HOA Foreclosure Laws in South Carolina

Understanding HOA Fees & Assessments

If you live in a planned community with a homeowners’ association (HOA), you likely have to pay fees to your HOA. Note: if you live in a condominium, your HOA may be called a condominium owner’s association (COA). Typically, the HOA or COA fees and assessments cover community services and operational expenses, like insurance, landscaping, other maintenance, and unexpected costs that affect the community. HOA and COA assessments are generally charged annually, though, in some communities, they may be included in your monthly dues.

If you belong to an HOA, you may have to pay:

• Monthly dues
• Annual fees
• Special assessments

Special Assessments

Your HOA/COA board is responsible for setting your community’s annual budget and determining how much monthly dues, fees, and assessments should be. However, it is not uncommon for unexpected expenses to come up. When this happens, an HOA or COA may be permitted to impose special assessments to cover the costs.

Special assessments may be imposed for unexpected costs, like:

• Unexpected storm damage
• Replacements or renovations to community buildings
• Replacements or repairs to community amenities, like pools and tennis courts
• Replacements or repairs to security features, such as gates and security lighting

If an HOA or COA determines that a special assessment is necessary, it may be charged monthly, quarterly, or annually depending on the circumstances of the assessment and the requirements of the governing documents.

Note: Review your HOA or COA governing documents (your Declaration of Covenants, Conditions, and Restrictions or CC&R document) to determine if assessments are allowed and, if so, to understand how those assessments are imposed.

Can an HOA or COA Foreclose on Someone Who Hasn’t Paid Their Assessments?

This is one of the most common questions we are asked by clients who live in communities with HOAs or COAs. In most cases in South Carolina, yes, an HOA or COA can foreclose on the home or condominium unit of someone who has failed to pay their assessments. This foreclosure can proceed regardless of whether the property owner is up to date on their mortgage payments. Foreclosures for nonpayment of assessments have nothing to do with the homeowner’s mortgage.

If the HOA/COA’s governing documents allow for it, once a lien has been levied against the property by the Association, the property can be foreclosed upon by the Association much in the same manner as a bank can foreclose upon a mortgage. Consequently, if an HOA/COA forecloses on a home or condo, it can be sold through a judicial sale, just as if it were a mortgage lender foreclosing on a home.

There are other steps an HOA or COA will usually take to address nonpayment of fees and assessments before foreclosure. These can include:

• Revoking community privileges
• Monetary fines
• Property liens
• Civil lawsuit

When someone moves to a planned community with an HOA or COA, they are obligated to pay dues, fees, and special assessments. They agree to pay these fees and assessments when they purchase the property. However, there are situations where an individual property owner may be unable to pay or may refuse to pay their assessments. In cases where someone is struggling financially, HOAs or COAs may offer payment plans to assist residents in meeting their assessment obligations, however they are not required to do so. Refusal to pay an assessment most often occurs when a resident (or residents) disagrees with the assessment imposed, whether that be the need for the assessment or the amount of the assessment. In most instances, an owner cannot legally withhold payment of assessments even is they do not approve of the actions of the Association.

What You Should Do If Your HOA or COA Is Foreclosing on Your Home

When someone gets behind in their HOA or COA assessment payments, the situation can snowball quickly. In these situations, the HOA or COA may be allowed to not only charge the property owner a fine for not paying, but they may also impose late fees and interest charges, and even require the owner to pay the HOA/COA’s attorneys’ fees. However, while the HOA or COA may be legally allowed to place and enforce a lien on a property, there are certain steps they must take to do so.

Potential HOA foreclosure defenses include:

• The assessment was not issued in accordance with the governing documents
• The board’s accounting of the assessment is incorrect
• Payments were made but misused or misapplied by the board
• Your community’s governing documents don’t allow or authorize special assessments
• Your community’s governing documents don’t allow foreclosures
• The HOA or COA didn’t follow state law or didn’t record the lien on your property correctly

Regardless of how you came to be in this situation, if your HOA or COA is attempting to foreclose on your property for nonpayment of assessments (or taking other action against you), it is recommended that you speak with an attorney experienced in handling these types of situations. This is especially important in South Carolina, where there are different statutes governing HOAs and COAs. Though the laws are similar, they are not identical, and you need an attorney who understands the full spectrum of South Carolina’s HOA and COA laws.

What You Should Do If You Are an HOA or COA & Need Help with a Foreclosure Action

When a resident/s refuse to pay their required assessments, the entire community suffers. Most HOAs and COAs operate on a very thin margin. Frequently, nonpayment results in communities not being able to complete the necessary repairs and upgrades that keep the development a clean, safe place to live. Finding a solution to assessment nonpayment issues can be challenging and stressful.

As a homeowners’ or condominium owners’ association, liens and foreclosures are typically the last resort. Unfortunately, there are situations in which an HOA or COA foreclosure is unavoidable. If you are an HOA or COA dealing with a foreclosure action, it is always a good idea to consult with a skilled attorney.

At Joye, Nappier, Risher & Hardin, LLC, we are experienced in homeowners’ association law, and we can help you deal with an HOA or COA foreclosure. Our attorneys can also help you with collections proceedings, liens, and other matters related to nonpayment of HOA or COA assessments. We understand how difficult these situations can be, and we are committed to providing our clients with the legal support they need to find the best solution.

To discuss your case with one of our attorneys, call our Myrtle Beach-based law firm at (843) 357-6454 or send us a message online.