Pending Legislation Could Significantly Affect Homeowners and HOA’s

If you are a homeowner in a neighborhood with an HOA, or thinking about purchasing a home in a neighborhood with an HOA, then you may benefit from some pending state legislation if it becomes law.   On the other side of the coin, if you are an HOA or property management company, this pending legislation is something to keep an eye on as it could have a significant impact on an HOA’s ability to enforce liens and collect debts owed by a homeowner.

Here are just a few of the highlights of the pending bills that, if passed, would become new law:

 (H3886)

• Owners (sellers) of property that is subject to an HOA would have to disclose the HOA’s governing documents to prospective purchasers;
• HOA’s would have to provide homeowners with copies of financial information and governing documents upon request and at no charge;
• HOA boards would not be able to take action to add or increase fees without complying with certain notice requirements;
• The South Carolina Real Estate Commission would offer online instruction covering the basics of HOA management, and the rights and responsibilities of homeowners.

(S.1145)

• Currently, HOA’s are permitted to file liens against an owner’s property for the owner’s nonpayment of fees, fines, assessments, etc., and the HOA can foreclose on said lien.  The pending legislation offers a big kick in the shins to HOA’s (and, conversely, a big help to homeowners) by prohibiting HOA’s from foreclosing on a lien if the debt that is the substance of the lien consists solely of:
  • nonpayment of fees, fines, assessments or other charges;
  • attorney’s fees incurred by the HOA associated with fees, fines, assessments, and other HOA charges;
• An HOA would not be permitted to foreclose against a homeowner on any lien without express authority to do so being granted to the HOA in the declarations (and, significantly, foreclosure power could not be added by amendment unless all homeowners subject to the declarations unanimously consent to such an amendment – this could be a big hurdle for existing HOA’s depending on how their existing declarations are written);
• For homeowners who are unable to keep up with their HOA payments because of job loss, disability, divorce, or family medical expenses, the HOA would have to allow the owner 30 days after an assessment to propose a payment plan.

These are just some of changes that would affect homeowners, and HOA’s, if either of these pending bills becomes law. If you are an HOA or property management company, a homeowner, or considering purchasing a home, you will want to keep up with these pending changes as they could have a significant impact on properties governed by HOA’s.