South Carolina Declarant Control Period

Started by AustinG • 15 replies • 2817 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

AustinG (South Carolina)
Posts: 4

Posted:

I apologize in advance if this topic has been covered - i tried to search thoroughly before creating a new topic. We are having issues with our declarant refusing to relinquish control of the board. At the start of this year, the developer owned 2 of 50 units in our condominium building. Since then they have sold 1 and now only have one unit remaining. THe building was a condo conversion which sold it's first units in 2007. They will not turn over the board but they will also not give a reason why. Any emails from the board asking them why they won't turn over control go unanswered. So at this point they have been in control 7 going on 8 years with 1 unit remaining. They have also refused to participate in votes related to repair issues. For example, one resident had water damage on their floor and they abstained from voting. This made it difficult because we weren't sure if we had a majority without their participation. They have also refused to acknowledge or vote on replacement board members lately. Things keep getting worse.

I would love to know what our options are. The Part 2 which is not included below is just floor plans of the different units.

Thanks in advance for any advice you can give.

JohnB26 (South Carolina)
Posts: 1,001

Posted:

What do your Covenants and Restrictions say?

AustinG (South Carolina)
Posts: 4

Posted:

I have scoured the master deed and covenants and there is no declarant control period specified. I looked at documents for similar properties in south carolina and they all have a declarant control period explicitly stated. It's crazy.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Austin,

I am not an attorney and I do not work in the legal profession.

In doing some research, I could find nothing in SC statutes that stipulate turnover (declarant to membership). Therefore, the specifics would be within your governing documents. If they are silent, I would suspect that turnover would occur when the Declarant no longer controls the voting power of the Association (i.e. declarant votes are less then membership votes).

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Austin

As a condo building(s) in SC, there is the SC Horizontal Property Act for such units. As I am in HOA of non-condo construction, we are not covered by that act so I pay little to no attention to it, but I suggest it might be as place for you to start looking.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Austin,

It appears that your declarant is just one of 50 owners and that he reserved no special powers for himself. The other 49 of you need to organize a meeting and elect your new board of directors. The new board will face the possibility of mounting a hostile take-over from the declarant but it sounds like he has no cards left to play.

Your new board may have to engage an attorney and take the declarant to court to force him to turn over the books and accounts of the association. If there is nothing in he declaration giving him control until certain conditions are met then he has no defense for refusing to bow to the will of the majority of the owners.

JohnB26 (South Carolina)
Posts: 1,001

Posted:

WELL STATED

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By LarryB13 on 11/12/2014 6:24 PM
Austin,

It appears that your declarant is just one of 50 owners and that he reserved no special powers for himself.

Well, that depends on how many votes the declarant gets per lot.

If the declarant gets more than 50 votes per lot, the declarant still has the voting power to dictate who will be on the Board, etc.

KerryL1 (California)
Posts: 14,550

Posted:

I like Larry's approach too!!

If the declarant has multiple votes per lot, I'm guessing Austin would have told us that.

AustinG (South Carolina)
Posts: 4

Posted:

Guys - I completely appreciate the help and input on this. They have 5 votes per unit, but 49 of 50 have sold so they have 5 votes to our 49.

I was trying to upload the by laws in PDF but there was a file limit. I've put them up on dropbox if anyone would be willing to review them and let me know if I'm missing anything. The developers are terrible, terrible people and have caused our building to be the only one that isn't appreciating in value while everything around us goes up and up. The fact it's been controlled for 7 years is a red flag to buyers.

Here's the link to the bylaws:

https://www.dropbox.com/sh/mrm50q0cxy3oy2v/AADekxgR7BeISV3nKoqdt0oFa?dl=0

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Austin

Who do you pay your dues to? Who pays the bills?

AustinG (South Carolina)
Posts: 4

Posted:

There has been a property management company in place for several years - NHE (no relation to developer).

We write our regime payments to NHE

DouglasK1 (Florida)
Posts: 2,046

Posted:

I'll go with Larry's answer and say that you might need a judge to force the developer to follow the contract.

Escaped former treasurer and director of a self managed association.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Austin,

It appears, and keep in mind that I am not an attorney nor do I work in the legal profession, that based on your posting and the documents provided, that the Declarant has 5 votes (since they only have 1 unit left) and the membership has 49 votes (1 per lot).

It also appears that the Association is incorporated as a limited liability company (LLC). Therefore, in addition to the HORIZONTAL PROPERTY ACT, the SC UNIFORM LIMITED LIABILITY COMPANY ACT OF 1996 also applies. As an LLC, from what I can tell, procedural issues will be controlled by your Bylaws.

I didn't have time to read over if the members should be electing directors at this time or not. At the very least, the Association should be having annual meetings.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By AustinG on 11/13/2014 11:36 AM
There has been a property management company in place for several years - NHE (no relation to developer).

We write our regime payments to NHE

Who contracts with NHE? Your BOD or the developer?

Austin

Tough love here but I think you may need to do more homework and/or hire an attorney to do such for you. My suggestion is if there are other owners who feel as you do, then gather them together and create a war chest ($$$$$$) to pursue the issue.

Hope this helps.

JohnB26 (South Carolina)
Posts: 1,001

Posted:

your assessment check should be payable to:

XYZ HOA, LLC NOT the 'mgmt. co.'

or, at least:

NHE for benefit of (F/B/O) XYZ HOA, LLC

NOT directly to the mgmt. co.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here