SusanS15 (South Carolina)
Posts: 9
Posts: 9
Posted:
Hi - I posted here last month about some major growing pains our HOA is having but the post was wiped away during that period of time in February when the site went down
Anyway - I'm on the Board of a HOA in South Carolina. We discovered several months ago that we had not been incorporated as we should have been as per our Declaration & CCRs. Our neighborhood is made up of three different sections, each having its own set of CCRs. That was when we discovered that the first section was to be incorporated under one name and the other two sections incorporated under a different (yet similar name: one is the XX"Property Owner's Association," the other is the XX"Homeowner's Association"). As long as anyone can remember, all residents have paid annual assessments to the XX Homeowner's Association.
So we incorporated as two separate entities. We had an attorney write up two sets of bylaws for each, which are identical. At our meeting tonight, the Board President wants to discuss merging the two HOAs under the name XX Homeowner's Association (mostly for financial reasons, I believe, and to keep the idea that we are all "one."). She said that the three sections will still have their separate CCRs. But how would that work? What becomes of the XX Property Owner's Association (XX POA to simplify hereon out) ? Wouldn't merging requiring dissolving that Association, which would make its CCRs obsolete?
A thorny part of this is that the XX POA's CCRs don't allow for levying fines for noncompliance in correcting covenant violations; the XX Homeowner's Association does. In fact, this was put to a vote about 7 years ago for the residents of what is now the XX POA and it didn't pass. The other Association's CCRs were amended by the developer before the property was turned over to the residents and they can levy fines. Some of the Board has been more than eager to get XX POA "in compliance" with the other HOA by being able to fine residents and are really pushing for it, in any way they can. Now, in both sets of the proposed bylaws, there is a section under the Powers of the Board that lays out a procedure for levying fines. My argument is that since another section of the proposed bylaws, Conflicts, states that when there is a conflict between SC law and the HOA documents, SC law, then the CCRS, then the Articles of Incorporation, then the bylaws, in that order, prevail. Since the XX POA CCRs don't allow for a fining procedure, then they would take precedent over the bylaws, making that section of the bylaws unenforceable (unless the CCRs were amended by a vote). If I'm wrong, please correct me. Is XX POA then losing that right if it is absorbed by the other Association?
I don't see anything in the XX POA's Declaration & CCRs that addresses dissolving the Association. There is a section, "Extension of Covenants to Include Additional Property," which says it can annex additional property by going through the correct legal channels and there is another section which addresses amending the covenants or terminating the covenants, which automatically renew every ten years (which would have last been 2010) and would require a super majority vote of residents. Nothing about dissolving the Association. The other Association, the XX Homeowner's Association, which would be absorbing XX POA, does not address dissolution OR annexing other property.
The Board President acts like she believes this can all be accomplished (without a vote of any residents, BTW) according to the real estate attorney who has handled the incorporation thus far. The attorney will be at tonight's meeting. I have prepared questions and my argument re: CCRS vs bylaws regarding the fines, but I'd like to be better prepared about the whole merger proposal. The Board President is extremely difficult to deal with and does not include other members in her discussions with the attorney. She governs by like what I refer to as "sneak attack" - no one knows anything until she surprises us with it. I have no idea what her argument will be on any of this because she just doesn't tell us anything (and, yes, I have "discused" this with her repeatedly - and heatedly - and it doesn't matter an iota to her).
Thoughts/opinions/suggestions are all welcome.
Anyway - I'm on the Board of a HOA in South Carolina. We discovered several months ago that we had not been incorporated as we should have been as per our Declaration & CCRs. Our neighborhood is made up of three different sections, each having its own set of CCRs. That was when we discovered that the first section was to be incorporated under one name and the other two sections incorporated under a different (yet similar name: one is the XX"Property Owner's Association," the other is the XX"Homeowner's Association"). As long as anyone can remember, all residents have paid annual assessments to the XX Homeowner's Association.
So we incorporated as two separate entities. We had an attorney write up two sets of bylaws for each, which are identical. At our meeting tonight, the Board President wants to discuss merging the two HOAs under the name XX Homeowner's Association (mostly for financial reasons, I believe, and to keep the idea that we are all "one."). She said that the three sections will still have their separate CCRs. But how would that work? What becomes of the XX Property Owner's Association (XX POA to simplify hereon out) ? Wouldn't merging requiring dissolving that Association, which would make its CCRs obsolete?
A thorny part of this is that the XX POA's CCRs don't allow for levying fines for noncompliance in correcting covenant violations; the XX Homeowner's Association does. In fact, this was put to a vote about 7 years ago for the residents of what is now the XX POA and it didn't pass. The other Association's CCRs were amended by the developer before the property was turned over to the residents and they can levy fines. Some of the Board has been more than eager to get XX POA "in compliance" with the other HOA by being able to fine residents and are really pushing for it, in any way they can. Now, in both sets of the proposed bylaws, there is a section under the Powers of the Board that lays out a procedure for levying fines. My argument is that since another section of the proposed bylaws, Conflicts, states that when there is a conflict between SC law and the HOA documents, SC law, then the CCRS, then the Articles of Incorporation, then the bylaws, in that order, prevail. Since the XX POA CCRs don't allow for a fining procedure, then they would take precedent over the bylaws, making that section of the bylaws unenforceable (unless the CCRs were amended by a vote). If I'm wrong, please correct me. Is XX POA then losing that right if it is absorbed by the other Association?
I don't see anything in the XX POA's Declaration & CCRs that addresses dissolving the Association. There is a section, "Extension of Covenants to Include Additional Property," which says it can annex additional property by going through the correct legal channels and there is another section which addresses amending the covenants or terminating the covenants, which automatically renew every ten years (which would have last been 2010) and would require a super majority vote of residents. Nothing about dissolving the Association. The other Association, the XX Homeowner's Association, which would be absorbing XX POA, does not address dissolution OR annexing other property.
The Board President acts like she believes this can all be accomplished (without a vote of any residents, BTW) according to the real estate attorney who has handled the incorporation thus far. The attorney will be at tonight's meeting. I have prepared questions and my argument re: CCRS vs bylaws regarding the fines, but I'd like to be better prepared about the whole merger proposal. The Board President is extremely difficult to deal with and does not include other members in her discussions with the attorney. She governs by like what I refer to as "sneak attack" - no one knows anything until she surprises us with it. I have no idea what her argument will be on any of this because she just doesn't tell us anything (and, yes, I have "discused" this with her repeatedly - and heatedly - and it doesn't matter an iota to her).
Thoughts/opinions/suggestions are all welcome.