Vendor Contracts and Reserve Studies

First, please quote exactly what your bylaws and CC&Rs state on the subject of records inspection by members.

Second, see the nonprofit corporation act linked at https://www.hopb.co/south-carolina . Go to the section titled, "inspection of records by members." So far, and to my surprise, it looks like the South Carolina nonprofit corporation act does not have a provision for reviewing reserve studies, and nor does it have a provision for reviewing contracts.

I did not quote Bylaws/Covenants as they all vary. The above is, I believe, more law than Bylaws/Covenants.

South Carolina statutes appear to me to be unusually limiting with regard to records a HOA member may view. Section 27-30-150 of the South Carolina HOA statutes instructs that the nonprofit corporation statute sections on access to records apply. I quote these below. Maybe John knows something different. Else I do not see where vendor contracts or reserve studies are required to be shared with members. It seems to me the OP's only hope is if her governing documents say something on the point (and they may very well).

South Carolina Nonprofit Corporation Act,
SECTION 33-31-1601. Corporate records.
(a) A corporation shall keep as permanent records minutes of all meetings of its members and board of directors, a record of all actions taken by the members or directors without a meeting, and a record of all actions taken by committees of the board of directors as authorized by Section 33-31-825(d).

(b) A corporation shall maintain appropriate accounting records.

(c) A corporation or its agent shall maintain a record of its members in a form that permits preparation of a list of the name and address of all members, in alphabetical order by class, showing the number of votes each member is entitled to cast.

(d) A corporation shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time.

(e) A corporation shall keep a copy of the following records at its principal office:

(1) its articles or restated articles of incorporation and all amendments to them currently in effect;

(2) its bylaws or restated bylaws and all amendments to them currently in effect;

(3) resolutions adopted by its board of directors relating to the characteristics, qualifications, rights, limitations, and obligations of members or any class or category of members;

(4) the minutes of all meetings of members and records of all actions approved by the members for the past three years;

(5) all written communications to members generally within the past three years, including the financial statements furnished for the past three years under Section 33-31-1620;

(6) a list of the names and business or home addresses of its current directors and officers; and

(7) its most recent report of each type required to be filed by it with the Secretary of State under this chapter.

SECTION 33-31-1602. Inspection of records by members.
(a) Subject to subsection (e) and Section 33-31-1603(c), a member is entitled to inspect and copy, at a reasonable time and location specified by the corporation, any of the records of the corporation described in Section 33-31-1601(e) if the member gives the corporation written notice or a written demand at least five business days before the date on which the member wishes to inspect and copy.

(b) Subject to subsection (e), a member is entitled to inspect and copy, at a reasonable time and reasonable location specified by the corporation, any of the following records of the corporation if the member meets the requirements of subsection (c) and gives the corporation written notice at least five business days before the date on which the member wishes to inspect and copy:

(1) excerpts from any records required to be maintained under Section 33-31-1601(a), to the extent not subject to inspection under Section 33-31-1602(a);

(2) accounting records of the corporation; and

(3) subject to Section 33-31-1605, the membership list.

(c) A member may inspect and copy the records identified in subsection (b) only if:

(1) the member's demand is made in good faith and for a proper purpose;

(2) the member describes with reasonable particularity the purpose and the records the member desires to inspect; and

(3) the records are directly connected with this purpose.

(d) This section does not affect:

(1) the right of a member to inspect records under Section 33-31-720 or, if the member is in litigation with the corporation, to the same extent as any other litigant; or

(2) the power of a court, independently of this chapter, to compel the production of corporate records for examination.

(e) The articles or bylaws of a religious corporation may limit or abolish the right of a member under this section to inspect and copy any corporate record.

---

See
https://www.scstatehouse.gov/code/t27c030.php
and
https://www.scstatehouse.gov/code/t33c031.php

AugustinD,

If I'm reading this right, it means Tina can show residents the Reserve Study. The above info just means that she and the board are not obligated to do do. Is this correct?

My BOD will show any owner, any document, contract, invoice, etc. that they ask for. But we are not mind readers. They have to ask for it.

I can think of several. If the reserve study concludes contributions to the reserves need to be increased substantially, a board who doesn't want to increase assessments (for whatever reasons) might want to conceal that fact. A reserve study might bring up reserve components that are currently not being reserved for. A board might want to hide that information, too, lest they have to increase assessments. Those are just a couple of reasons. They're not "good" reasons, but not all boards are committed to doing the right thing.

John, gosh yes, this is one of the best reasons to share the reserve study (or a capsule summary of it): So people understand why the assessment has to go up or why a large special assessment is necessary. Of course, the board that does this might get canned at the next election. But do it you must.

You are right that in the end, the board could be canned at the next election. For myself, I'm O.K with this as long as I feel I have the best interest of the community at heart and that I have done everything possible to find the best solution possible to address our issues. It's been brought up many times on this forum that apathy on the part of the board or it's residents is a silent killer. During my short time I've been on the board, I've come to fully understand this now.

JohnT

Though not all Covenants are the same, our SC covenants allow the BOD to increase dues as much as they want to but there is a procedure:

1. On or before Dec 1 the BOD must present each owner (US Mail) a copy of the next years budget including the dues increase to happen on Jan 1. This is the only time during the year we can increase dues. We went up 40% this year to build reserves for future roof replacements. Along with the budget, we did a mail out explaining, along with a spreadsheet showing, the needed increase. We had also handed the spreadsheet out at our Annual Meeting in April so some expected something.....LOL

2. Our owners can call a Special Meeting prior to Jan 1at which 51% of all owners (I repeat all owners) must vote to disapprove the upcoming budget. No one made a move to do so.

We only had one member that threatened legal action. We Emailed him a copy of the Covenant Section showing that we could do this. He went away. I was quite surprised only one raids he!!.

Check you Covenants closely as to how to increase dues. If like ours, you do not have much time left to do so for the coming year.

If July to July Fiscal Year you could not use the above method, even if allowed, until beginning of next Fiscal Year. And as I said we get one shot a year. Budget presented on or before 12/01 and becomes effective on 01/01.