207270 (April 6, 2006)). The June 2, 20 I 0 opinion from this Office gives a good overview of homeowner associations under South Carolina law. We are enclosing a copy for your constituent.

Conclusion: Based on your questions, this Office will be forwarding your concerns to the civil section of this Office for review. For any other issues, we recommend your constituent consult a private attorney. However, please let us know if we can do anything else to assist you in the future. Sincerely,

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Anita Smith Fair
Assistant Attorney General
REVIEWED AND APPROVED BY:

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Solicitor General