SC bills would regulate HOAs in three ways

By Deborah Goonan, Independent American Communities

gavel

Will South Carolina make progress on regulation of Association Governed Housing Communities in 2017?

Maybe. Similar bills have been pre-filed in both the House and the Senate, by State Rep. Russell Fry and Senator Greg Hembree, respectively.

According to reports, the bills will address three main consumer complaints about HOAs:

  • Uneducated board members that don’t know what they’re doing
  • Lack of full disclosure prior about the existence of a mandatory association in the real estate sales process
  • The fact that the only way to settle HOA disputes is to file a costly lawsuit in civil court

The proposed solutions:

  • Real Estate Commission would create free “HOA 101” classes for Board members
  • Creation of strict pre-sale real estate disclosure requirements
  • Allow Association members to bring their HOA disputes to Magistrate Court (also known as Small Claims Court)

HOA bills have been filed in the past two Legislative sessions, but made no progress. This year, all three regulatory proposals address common sense issues. The most controversial issue will likely be moving most HOA disputes to the Magistrate level.

How does Magistrate Court work?

South Carolina’s Magistrate Court Rules differ from circuit court for civil actions in several ways. The process is relatively inexpensive and limited to a short period of time (120 days or less). It also provides an opportunity for both sides to be heard, and for the defendant to confront and cross-examine witnesses to the complaint. The court can even subpoena witnesses that reside in the same County. Otherwise, procedures are informal and relaxed when compared to standard circuit court.

RULE 13
CONDUCT OF TRIAL; JURY TRIALS; WITNESSES; SUBPOENAS

(a) Trials should be conducted in an informal manner and the South Carolina Rules of Evidence shall apply but shall be relaxed in the interest of justice. In the trial of a civil action, in which one or both parties are unrepresented by legal counsel, the court shall question the parties and witnesses in order to assure that all claims and defenses are fully presented.

For example, the homeowner Plaintiff would file a written complaint to the Magistrate, then an officer of the Magistrate would serve the complaint to the defendent HOA, either in person or by certified mail with return receipt. Once the complaint or summons is received by the HOA, the Defendant HOA would be given a limited time, ususlly 30 days, to respond with a written Answer, which may or may not contain a Counterclaim.

If the Defendant provides an Answer, it, too, must be served on the Plaintiff. However, the Plaintiff does not respond to an Answer and Counterclaim.

The Magistrate’s Office sets a trial date when both parties have had a chance to file a claim, respond, and file a counterclaim, if applicable. In South Carolina, there may or may not be a jury at the trial.

Why the Magistrate Court is less costly than Circuit Court

Filing fees and court costs a generally a few hundred dollars, not including legal fees if you retain an attorney.

The Magistrate court will not require exchange of information by both parties, and it will not engage in granting multiple continuances, motions, or other litigation tactics that draw out the pre-trail process. That results in less time, and fewer billable hours when attorneys are involved.

While it is not necessary to be represented by an attorney in Magistrate Court, it may be advisable depending on the nature of the complaint.

The amount of monetary judgments in civil action cases brought to Magistrate Court is limited to $7,500 in South Carolina.

The Magistrate’s Court has been used for many years to settle landlord-tenant disputes and other small claim consumer complaints.

No-Shows, Default Judgments, and Appeals

Both parties are expected to show up for the Magistrate’s trial. If either party fails to appear, it can result in a default judgment for the other party or a dismissal of the complaint. If no Answer is provided to the original complaint file by the Plaintiff, the court will issue a Judgment by default at the trial, in favor of the Plaintiff. If the Plaintiff fails to show and Defendant shows up after having filed a Counterclaim, the Defendant wins by default.

After listening to both sides present their arguments, the court may award financial damages to one or both parties, or may even choose to dismiss the claim.

Note that the process would work the other way around, too. The HOA could be the Plaintiff and the homeowner the Defendant.

Either party has 10 days to appeal a Judgment issued at trial or by written notice in the case of no-show at trial. An appeal goes to Circuit Court, but both parties may also request a new trial before the same Magistrate.

 

Potential dispute resolution for homeowners and residents of HOAs

So, what kind of complaints might be appropriate for Magistrate’s Court? It depends on the details in the bill, and whether or not the Magistrate’s jurisdiction is limited to specific issues. In my opinion, jurisdiction over disputes needs to remain open, subject to limitations of Magistrate’s Court – damages that can be reduced to financial losses up to $7,500.

Here are some examples:

  • Disputed fines related to CC&Rs, Rules and Regulations, in the early stages of the dispute, when paid under protest
  • Unfair collection fees, errors in billing, late posting of payments
  • Deferred maintenance or failure to make repairs to your unit, when the Association is obligated to perform such services under the terms of the governing documents (a legal contract)
  • Unjustified parking and traffic related fines, booting or towing of vehicles
  • Damages to private property, caused by Association staff or contractors
  • Damages to your vehicle caused by malfunctioning entry gates

 

Given the limitations of Magistrate’s Court to small claims, the following types of disputes would still have to be addressed by filing a civil action in Circuit Court:

  • Damages to private property caused by deferred maintenance, human error, or malfeasance of Association staff or contractors, in excess of $7,500
  • Failure to maintain common areas, when it’s difficult to quantify financial impact to private property values, or when damages to private property exceeds $7,500
  • Assessment collection disputes in excess of $7,500
  • Disputes that cannot be reduced to financial damages, such as failure of the Association to address nuisances (noise, foul odors, pet disturbances)
  • Association’s failure to follow the terms of governing documents or state law such as:
    • Failure of Association to provide access to official documents without an enforceable court order
    • Election and recall disputes
    • Failure of Association to conduct required meetings

 

For more information, see SC FAQs on Magistrate’s Court.

http://www.judicial.state.sc.us/selfhelp/FAQMagistrate.pdf

 

 

Recent news releases about SC proposed HOA legislation:

Senator Hembree pre-files bill to regulate SC Homeowners Associations

By Abbey O’Biren, WBTW News 13

MYRTLE BEACH, SC (WBTW) – South Carolina Senator, Greg Hembree, pre-filed a bill to require more regulation of Homeowners Associations in the state.

Hembree said he’s received complaints about a lack of education for HOA board members as well as huge fees to take HOA disputes to court.

“Homeowners Associations are virtually unregulated in South Carolina,” said Hembree. “All over the country there are as many ideas about how to regulate these things as there are states.”

Hembree said the bill hopes to address the major complaints he hears about HOA’s.

Read more, VIDEO:

Senator Hembree pre-files bill to regulate SC Homeowners Associations

 

Heroin, sex trafficking, HOAs, mopeds targeted in prefiled bills

BY AUDREY HUDSON AND CHLOE JOHNSON

Dec. 15, 2016

Myrtle Beach Online –

Relevant excerpt:

Legislation that hasn’t passed in previous sessions that affect Homeowners Associations was reintroduced this week.

Fry is sponsoring the bill in the House and says that the simple measure is more likely to pass if not part of a comprehensive package.

“HOA reforms are consistently bogged down every year because people try to make it too comprehensive and it becomes too complicated,” Fry said.

Fry’s bill would require disclosure of HOA covenants and restrictions prior to home sales; free and voluntary educational classes for new HOA board members to learn about their obligations, and; giving jurisdiction to settle disputes to magistrate as well as common plea courts.

Source article:

http://www.myrtlebeachonline.com/news/local/article121172328.html#storylink=cpy

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