H 5204

South Carolina General Assembly
126th Session, 2025-2026
Bill 5204
Indicates Matter Stricken
Indicates New Matter
(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)
A bill
TO AMEND THE SOUTH CAROLINA CODE OF LAWS
BY AMENDING SECTION 27-30-120, RELATING TO HOMEOWNERS ASSOCIATION DEFINITIONS,
SO AS TO PROVIDE ADDITIONAL DEFINITIONS; AND BY ADDING ARTICLE 5 TO CHAPTER 27,
TITLE 30 SO AS TO PROVIDE FOR ADDITIONAL REGULATIONS AND OVERSIGHT OF
HOMEOWNERS ASSOCIATIONS TO PROTECT AND BENEFIT HOMEOWNERS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1.  Article 5, Chapter 30, Title 27 supersedes where these
laws conflict with the general nonprofit laws South Carolina Nonprofit
Corporation Act (S.C. Code Ann. Section 33-31-101, et seq.) as well as the
South Carolina Horizontal Property Act (S.C. Code Ann. Section 27-31-10, et
seq.)
SECTION 2.  Section 27-30-120 of the S.C.
Code is amended to read:
    Section 27-30-120. As
used in this article chapter:
    (1) "Board" means the representative
body, regardless of name, designated in the governing documents to act on
behalf of a homeowners association and govern the association.
    (2) "Capital upgrade" means the
optional addition of a permanent structural change or the improvement of some
aspect of a property that will either enhance the property's overall value,
prolong its useful life, or adapt it to new uses. Capital upgrades include
optional projects such as remodeling a lobby, adding a tennis court, or
expanding a clubhouse. Capital upgrades do not include repairs such as
replacing roofs or repaving streets or parking lots.
    (3) "Covenants" or "CC&Rs" means a
set of restrictions, legally binding written agreements, and fines which govern
the privately owned properties in an HOA and are attached to the deed, so that
when the property is sold, all subsequent owners are required to abide by the
covenants.
    (2)(4)(a)
"Declarant" means a person or group of persons acting in concert who:
       (a)
as part of a common promotional plan, subdivide
and offer to dispose of an interest the person or group has in a unit in real
property; or.
       (b) reserve or
succeed to a special declarant right, which means a right created under the
declaration or bylaws for the person or group to retain or exercise authority
in addition to regular declarant rights in a unit of real propertyFines for the covenants must be written in the covenants.
    (3)(5) "Declaration" means the recorded
instruments, however denominated, that create a homeowners association,
including amendments to those instruments. instrument
that creates a common interest community, including any amendments to the instrument.
A declaration must be registered with the county. It is to define the land
included in the HOA including, but not limited to, plat maps defining the
private and common interest parcels and allocated interests, the master deed,
amenities, organizational documents, governing documents, the covenants, conditions,
restrictions, and the rules and fines. The declaration stands as a contract
between the HOA members and the declarant, and both are required to follow the
terms of the contract. The declaration or any part of the declaration cannot be
changed without a vote of the members. Nothing in the declaration shall impose
on or supersede the member's right to free speech, other constitutional rights,
or rights granted in city or county ordinances, state or federal law.
    (4)(6) "Governing documents" means
declaration, master deeds, or bylaws, or any amendments to the declaration,
master deeds, or bylaws. the organizational
documents, bylaws, covenants, and rules by which the association exercises its
powers and manages its property.
    (5)(7) "Homeowner" means a declarant or other person who owns
a unit in a homeowners association, but does not include a person having an
interest in such a unit solely as security for an obligation.
    (6)(8) "Homeowners association," "HOA," or "association" means an entity developed to
manage and maintain a planned community or horizontal property regime for which
there is a declaration requiring a person, by virtue of his ownership of a
separate property within the planned community or horizontal property regime,
to pay assessments for a share of real estate taxes, insurance premiums,
maintenance, or improvement of, or services or other expenses related to,
common elements and other real estate described in that declaration. A
"homeowners association" or "association" does not include a vacation time
sharing plan organized and subject to the provisions of Chapter 32.
    (7)(9) "Homeowners association management company" means a
corporation, limited liability company, partnership, trust, association, sole
proprietorship, or other similar organization engaging in the business of
managing homeowners associations.
    (10) "HOA Seller Certification" means
a document that must be given by the HOA to members upon request to certify
that the member's property meets all covenants, has paid all applicable dues
and assessments.
    (11) "HOA Seller Packet" means a
comprehensive set of documents provided to the potential buyer of a property by
the HOA to give to any prospective buyer disclosure information including, but
not limited to, the governing documents, articles of incorporation, bylaws,
covenants and rules, latest HOA seller certification of each unit, percentage
of properties rented versus owner-occupied, financial statements for the last seven
years, the reserve study, and the current amount in the reserve account as well
as disclosure about any existing physical damage, and any health or safety
issues such as mold, leaks, radon, lead, asbestos, that exist in the HOA or
existed in the HOA over the last three years. The document also must reveal any
known upcoming assessments. This information is required to be maintained on a
website for easy access to potential buyers at no charge.
    (12) "Member" means a corporation or
individual owning property that is subject to an association. The interest of a
member is equal to that of any other and no member can acquire any interest
which entitles him to a greater voice, vote, authority, or interest in the
corporation than any other member. A member, person, or corporation may not
create another membership by owning another corporation, in whole or in part,
that also owns property in the association.
    (13) "Organizational documents" means
the instruments filed with the Secretary of State to create an entity and the
instruments governing the internal affairs of the entity including, but not
limited to, articles of incorporation, limited liability company or partnership
agreement, certificate of formation, and bylaws.
    (14) "Rule" means a policy or
procedure that governs the use or appearance of common property or conduct of
persons while using common property but not including the private property.
Rules might include requirements such as procedures for submitting and handling
complaints or maintenance requests, quiet hours, or swimming pool policies.
    (8)(15) "Unit" means an apartment in a horizontal property
regime, or a lot in a subdivision.
SECTION 3.  Chapter 30, Title 27 of the
S.C. Code is amended by adding:
Article 5
Homeowners
Associations
    Section
27-30-510. (A) The Department of
Consumer Affairs (department) is authorized to enforce the provisions of this
article. The department may fine and levy other penalties against individual board
members and property managers that knowingly violate the federal, state, and homeowners
association laws or the governing documents of the association. This article
supersedes where these laws conflict with the general nonprofit laws South
Carolina Nonprofit Corporation Act (S.C. Code Ann. Section 33-31-101, et seq.)
as well as the South Carolina Horizontal Property Act (S.C. Code Ann. Section
27-31-10, et seq.)
    (B) An association must:
       (1) be incorporated and registered in
this State; and
       (2) carry directors and officers
insurance for its board members.
    (C)(1) The department shall receive a fee
from each HOA equal to three dollars for each association unit in the HOA. Fees
must be paid annually when each association renews its license.
       (2) The collected fees must be put in
an account exclusively for the use of the department in handling association
law enforcement and compliance. The amount of the fees must be adjusted
annually.
    Section
27-30-520. (A)(1) In the event that
a member writes a complaint to the board which includes quoted law or governing
documents that the board members are violating, including false covenants,
conditions, and restrictions accusations, the board is required to arrange a
member appeal at the next board meeting, and the board must vote on further
action. The vote of each board member must be recorded and a copy given to the member
at the appeal. The meeting must be held within thirty days of receiving the
complaint.
       (2) Ten days after the board meeting,
if the board does not respond or refuses to change its position, the member may
file a complaint with a summary of issues, the laws or governing documents
violated, the evidence of the violation, the correspondence sent to and from
the association regarding the issue, and quoted law and governing documents to the
department.
       (3) The department shall investigate
the claim, and if:
  (a) it finds for the association, it shall
send an email response to the member and copy the board, explaining its
decision and the reasoning, quoting the specific law or governing documents the
member is violating and how to correct the issue. The member has five days to
respond in writing or by email that he will rectify the problem and must do so
in a reasonable time as determined by the department; or
  (b) it finds for the member, the department
shall send a cease-and-desist letter to the board and copy the member. The board
has five days to respond in writing or by email that it will rectify the
problem and must do so in a reasonable time as determined by the department.
       (4)(a) If the State HOA Office determines
the board has violated the laws or the governing documents, the State HOA
Office will send an email to the offending board members and copy the other board
members and the homeowner identifying what laws or governing documents were
broken, ordering the board to fix the issue within five days and explaining
specifically how to fix the problem.  The offending board members are the board
members that voted to violate the laws or governing documents.
  (b) By definition, if the offending board
member(s), once receiving the email from the State HOA Office, continue to
violate the law or governing documents, or it is determined by the State HOA
Office, that they did know or should have known that they were violating the
law before it was brought to the State HOA Office, they knowingly violated the
law.
  (c) Should the offending board members
not agree in writing or email to rectify the problem within five days, or do
not rectify the problem in a reasonable time as decided by the State HOA
Office, the State HOA Office will order the offending board members removed
from the board enjoining them from serving on any HOA board for a certain
period of time or in perpetuity; a record of these removals will be kept on the
State HOA Office website and the length and end date of the suspension.
  (d) Another election will then be held
to replace the removed board members. The State HOA Office will help the
members to create and run the election if needed. The State HOA Office can also
choose volunteer members as temporary board members until the new election is
complete. The State HOA Office can also appoint a receiver(s) to run the HOA
until the election if necessary.
  (e) If the State HOA Office determines
that crimes were committed, they or the Attorney General's office will
investigate and prosecute.
    (B)(1) The offending board members are
those that voted not to follow the law or governing documents in the homeowners
appeal to the board. If the offending board members refuse to follow the
conditions of the letter from the State HOA Office, the offending board members
will be by definition considered to have knowingly violated the laws and/or
governing documents.
       (2) If the homeowner has suffered
financial damages, the State HOA Office will determine if the offending board members
had knowingly violated the HOA laws or governing documents or should have known
they were violating the law or governing documents.  If so, the State HOA
Office shall fine the offending board members the cost of the damages,
splitting the cost equally amongst the offending board members.  If not, the
State HOA Office will fine the HOA Corporation to recover the homeowners
damages.
       (3) In either case, the homeowner may
notify the State HOA Office that the homeowner chooses to sue the HOA or the board
members themselves under the Consumer Protection Act instead of the State HOA
Office fining them.
       (4) If it is determined that the property
management company took action not authorized by the board, the property management
company will pay the fines.  If the property management company profited from
illegal or unethical actions, the property management company could have their
license suspended and/or be investigated and prosecuted
       (5) Either party may appeal the
decision and the Attorney General's office shall defend the department.
    Section
27-30-530. (A) An association's board
must provide a free mandatory association member list including the
association's physical address, mailing address, and email addresses of
members.
    (B) A member may choose to also have
all communications sent through USPS mail.
    (C) All association members with
access to the list must sign an agreement not to share the email addresses or
phone numbers with anyone outside the association and not to use the email or
phone numbers for commercial purposes. All phone numbers are to be included
unless specified to be unlisted by the property owner.
    Section
27-30-540. (A) Association dues should
be required to be paid from a member's escrow account. If the member does not
have a mortgage, then the member should have a choice to pay all dues up front
or pay quarterly or monthly with no interest.
    (B)(1) Thirty days' written notice is
required for all fines and debts and thirty days must be given for members to
file a dispute.
       (2) If no complaint is filed by the
homeowner with the department, all debts under ten thousand dollars must be
handled through small claims court with no attorneys allowed to present.
       (3) Fines, late fees, and interest
stop once a dispute is filed in writing with the association until it is
resolved in small claims court or with the department, except that interest at
an annual interest rate of the current Consumer Price Index plus one percent
may be charged for the original assessment amount, not including fines, fees,
or any other charges.
       (4) Fines, fees, or attorneys' fees
are not allowed before going through small claims court or the department.
       (5) Attorneys' fees in excess of ten
percent of the original amount owed, not including any fees or interest, may
not be charged to the member. These fees cannot be charged to the member until
the case is decided through small claims court.
       (6) Attorneys' fees specifically for
the foreclosure process cannot exceed those allowed by the Federal Housing
Administration (FHA).
    (C) The minimum debt to allow foreclosure
is ten thousand dollars or one thousand dollars per the number of units in the association,
whichever is less. This minimum will not include anything but the original
assessment or dues amount, no late fees, interests, attorney's fees, or other. Associations
should create a reserve account category for bad debt and have insurance to
cover amounts larger than the reserve fund.
    (D) All efforts should be taken to
minimize damage to the member and minimize the property owner's legal costs.
    (E)(1) Ninety days' notice is required
before a foreclosure, and the notice must include the amount required to stop
the foreclosure and the contact information for all state free or low-cost
foreclosure counselors.
       (2) Mediation must start at least
thirty days before the foreclosure date.
    (F)(1) Nonjudicial foreclosures are
allowed only if agreed upon by both parties.
       (2) Homeowners of a foreclosed home
must move out of the property within thirty days of the foreclosure.
    (G) After deducting debts attached to
the property and the cost of the sale of the property, the member must receive
the balance of equity. Properties sold in foreclosure to be sold through a
realtor chosen by the seller at market value in the current real estate market,
not at Sheriff's sales.
    (H) Board members or property managers
who knowingly violate the provisions of this section are considered to have
violated the Consumer Protection Act and victims are entitled to treble damages
and attorneys' fees.
    (I) Properties sold in foreclosure must
be sold through a realtor chosen by the seller at the market value in the
current real estate market, not at a foreclosure sale.
    Section
27-30-550. (A)(1) The association
shall provide reasonable and consistent time periods to fix violations before
fining is allowed and must be documented and readily available to the members.
       (2) A written notice must be given for
all fines, and the association must allow thirty days for a member to file a
dispute.
    (B) Should a homeowner request an
appeal to the board, the board is required to arrange a member's appeal at the
next board meeting where the board shall vote on further action. The board must
arrange the appeal at a public board meeting within thirty days of the request
for an appeal.  These appeals must take place at the beginning of the board
meeting. The vote of each board member must be recorded in the minutes with a
summary of the issue, and a copy given immediately after the vote to the homeowner.  (C)(1)
For contested issues fines, fees, or attorneys' fees are allowed before going
through either small claims court or the department with no attorneys allowed
to be involved except for appeals against the small claims or the department
decision.
       (2) Attorneys' fees in excess of ten
percent of the original amount owed, not including any fees or interest, cannot
be charged to the member. And the ten percent cannot be charged to the member
until the case is decided through small claims court or the department and all
appeals are concluded.
    (D) All association records and
arguments to be presented in court or to the department and notice must be
given to the member at least thirty days before the court or hearing date.
    (E) All records of violations and
fines must be accessible by all members including the name of the person filing
the complaint and the document on which the complaint was filed and all
communications between the accuser, the board, and employees of the association.
    Section
27-30-560. (A) All voting at an association
meeting must be conducted by an independent election company. The election
company must change every three years, and an election company used, cannot be
used again for at least six years. The election company cannot be indemnified
by the HOA  (B) Each member receives one vote.
    (C) A convicted felon may not serve as
a board member. A board member convicted of embezzlement or receiving kickbacks
must be immediately removed from the board and cannot run again or participate
in any committee. The spouse or anyone living with the convicted felon in his home
is also ineligible to be a board member.
    (D)(1) There must be at least three people
on an independent election committee, not under the control of the board,
elected by the membership, who organize and schedule elections.
       (2) The association attorney, property
management company, member of the current board, member running for the board, or
their family members are prohibited from sitting on the election committee. The
spouse or anyone living with the convicted felon in their home is also
ineligible to be a board member.
    (E) Board members may not use
association funds, resources, social media, mailing lists, or other
communications belonging to the association that other members are not allowed
to use for free to send out any communications regarding any of the candidates,
members, policies, or to make any political commentary.
    (F) Elections may not be held on any
holiday week and must be held on weekends.
    (G) All candidates' information must
be mailed to every member at the same time and in the same manner at the
expense of the association. Associations must include an elections fund
provided for in their budgets.
    (H) A member must have at least thirty
days to mail in or otherwise submit his ballot from the day the ballot is
received. The envelopes for the ballots must have prepaid postage, the mailing
address of the election company, and the member's return address.
    (I)(1) A ballot from a member may not be
sent to the association. The ballots must be mailed directly to the election
company. Board members, other members, staff, or employees may not have any
access or participate in any way with the process of the elections. No proxies
are allowed for elections.
       (2) Members must be allowed to vote
electronically or by the choice of the member, by mail. The electronic voting
system cannot be operated, licensed or in any way have any connection or
affiliation with current board members, members of the HOA, property management
company, HOA attorneys and or subsidiaries of any of the previous mentioned
bodies.
    (J) Current board members may not
change anything in the declaration, including bylaws, articles of
incorporation, CCRs, rules, or fines. All changes must be accomplished by a
majority vote of the members.
    (K) A quorum must be set in the declaration.
A quorum must be no less than ten percent of the membership and not more than twenty
percent. Any changes in meeting quorum must be accomplished by a vote of the
membership and not the association board. A quorum is required for all meetings
except elections.
    (L) Board members are limited to three
years of consecutive service and then may not run again for another six years.
    (M) A board member who has tampered
with the election process must be removed from the board and prohibited from
running in future elections.
    (N) A member may email a motion to the
board at least fourteen days before any meeting or make a request for a topic
to be discussed. That motion or topic must be included in the agenda, and the
agenda must be emailed to all members and mailed to members who requested
mailed notifications, at least seven days before the meeting. The member
suggesting the motion or topic must be allowed to make that motion or bring up
that topic at the beginning of the new business portion of the meeting.
    (O) Retaliation by the board members
against members who propose motions or topics, voice concerns, or disagree with
the board's decisions at any meeting or in any other manner is strictly
prohibited.
    (P) All board members must be elected
by the membership by receiving the most votes, except in the event of a board member
being removed or resigning. In that event the board may elect a replacement board
member to serve until the next annual election. The members shall elect a president.
All other executive positions must be elected by the board members. Board members,
by vote, may remove any of the executive board members from their role, but not
from the board itself, and members by vote can remove any board member or
remove the president from his position.
    (Q) The choice of management companies
must be made by a vote of the members.
    Section
27-30-570. (A) Board members,
property managers, and attorneys are responsible to the members, both
individually and as a whole, not to the board or the HOA organization. If a
property manager or attorney is aware of any violations by a board member, it
is the fiduciary and legal responsibility of the property manager or attorney
to advise the board member of the laws, and if the situation is not immediately
rectified, to report the violation to the department and provide written notice
to the offended member.
    (B) All covenants must be fully and
equally enforced on all members.
    (C) Individual waivers of any rules or
bylaws are not allowed. The board cannot engage in selective enforcement or
make waivers for one member but not others for similar issues.
    (D) Covenants must be as specific as
possible and avoid general and subjective statements.
    Section
27-30-580. (A) An association can
only enforce what is clearly stated in the covenants.
    (B) An association's authority is
limited to the enforcement of covenants and may levy fines only as stated in
the covenants and bylaws.
    (C) An association does not have
authority to enforce laws or ordinances or usurp authority from governmental
enforcement agencies.
    (D) General statements in the association's
governing documents indicating that members must follow all applicable laws and
ordinances do not give the association the authority to enforce laws or
ordinances.
    (E) An association cannot enforce or
fine for speed limits, building codes, zoning, other laws, or state or county
ordinances that are enforced by other governmental agencies.
    Section
27-30-590. (A) The association's
seller packet must be presented to a prospective property buyer before he makes
an offer on the property.
    (B) A cover sheet listing all the
components of the seller packet must be signed and dated by the prospective
property buyer and included in the offer documentation when a prospective buyer
is making an offer on a property that is in an association.
    (C) All fines for covenant violations
must be written into the covenants. All rules of the association and all
applicable fines must be in the covenants. Seller certifications that are
fraudulent must be prosecuted as fraud.
    (D) The process to change the
governing documents must be written in the bylaws and require more than
sixty-seven percent of the votes to be in favor of the change.
    (E) The association is responsible for
delivering the seller certification and all governing documents to the seller
within fifteen days of the seller's request.
    (F) A seller certification fee must be
the actual cost with a detailed receipt of how the cost was calculated, not to
exceed two hundred dollars, and fees may not be added by any other vendor for
these documents.
    (G) All documents must be written in
plain English and in sixth grade language.
    Section
27-30-600. (A) Once the first home
in an association is sold, no additional covenants may be added.
    (B) Covenants may be removed or made
less restrictive at any time by a membership vote. Bylaws may be amended by a
majority vote of the total membership at any time. Rules for common areas may
be adopted, amended, or repealed by a majority vote of the total membership at
any time.
    (C) Members may propose a bylaw,
covenant repeal, partial repeal, amendment, or rule change by obtaining
petition signatures from two percent of the members or fifty members, whichever
is less. The petition must include the exact wording of the current bylaw,
covenant, or rule and the exact changes desired.
    (D) The board must provide members
with:
       (1) a copy of the petition for the
change in the covenants, rules, or fines;
       (2) a date by which the members must
vote on the change; and
       (3) electronic or paper ballots to
vote.
    (E) Voting must be by paper or
electronic means through an impartial third-party voting company.
    (F) Voting must be completed within
sixty days of the submission of the petition and voting ballots must be sent to
the members at least thirty days before the end of the voting period.
    (G) Every covenant must be reasonable,
apply, and be enforced equally to all members. Question of reasonableness must
be determined by the department.
    (H) Following a change to the bylaws,
covenants, or rules, the board must give notice to the members of its action
and provide a copy of all the changes made and the total document in updated
form.
    Section
27-30-610. (A) When damage occurs
to common property, insurance payments must be allocated to making repairs and
members must approve of how the insurance payments are allocated. Repairs must
leave the damaged building in as good or better condition than before the damage
occurred.
    (B) Members must be mutual
beneficiaries of homeowners association insurance.
    (C) An association may not make a
profit from members through any individual common property.
    (D) An association may not charge
members for use of common areas including a clubhouse. They may charge
nonmembers.
    (E) An association may charge for
damage caused by a member and the actual cleanup costs.
    (F) A board member, family member of a
board member, or property manager is not allowed to purchase a home, unit, or
property being foreclosed on in the community his board manages.
    (G) A board member, employees, or
vendor may not use association resources or funds for personal use.
    Section
27-30-620.  (A) All homeowners associations must be
updated to match current state law.
    (B) All laws relating to fair housing,
fair collections, fair lending, and consumer protection should apply to all
members and boards of homeowners associations.
    Section
27-30-630. (A) All association
meetings require fourteen days' advanced notice by email and if requested by
any member, by mail.
    (B) All association meetings must be
open meetings, and all members and others specifically invited by any member are
allowed to attend. All meetings must be offered virtually for those who cannot
attend physically. A member may choose a proxy to attend and represent him at
any meeting but must send an email or certified letter stating who that proxy
is to the board at least one day before the meeting. All meetings can be
recorded by any member, proxy, or guest of a member.
    (C) All records required to be
retained by an association must be made available for examination and copying
by all unit owners, holders of mortgages on the units, and their respective
authorized agents, on a website, and at the offices of the association or its
managing agent during reasonable business hours or at a mutually convenient
time and location within thirty miles of the association property.
    (D) An association must retain the
following in permanent electronic record available on a website or equivalent,
at no individual cost to the members to download, with only the exceptions
specified in this section:
       (1) complete current and original
forms of the declaration and amendments, governing documents, organizational
documents, rules, all financial records, contracts, blueprints, pipe
schematics, and maps of stormwater conveyance systems depicting underground
pipes, and electric and other utilities installed by the association;
       (2) financial records for the last seven
years in Excel or equivalent format, in a manner that allows members to
download and manipulate or organize the data including, but not limited to,
income statements, balance sheets, check registers, current budget with monthly
variation, detailed records of receipts and expenditures affecting the
operation and administration of the association, actual receipts kept in month
and date order, reserve account details, tax returns, and other appropriate
accounting records in accrual format for the last seven years;
       (3) minutes of all meetings;
       (4) general descriptions of all
lawsuits or potential lawsuits related to the association;
       (5) a complete and accurate list of
current members, including the names of current members, telephone numbers,
unless member opts out, addresses in the association, mailing addresses, email
addresses, and the number of votes allocated to each unit;
       (6) a list of the names and addresses
of past and present board members and officers and the dates they served since
the start of the association. The name mailing address, email address, and
phone number of the property management company and the individual property
manager assigned to the HOA;
       (7) the most recent annual report
delivered to the applicable government agency, if any;
       (8) copies of contracts less than
seven years old;
       (9) a permanent record of materials
relied upon by the board or any committee to approve or deny any requests for
design or architectural approval, the reasons for approval or denial, and
copies of those approvals and denials;
       (10) a permanent record of materials
relied upon by the board or any committee concerning a decision to enforce the
governing documents including the reason for the enforcement and related fines;
       (11) insurance policies to be held seven
years after the end of the insurance contract;
       (12) warranties to be held for seven
years after the warranty expires;
       (13) copies of all notices provided
to unit owners or the association in accordance with this article or the
governing documents;
       (14) ballots, proxies, absentee
ballots, and other records related to voting by unit owners for seven years
after the election, action, or vote to which they relate; and
       (15) a record of all covenant
violations, related documentation, fines, and results.
    (E) An association only may charge its
actual cost for producing and providing copies of any records under this
section and for supervising the unit owner's inspection and may not charge for
access to or downloading of electronic records stored on a website. For the
labor of supervising the inspection and copying of physical records, only the
actual time of the supervising employee may be charged at a maximum fee of
minimum wage in that area plus ten percent and only while the member is
actually physically viewing or copying the documents.
    (F) A right to copy records under this
section includes the right to receive copies by photocopying or other means.
The association may not charge for records that are transmitted electronically.
    (G) An association must keep the
records in a reasonably organized manner but is not obligated to compile or
synthesize information other than the member list.
    (H) Information provided pursuant to
this section may not be used for commercial purposes other than to sell or
purchase the properties in the association.
    (I) A member may not be asked to sign
any nondisclosure or confidentiality agreement regarding any information
related to the association.
    (J) An association's managing agent
must deliver all of the association's original books and records to the
association immediately upon termination of its management relationship with
the association or upon such other demand as is made by the board. An
association managing agent may keep copies of the association records at its
own expense.
    (K) Records retained by an association
may be withheld from inspection and copying to the extent that they concern:
       (1) personnel and medical records
relating to specific individuals;
       (2) contracts, leases, and other
commercial transactions to purchase or provide goods or services currently
being negotiated;
       (3) attorney-client privileged details
of current or potential litigation or mediation, arbitration, or administrative
proceedings;
       (4) attorney-client privileged details
of current or potential matters involving federal, state, or local
administrative or other formal proceedings before a governmental tribunal for
enforcement of the governing documents;
       (5) legal advice or communications pertaining
to current or potential matters that are otherwise protected by the
attorney-client privilege or the attorney work product doctrine, including
communications with the managing agent or other agents of the association;
       (6) information the disclosure of
which would violate a court order or law;
       (7) records of an executive session of
the board;
       (8) personal phone number of a member
if requested to be held confidential by the member; or
       (9) security access information
provided to the association for emergency purposes.
    (L) Board members must have free
access to all records.
    Section
27-30-640. (A) A new homeowners
association must have reserve studies completed at least every three years and
maintain a one hundred percent-funded reserve account.
    (B) An association that exists on
January 1, 2027, must have a fully funded reserve account by January 1, 2037.
    (C) Reserve funds only may be spent on
reserve items.
    (D) All association damages and
repairs must be listed and briefly described in a report each month, along with
the cost associated with the repair.
    (E) The president, vice president, treasurer,
and secretary must sign checks that remove money from the reserve account. A
monthly report must be posted with financial statements showing how reserve
funds were spent.
    (F) All new HOAs should be required to
have reserve studies at least every three years and maintain a one hundred
percent funded reserve account. This means that there is money in the reserve
for all common assets equaling the current percent of the straight-line
depreciation of each asset times the current replacement cost. As an example,
if a roof has a projected thirty-year life, at year fifteen, half of the
current cost of replacement should be in the reserve.
    (G)(1) All existing HOAs must move to
fully funded reserve accounts over a ten-year period increasing by ten percent
per year until fully funded.
       (2) Reserve funds can only be spent on
reserve items.
       (3) The president, vice president, treasurer,
and secretary, at least four board members must sign checks that remove money
from the reserve account. A monthly report must be posted with the financial
statements showing where the reserve funds were spent.
       (4) All HOA damage and repairs should
be required to be listed and briefly described in a report each month, along
with the cost associated with the repair.
    Section
27-30-650. (A) In order to adopt a
budget, more than fifty percent of the votes cast is required. If the budget is
rejected, or the required notice is not given, the periodic budget last
ratified by the members continues until the members ratify or approve a
subsequent budget proposed by the board.
    (B) Individual line items may be voted
in or out by the members through the motion process.
    (C) Within thirty days after adoption
of any proposed budget for the association by the board, the board must provide
a copy of the budget to all members and set a date for a meeting of the members
to consider ratification of the budget no less than fourteen days nor more than
fifty days after providing the budget.
    (D) A member may assign his vote
through a proxy form which must be supplied by the association to the members
with the notification of the meeting.
    (E)(1) A budget meeting is a member
meeting not a board member meeting.
       (2) The first action of the meeting is
to vote on a president by the membership present at the meeting.
       (3) The board must supply the chair a
recommended agenda.
       (4) The second action in the meeting
must be for the treasurer to explain the proposed budget and answer questions.
       (5) The chair must make the meeting as
efficient and fair as possible.
       (6) All motions to the budget must be
addressed at the budget meeting.
       (7) Budgets are required to meet fully
funded reserve accounts as well as maintenance of all common assets and all
other legal requirements and cannot be voted out of the budget.
    (F) The budget must include:
       (1) the projected income to the
association by category;
       (2) the projected common expenses and
those specially allocated expenses that are subject to being budgeted, both by
category;
       (3) the amount of the assessments per
unit, the amount those assessments have increased or decreased expressed on a
percentage basis from the most recently ratified budget, and the date the
assessments are due;
        (4) the current amount of regular
assessments budgeted for contribution to the reserve account;
        (5) a statement of whether the
association has a reserve study that meets the requirements of the State and,
if so, the extent to which the budget meets or deviates from the
recommendations of that reserve study; and
        (6) the current deficiency or surplus
in reserve funding expressed in total and on a per unit basis.
    (G)(1) The board, at any time, may
propose a special assessment only if necessary. The assessment is effective
only if the board follows the procedures for ratification of a budget described
in this section, the purpose of the special assessment is clearly stated in the
notice required by this section, and the majority of a quorum of members at a
meeting called for that purpose approve the assessment.
       (2) Special assessment meetings must
follow the same requirements as budget meetings.
       (3) The special assessment must
include:
  (a) the projected income to the
association by purpose; and
  (b) the amount of the assessments in
total and per unit and the date the assessments are due.
       (4) The board may provide that the
special assessment may be due and payable in installments over any period it
determines, for a justifiable reason, but may not provide a discount for early
payment. Finance or late fees may not be charged but interest of the current T-Bill
rate plus one percent may be charged to the member if his payment is late. Members
must be allowed to pay the entire balance of their assessment at any time in
advance.
    (H) The association may spend funds
paid on the special assessment only in accordance with the purpose stated in
the notice of the assessment ratification meeting.  Reconciliation of specially
assessed funds must occur no later than sixty days following the expenditure
satisfying such purpose.  Surplus funds, if any, remaining after such purpose
has been fulfilled must be credited to the members in proportion to their
allocated interests.
    (I) If the purpose of a budget item or
special assessment is to make one or more capital upgrades, there must be a
separate motion to pass the capital expense budget item or special assessment.
    (J) If the capital upgrade portions of
the budget and the special assessment combined are equal to or less than five
percent of the budgeted gross expenses for that fiscal year, the motion
requires a majority of votes of all members in the association to pass:
       (1) For combined capital upgrades that
exceed five percent but are equal to or less than ten percent of the budgeted
gross expenses of the association for that fiscal year, the approval of the members
to which sixty-seven percent of the votes in the association are allocated.
       (2) For combined capital upgrades that
exceed ten percent of the budgeted gross expenses of the association for that
fiscal year, the approval of the members to which ninety percent of the votes
in the association are allocated.
    (K) Contracts that are not in the
budget or that exceed the budget may not be signed by the board. A specific
item may be added, removed, or modified by a majority vote of the members at a special
member meeting at any time. All changes must be approved by the majority of
votes cast at that meeting.
    (L) All contract terms may not exceed
one year and must automatically renew on a month-to-month basis after its term
but include a cancellation clause allowing the association to cancel the
contract with a sixty-day notice without reason or cause after the term.
    Section
27-30-660. (A) An association
attorney shall represent the membership as a whole, not the board, in all
issues.
    (B) An association attorney is a
mandatory reporter of illegal or unethical actions of the board and the
property managers. The attorney shall attempt to explain the correct actions to
the board. If the board does not correct its actions within five days, the
attorney shall report its actions to the membership and the department.
    (C) Members must be co-beneficiaries
on all association vendor contracts.
    Section
27-30-670. Every three years, the members must vote to determine if the association
should be dissolved. In order to dissolve an association, a sixty-five percent
majority is required.
    Section
27-30-680. An association must maintain its FHA, VA, and government subsidized
loan certifications. A thirty-five percent rental cap is required.
    Section
27-30-690. (A) Insurance or a bond
must be supplied by the developer before the first home is sold or rented with
the members listed as beneficiaries.
    (B) In cases where the developer is
unable to deliver as promised, the developer must inform current owners, and if
more than sixty-five percent of the current owners who vote decide to disband
the association, the association must be dissolved.
    (C) The association must have its own
board from the point at which all the units are sold or rented or there are ten
units sold or rented, whichever is less.
    (D) The board members and the
declarant must abide by the declaration and may not change the declaration
until all the units are sold or rented for the first time or three years have
expired since the sale or rental of the first home. After that, changes may not
be made without a vote of the members. At that time total control of that
section of the association is turned over to the members. The three-year period
then begins in the next section after the first home is sold or rented in that
section.
    (E) Board members and members must be
unit owners. There must be at least three board members.
    (F) The declarant is a unit owner
until the last unit is sold or rented for the first time. The declarant holds
one seat on the board until the last unit is sold or rented for the first time.
    Section
27-30-700. An incorporated municipality, county, or special purpose district
may not require the creation of any association as a condition for approving a
development, getting a building permit, or obtaining services. States,
counties, and municipalities may not allow more than thirty percent of total
units in their jurisdiction to be under any form of HOA. They may also not
allow more than thirty percent of all dwellings in any financial segment in one
hundred-thousand-dollar segments, based on the average tax appraisals of the
units in their jurisdiction, to be under any form of HOA. Financial segments
meaning zero dollars to one hundred thousand dollars, more than one hundred
thousand dollars to two hundred thousand dollars, etc.
SECTION
4.  This act takes effect upon approval by the Governor.
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This web page was last updated on February 18, 2026 at 01:09 PM