H 4158 Session 110 (1993-1994)
H 4158 General Bill, By C.L. Sturkie
A Bill to amend Title 27, Code of Laws of South Carolina, 1976, relating to
property and conveyances, by adding Chapter 30 so as to enact the South
Carolina Condominium Act; to amend Sections 40-57-10, 40-57-20, 40-57-40,
40-57-90, 40-57-100, 40-57-110, 40-57-140, 40-57-160, 40-57-170, 40-57-240,
all as amended, and Section 40-57-120, all relating to regulation of persons
engaged in various real estate activities so as to include condominium
association managers among those person regulated; and to amend Section
16-1-10, relating to crimes classified as felonies, so as to add failure of a
condominium developer to properly handle escrow funds.
04/29/93 House Introduced and read first time HJ-23
04/29/93 House Referred to Committee on Judiciary HJ-24
A BILL
TO AMEND TITLE 27, CODE OF LAWS OF SOUTH CAROLINA,
1976, RELATING TO PROPERTY AND CONVEYANCES, BY
ADDING CHAPTER 30 SO AS TO ENACT THE SOUTH
CAROLINA CONDOMINIUM ACT; TO AMEND SECTIONS
40-57-10, 40-57-20, 40-57-40, 40-57-90, 40-57-100, 40-57-110,
40-57-140, 40-57-160, 40-57-170, 40-57-240, ALL AS AMENDED,
AND SECTION 40-57-120, ALL RELATING TO REGULATION OF
PERSONS ENGAGED IN VARIOUS REAL ESTATE ACTIVITIES
SO AS TO INCLUDE CONDOMINIUM ASSOCIATION
MANAGERS AMONG THOSE PERSONS REGULATED; AND TO
AMEND SECTION 16-1-10, RELATING TO CRIMES CLASSIFIED
AS FELONIES, SO AS TO ADD FAILURE OF A CONDOMINIUM
DEVELOPER TO PROPERLY HANDLE ESCROW FUNDS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The 1976 Code is amended by adding:
"CHAPTER 30
South Carolina Condominium Act
Article 1
General Provisions
Section 27-30-10. This chapter may be cited as the `South Carolina
Condominium Act'.
Section 27-30-20. (A) The purpose of this chapter is to recognize
the condominium form of ownership of real property, and to establish
procedures for the creation, sale, and operation of condominiums.
(B) Every condominium created and in this State on and after
January 1, 1994, is subject to this chapter. Sections 27-30-1320 thru
27-30-1390 apply to any transaction in which the first unit in a
condominium or separate phase of a condominium is first offered for
sale or lease for a term of more than five years by a developer after
December 31, 1993, even if the condominium may have been created
before January 1, 1994. Chapter 31, Title 27, the Horizontal Property
Act, otherwise continues to govern a condominium created before
January 1, 1994, unless amendments to the documents creating the
pre-existing condominium, duly executed according to the provisions of
those documents and the Horizontal Property Act, subject the
condominium to the provisions of this chapter and effect any changes to
the condominium documents required to conform to the requirements
imposed by this chapter. Notification of the election to be governed by
this chapter must be given to the commission within thirty days after the
election is effected, accompanied by a certification by an attorney
licensed to practice law in this State that the election has been duly
effected, as well as the fee required pursuant to Section 27-30-1310. A
contract for the sale or lease of a unit in a condominium which is not
governed by this chapter must state in bold letters: The seller (or lessor)
of this unit is not governed by the provisions of the South Carolina
Condominium Act. (Chapter 30, Title 27, Code of Laws of South
Carolina, 1976.)
Section 27-30-30. As used in this chapter unless the context
otherwise requires:
(1) `Assessment' means a share of the funds assessed against the unit
owner for common expenses.
(2) `Association' means the corporate entity responsible for the
operation of a condominium.
(3) `Association property' includes real and personal property in
which title or ownership is vested in the association for the use and
benefit of its members.
(4) `Board of administration' or `board' means the board of directors
or other representative body responsible for administration of the
association.
(5) `Bylaws' means the bylaws adopted by the association.
(6) `Commission' means the Real Estate Commission of South
Carolina established pursuant to Chapter 57, Title 40.
(7) `Commissioner' means the chief executive officer appointed by
the Real Estate Commission of South Carolina.
(8) `Common elements' means the portions of the condominium
property not included in the units, the use of which are available to all
condominium unit owners.
(9) `Common expenses' means all expenses and assessments
properly incurred by the association for the condominium.
(10) `Common surplus' means the receipts of the association collected
on behalf of the condominium including, but not limited to, assessments,
rents, profits, and revenues on account of the common elements in
excess of the common expenses.
(11) `Condominium' means a form of ownership of real property
created pursuant to this chapter comprised of units that may be owned
by one or more persons, and in which there is an undivided share in
common elements appurtenant to each unit.
(12) `Condominium parcel' means a unit and the undivided share in
the common elements appurtenant to the unit.
(13) `Condominium property' means the land, leasehold, and personal
property subject to condominium ownership, whether or not contiguous,
and improvements, easements, and rights appurtenant to the land,
leasehold, or personal property intended for use in connection with the
condominium.
(14) `Conspicuous type' means type in bold face capital letters no
smaller than the largest type on the page on which it appears.
(15) `Declaration' or `declaration of condominium' means the
instrument by which a condominium is created.
(16) `Developer' means a person or entity who creates a
condominium or offers condominium parcels for sale or lease in the
ordinary course of business. It does not include an owner or lessee of a
condominium or cooperative unit who has acquired his unit for his own
occupancy; and it does not include a cooperative association creating a
condominium by converting an existing cooperative after control of the
association has been transferred to the unit owners if following the
conversion, the unit owners are the same persons who were unit owners
of the cooperative and no units are offered for sale or lease to the public
as part of the conversion plan.
(17) `Escrow account' means funds held or maintained by an escrow
agent.
(18) `Escrow agent' means a bank, a savings and loan association, an
attorney who is a member of the South Carolina Bar, a real estate broker
licensed under Chapter 57 of Title 40, a title insurer authorized to do
business in this State acting through its employees or a licensed title
insurance agent, or a financial lending institution having a net worth in
excess of five million dollars.
(19) `Joinder' means to allow an owner, in writing, to join in the
action of an association or regime after the fact, even if he is absent from
the meeting, either in person or by proxy, to allow the association to
obtain the necessary participation to effect a desired action.
(20) `Land' means the surface of a legally described parcel of real
property including the air space above and the subterranean space below
the surface unless otherwise defined or specified in the declaration and
whether separate from or including the surface. It may mean all or any
portion of the air space or subterranean space between two legally
identifiable points and may exclude the surface of a parcel of real
property and may mean any combination of these, whether or not
contiguous.
(21) `Limited common elements' means those common elements
reserved for the use of one or more condominium units to the exclusion
of other units, as specified in the declaration, with the responsibility of
repair resting with the association and the responsibility of routine
housekeeping resting with the unit owner.
(22) `Operation' or `operation of the condominium' includes the
administration and management of the condominium property.
(23) `Person' means a natural person, corporation, business trust,
estate, trust, partnership, association, joint venture or other legal or
commercial entity.
(24) `Record' means to record a document relating to a condominium
in the office of the clerk of court or register of mesne conveyances of the
county where the condominium is located.
(25) `Rental agreement' means a written agreement or an oral
agreement if for less duration than one year, providing for the use and
occupancy of the premises.
(26) `Special assessment' means an assessment levied against unit
owners other than the assessment required by an annual budget.
(27) `Time share interest' means an interest in a unit in which the
exclusive right of use, possession, or occupancy of the unit circulates
among the owners of the time share unit on a periodically recurring
basis. It includes, but may not necessarily be limited to, interest in a
vacation time sharing lease plan, a vacation time sharing ownership
plan, or vacation multiple ownership interests as defined in the South
Carolina Vacation Time Share Plan Act, Section 27-32-10, et seq.
(28) `Time share unit' means a unit in which a time share interest has
been created.
(29) `Unit' means a part of the condominium property subject to
exclusive ownership. A unit may be in improvements, land, or land and
improvements, as specified in the declaration.
(30) `Unit owner' or `owner of a unit' means the owner of a
condominium parcel.
(31) `Voting certificate' means a document which designates a record
title owner or the corporate, partnership, or entity representative to vote
on behalf of a condominium unit owned by more than one owner or by
an entity. Collective owners of a unit are considered one unit owner for
voting purposes.
(32) `Voting interest' means the voting rights held by a unit owner.
Section 27-30-40. A power of attorney affecting any aspect of the
operation of a condominium is subject to and must be in compliance
with this chapter, condominium documents, association rules, and other
rules adopted pursuant to this chapter, and covenants, conditions, and
restrictions in force at the time of the execution of the power of attorney.
Section 27-30-50. (A) A condominium must be created in
accordance with this chapter.
(B) A condominium may be created on land owned in fee simple or
held under a lease in compliance with this chapter.
(C) A condominium is created by recording a properly executed and
acknowledged declaration in the public records of the county where the
land is located. All persons, or their lawfully authorized agents, who
have record title to the interest in the land being submitted to
condominium ownership must execute the declaration.
Section 27-30-60. (A) The declaration creating the condominium
must contain or provide for:
(1) a statement submitting the property to condominium
ownership;
(2) the name by which the condominium property is to be
identified which must include the word `condominium' or be followed
by the words `a condominium';
(3) the legal description of the land and, if a leasehold estate is
submitted to condominium ownership, an identification of the lease;
(4) an identification of each unit by letter, name, number, or a
combination of them, so that no unit may bear the same designation as
any other unit;
(5) a survey of the land showing all existing easements, a graphic
description of the improvements in which units are located, and a plot
plan that, with the declaration, are sufficiently detailed to identify the
common elements, each unit, and their relative locations and
approximate dimensions. The survey, graphic description, and plot plan
may be in the form of exhibits consisting of building plans, floor plans,
maps, surveys, or sketches. A certificate of a surveyor authorized to
practice in this State must be included in or attached to the declaration,
the survey, or the graphic description that the construction of the
improvements is substantially complete so that the material, together
with the provisions of the declaration describing the condominium
property, is an accurate representation of the location and dimensions of
the improvements and so that the identification, location, and
dimensions of the common elements and of each unit can be determined
from these materials. Completed units within each substantially
completed building in a condominium development may be conveyed
to purchasers even though other buildings in the condominium are not
substantially completed, provided that all planned improvements
including, but not limited to, landscaping, utility services and access to
the unit, and common element facilities serving the building, as set forth
in the declaration, are completed and the declaration of condominium is
recorded and provided that as to the units being conveyed there is a
certificate of a surveyor as required above, including certification that
all planned improvements, including, but not limited to, landscaping,
utility services and access to the unit, and common element facilities
serving the building in which the units to be conveyed are located have
been completed substantially, and the certificate is recorded with the
original declaration or as an amendment to the declaration. This section
does not require development of improvements and amenities declared
to be included in future phases pursuant to this chapter before conveying
a unit as provided by this item. For the purposes of this item, a
`certificate of a surveyor' means certification by a surveyor in the form
provided in this item and when appropriate may include certification by
an architect or engineer authorized to practice in this State.
Notwithstanding the requirements of substantial completion provided in
this item, nothing in this item prohibits or impairs the validity of a
mortgage encumbering units together with an undivided interest in the
common elements as described in a declaration of condominium
recorded before the recording of a certificate of a surveyor;
(6) The declaration shall allocate a fraction or percentage of
undivided interests in the common elements, the same or different
fraction or percentage share of the common expenses, and a portion of
the votes in the association, to each unit and state the formulas used to
establish those allocations. Those allocations may not discriminate in
favor of units owned by the declarant. The sum of the allocations in the
case of undivided interests in the common elements and share of the
common expenses must total one hundred in each instance.
(7) the name of the association which must be incorporated;
(8) unit owners' membership and voting rights in the association;
(9) the documents creating the association attached as an exhibit;
(10) a copy of the bylaws attached as an exhibit. The validity of
the condominium or title to the condominium parcels is not affected by
defects or omissions in the bylaws;
(11) the creation of a nonexclusive easement for ingress and egress
over streets, walks, and other rights-of-way serving the units of a
condominium, as part of the common elements necessary to provide
reasonable access to the public ways, or a dedication of the streets,
walks, and other rights-of-way to the public. No easement for ingress
and egress may be encumbered by a leasehold or lien other than those
on the condominium parcels, unless:
(a) the lien is subordinate to the rights of unit owners in and to
the easement; or
(b) the holder of a lien or leasehold encumbering the land
burdened with an easement has executed and recorded a nondisturbance
agreement to the effect that the use-rights of each unit owner will not be
disturbed or terminated as long holder of the easement is not in default
under the terms of the grant of easement;
(12) if time share interests are or may be created in a condominium
unit, a statement in conspicuous type that time share interests may be
created in units in the condominium must be contained in the
declaration. The degree, quantity, nature, and extent of the interests
must be defined and described in detail including a specific statement of
the minimum duration of the recurring periods of rights of use,
possession, or occupancy that may be created;
(13) a schedule listing the components included in each unit of the
condominium, including but not limited to, wallcoverings, ceiling
coverings, plumbing fixtures, electrical appliances, cabinetry, heating
and air conditioning units, and doors and windows and their
components;
(14) a statement establishing responsibility for maintenance and
insuring of the components listed in the schedule required by item (13).
The responsibility may be imposed on the condominium association or
on each unit owner;
(B) The declaration may include covenants and restrictions
concerning the use, occupancy, and transfer of the units permitted for
real property and other provisions not inconsistent with this chapter.
The rule against perpetuities may not defeat a right given a person or
entity by the declaration for the purpose of allowing unit owners to
retain reasonable control over the use, occupancy, and transfer of units.
(C) A person who executes or consents to the execution of a
declaration subjects his interest in the condominium property to the
provisions of the declaration.
(D) All provisions of the declaration are enforceable equitable
servitudes, run with the land, and are effective until the condominium is
terminated.
(E) If the property which is the subject of the declaration is
encumbered by a mortgage, then a consent form must be executed by a
person or entity who has a record interest in a mortgage encumbering the
interest in the land being submitted to the condominium ownership. The
consent form must be attached to the declaration having the effect of
evidencing the lender's acknowledgement of and consent to the filing of
the declaration.
Section 27-30-70. No time share interest may be created in a
condominium unit except pursuant to provisions in the declaration
expressly permitting the creation of that interest.
Section 27-30-80. (A) When executed in accordance with this
article, a declaration including all exhibits and all amendments may be
recorded as an agreement relating to the conveyance of land.
(B) Graphic descriptions of improvements constituting exhibits to a
declaration must be recorded as a part of a declaration and must be
certified by a surveyor pursuant to this article.
(C) When recording the declaration, the clerk of court, may file the
exhibits of a declaration containing graphic descriptions of
improvements in a separate book and shall indicate the place of filing in
the margin where the declaration is recorded.
Section 27-30-90. (A) A condominium parcel created by the
declaration is a separate parcel of real property even though the
condominium is created on a leasehold.
(B) These appurtenances pass with a condominium unit:
(1) an undivided share in the common elements and common
surplus;
(2) the exclusive right to use a portion of the common elements
as may be provided for in the declaration;
(3) an exclusive easement for the use of the airspace occupied by
the unit and as the unit may lawfully be altered or reconstructed. An
easement in airspace which is vacated is terminated automatically;
(4) membership in the association designated in the declaration,
with full voting rights;
(5) other appurtenances as may be provided in the declaration.
(C) A unit owner is entitled to the exclusive possession of his unit,
subject to the association's right to access pursuant to this article. The
unit owner may use the common elements in accordance with the
purposes for which they are intended, but no use may hinder or encroach
upon the lawful rights of other unit owners.
Section 27-30-100. (A) The undivided share in the common
elements appurtenant to a unit must not be separated from the unit and
passes with the title to the unit, whether or not separately described.
(B) The shares in the common elements appurtenant to a unit may
not be conveyed or encumbered except with the unit.
(C) The shares in the common elements appurtenant to units are
undivided and there may be no action for partition of the common
elements.
Section 27-30-110. (A) `Common elements' includes:
(1) the condominium property not included within the units;
(2) easements through units for conduits, ducts, plumbing, wiring,
and other facilities for furnishing utility services to units and common
elements;
(3) an easement of support in every portion of a unit which
contributes to the building's support;
(4) the property and installations required for furnishing utilities
and other services to more than one unit or to the common elements.
Section 27-30-120. After the declaration is recorded, a description of
a condominium unit as designated in the declaration and the recording
data identifying the declaration is a sufficient legal description for all
purposes. The description includes all appurtenances to the unit,
whether or not separately described, including, but not limited to, the
undivided share in the common elements appurtenant to the unit.
Section 27-30-130. (A) (1) If the declaration fails to provide a
method of amendment, and except as otherwise specifically provided in
the subparagraphs of this section, any matter in the declaration may be
amended if the amendment is approved by the owners of at least
two-thirds of the units.
(2) No provision of the declaration may be revised or amended by
reference to its chapter or number only. Proposals to amend existing
provisions of the declaration must contain the full text of the provision
to be amended; new words must be inserted in the text and underlined;
and words to be deleted must be lined through with hyphens. If the
proposed change is so extensive that this procedure would hinder rather
than assist the understanding of the proposed amendment, it is not
necessary to use underlining and hyphens as indicators of words added
or deleted, but a notation must be inserted immediately preceding the
proposed amendment in substantially the following language:
`Substantial rewording of declaration. See provision ______ for present
text'.
(3) Nonmaterial errors or omissions in the amendment process do
not invalidate an otherwise properly promulgated amendment.
(B) Other than amendments made by the developer in accordance
with this chapter and any rights the developer may have in the
declaration to amend without consent of the unit owners, an amendment
must be certified by the association that the amendment was duly
approved by the association or its board of directors. The certification
must include the recording data identifying the declaration and must be
executed in the form required for the execution of a deed. An
amendment by the developer must be in writing, but a certificate of the
association is not required.
(C) An amendment of a declaration is effective when properly
recorded in the public records of the county where the declaration is
recorded.
(D) Unless otherwise provided in the declaration as originally
recorded, no amendment may change the configuration or size of a
condominium unit in a material fashion, materially alter or modify the
appurtenances to the unit, or change the proportion or percentage by
which the owner of the parcel shares the common expenses and owns
the common surplus unless the record owner of the unit and all record
owners of liens on the unit join in the execution of the amendment and
unless all the record owners of all other units approve the amendment.
(E) If through a scrivener's errors it appears that a unit has not been
designated as owning an appropriate undivided share of the common
elements or does not bear an appropriate share of the common expenses;
or that all the common expenses, interest in the common surplus, or all
of the common elements in the condominium have not been distributed
in the declaration so that the sum total of the shares of common elements
which have been distributed or the sum total of the shares of the
common expenses or ownership of common surplus fails to equal one
hundred percent; or that more than one hundred percent of common
elements, common expenses, or ownership of the common surplus have
been distributed, the error may be corrected by filing an amendment to
the declaration approved by the board of administration or a majority of
the unit owners.
(F) The common elements designated by the declaration may be
enlarged or diminished by an amendment to the declaration. The
amendment must describe the interest in the property and must submit
the property to the terms of the declaration. The amendment must be
approved and executed as provided in this section.
(G) Unless otherwise provided in the declaration as originally
recorded, no amendment to the declaration may permit time share
interests to be created in a unit of the condominium unless the record
owner of each unit of the condominium and the record owners of liens
on each unit of the condominium join in the execution of the
amendment.
(H) If there is an omission or error in a declaration of condominium
or in any other document required to establish the condominium, the
association may correct the error or omission by an amendment to the
declaration or other document in the manner provided in the declaration
to amend the declaration or if none is provided, by vote of a majority of
the voting interests. The amendment is effective when passed,
approved, certified, and recorded as provided in this article. This
amendment procedure may not be used if the amendment would affect
property rights of unit owners materially or adversely unless the affected
unit owners consent in writing.
(I) If there is an omission or error in a declaration or other document
required to establish the condominium which would affect the valid
existence of the condominium and which may not be corrected by the
amendment procedures in the declaration or this chapter, a unit owner
in the condominium or the association may bring an action in the circuit
court to correct the error or omission, and the action may be a class
action. The court may require that one or more methods of correcting
the error or omission be submitted to the unit owners to determine the
most acceptable correction. All unit owners, the association, and the
mortgagees of a first mortgage of record must be joined as parties to the
action. Service of process on unit owners may be by publication, but the
plaintiff must furnish every unit owner not personally served with a copy
of the petition and final decree of the court by certified mail, return
receipt requested, at the unit owner's last known residence address. If
an action is not brought within three years of the filing of the documents
forming the condominium, a condominium is considered created
whether or not the documents substantially comply with this chapter.
However, at any time an action may be brought pursuant to this
subsection to correct the document or other permissible methods of
amendment may be utilized to correct the errors or omissions.
(J) The declarations, bylaws, and common elements of two or more
independent condominiums of a single complex may be merged to form
a single condominium upon the approval of the voting interest of each
condominium as is required by the declaration for modifying the
appurtenances to the units or changing the proportion or percentages by
which the owners of the parcel share the common expenses and own the
common surplus; upon the approval of all record owners of liens; and
upon the recording of new or amended articles of incorporation,
declarations, and bylaws.
Section 27-30-140. (A) The association is responsible for the
operation of the condominium, and an association may operate more
than one condominium. The unit owners must be the shareholders or
members of the association, and the officers and directors of the
association have a fiduciary relationship to the unit owners.
(B) A director of the association is presumed to have assented to
action taken at a board meeting at which he was present unless he votes
against or abstains from voting on the action because of a stated conflict
of interest.
(C) A unit owner may not act for the association by reason of being
a unit owner.
Section 27-30-150. (A) The powers and duties of the association
include those contained in this section, in the condominium declaration
and bylaws, and in the South Carolina Business Corporation Act of
1988, as applicable, if not inconsistent with this chapter.
(B) The association may contract, borrow, sue, or be sued. For these
purposes, the powers of the association include, but are not limited to,
the maintenance, management, and operation of the condominium
property. The association may institute, maintain, settle, or appeal
actions or hearings in its name on behalf of all unit owners concerning
matters of common interest, including, but not limited to, the common
elements; the roof and structural components of a building or other
improvements; mechanical, electrical, and plumbing elements serving
an improvement or a building; protestations of ad valorem taxes on
commonly used facilities and on units; and may defend actions in
eminent domain or bring inverse condemnation actions. If the
association has the authority to maintain a class action, the association
may be joined in an action as representative of that class on matters for
which the association could bring a class action. Nothing in this
subsection limits a statutory or common-law right of an individual unit
owner or class of unit owners to bring an action which may otherwise be
available.
(C) The association may make and collect assessments and lease,
maintain, repair, and replace the common elements; however, the
association may not charge a use fee against a unit owner for the use of
common elements or association property unless otherwise provided for
in the declaration of condominium or by a majority vote of the
association or unless the charges relate to expenses incurred by an owner
having exclusive use of the common elements or association property.
(D) The association has the irrevocable right of access to each unit
during reasonable hours when necessary for the maintenance, repair, or
replacement of common elements or for making emergency repairs
necessary to prevent damage to the common elements or to another unit.
(E) An association may operate condominiums in a phase project as
though it were a single condominium for purposes of financial matters,
including budgets, assessments, accounting, record keeping, and similar
matters, if provision is made for the consolidated operation in the
declarations of each condominium as initially recorded or in the bylaws
as initially adopted. Common expenses for condominiums in a phase
project operated by a single association may be assessed against all unit
owners in the project pursuant to the proportions or percentages
established in the declarations as initially recorded or in the bylaws as
initially adopted, subject to the limitations of Section 27-30-290.
(F) The association may acquire title to property or otherwise hold
property for the use and benefit of its members.
(G) The association may purchase land or a recreation lease upon the
approval of the voting interest as required by the declaration. If the
declaration makes no provision for acquisition of the land or recreation
lease, the vote must be that required to amend the declaration to permit
the acquisition.
(H) The association may purchase units in the condominium and
acquire, hold, lease, mortgage, and convey them unless prohibited by the
declaration, articles of incorporation, or bylaws of the association.
(I) Unless prohibited by the declaration, the association, without the
joinder of any unit owners, may grant, modify, or move an easement if
the easement crosses or constitutes part of the common elements. This
subsection does not authorize the association to grant, modify, or move
an easement crossing the property of anyone except the unit owners or
created in whole or in part for the use of anyone except the unit owners
without their consent or approval as required by law or the instrument
creating the easement. Nothing in this subsection affects the powers
enumerated in subsection (B) or the minimum easement requirements
that must be included in the declaration.
(J) An association may enter into agreements to acquire leaseholds,
memberships, and other possessory or use interests in land and facilities
such as country clubs, golf courses, marinas, and other recreational
facilities whether or not the land or facility is contiguous to the
condominium land if they are intended to provide enjoyment, recreation,
or other use or benefit to the unit owners. These leaseholds,
memberships, and other possessory or use interests existing or created
at the time of recording the declaration must be stated and fully
described in the declaration. Subsequent to the recording of the
declaration the association may not acquire or enter into agreements
acquiring a leasehold, membership, or other possessory or use interest
except as authorized by the declaration. The declaration may provide
that the rental, membership fees, operations, replacements, and other
expenses are common expenses, may impose covenants and restrictions
concerning their use, and may contain other provisions not inconsistent
with this chapter.
Section 27-30-160. (A) The association must maintain adequate
insurance to protect the association, the common elements, the
association property, and the condominium property required to be
insured by the association pursuant to subsection (B). An association or
group of associations may self-insure for claims against the association,
the association property, and the condominium property required to be
insured by an association in accordance with Title 38 (Insurance Laws).
A copy of each insurance policy must be made available for inspection
by unit owners at reasonable times.
(B) A hazard policy issued to protect a condominium building must
provide that the word `building' wherever used in the policy includes,
but is not necessarily limited to, fixtures, installations or additions
comprising that part of the building within the interior of the individual
units initially installed, or replacements of like kind or quality, in
accordance with the original plans and specifications or as they existed
at the time the unit was conveyed initially if the original plans and
specifications are not available. The association is required to provide
coverage for common elements as described in Section 27-30-110. The
unit owners must be considered additional insureds under coverage
provided in accordance with this subsection. All deductibles relating to
common elements insured under the master policy are a common
expense paid by the association.
(C) An insurance policy issued to an individual unit owner must
provide that the coverage is excess over the amount recoverable under
any other policy covering the same property without rights of
subrogation against the association.
(D) A notice of renewal of or amendments to the association's
coverage which reflects changes authorized by Title 38 (Insurance
Laws) must be mailed by the association to unit owners and must advise
the members of any substantial change in insurance coverage to be
provided by the association, including a description of the property
previously covered which is no longer covered and the effective date of
the change.
(E) Any insurance carrier used to insure condominiums in South
Carolina must adhere to the current Federal National Mortgage
Association (`Fannie Mae') financial requirements for insurance
companies.
Section 27-30-170. (A) The following constitute the official records
of the association and, if applicable, must be maintained by the
association:
(1) a copy of the plans, permits, warranties, and other items the
developer must relinquish when the unit owners assume control of the
association;
(2) a copy of the recorded declaration of condominium of each
condominium operated by the association and of each amendment to
each declaration;
(3) a copy of the recorded bylaws of the association and of each
amendment to the bylaws;
(4) a certified copy of the articles of incorporation of the
association or other documents creating the association and of each
amendment;
(5) a copy of the current rules of the association;
(6) the minutes of meetings of the association, the board of
directors, and unit owners, which must be retained for at least seven
years;
(7) a current roster of all unit owners and their mailing addresses,
unit identifications, voting certifications, and, if known, telephone
numbers;
(8) all current insurance policies of the association and
condominiums operated by the association;
(9) a current copy of any management agreement, lease, other
contract to which the association is a party or under which the
association or the unit owners have an obligation or responsibility;
(10) bills of sale or transfer for all property owned by the
association;
(11) accounting records for the association and separate accounting
records for each condominium the association operates. Accounting
records must be maintained in accordance with good accounting
practices and retained at least seven years. These records must include,
but are not limited to:
(a) accurate, itemized, and detailed records of all receipts and
expenditures;
(b) a current account and a monthly, bimonthly, or quarterly
statement of the account for each unit designating the name of the unit
owner, the due date and amount of each assessment, the amount paid
upon the account, and the balance due;
(c) all audits, reviews, accounting statements, and financial
reports of the association or condominium;
(d) all contracts for work to be performed. Bids for work to be
performed must be considered official records and must be maintained
for one year;
(12) ballots, sign-in sheets, voting proxies, and all other papers
relating to elections, which must be maintained for one year from the
date of the election;
(13) all rental records, when the association is acting as agent for
the rental of units.
(B) The official records of the association must be maintained in the
State of South Carolina.
(C) The official records of the association are open to inspection at
all reasonable times by any association member or the authorized
representative of a member. If approved by the board of directors, an
association member may make and obtain copies of the official records
for a reasonable charge, if any, by the association. Failure to permit
inspection of the association records entitles a person prevailing in an
enforcement action to recover reasonable attorney's fees from the person
in control of the records who, directly or indirectly, knowingly denied
access to the records for inspection.
Section 27-30-180. (A) Annually on a date as provided in the
bylaws of the association, the board of administration of the association
shall mail or furnish by personal delivery to each unit owner a complete
financial report of actual receipts and expenditures for the previous
fiscal year. The report must include receipt amounts by accounts and
receipt classifications and must include expense amounts by accounts
and expense classifications, including, if applicable, but not limited to:
(1) costs for security;
(2) professional and management fees and expenses;
(3) taxes;
(4) costs for recreation facilities;
(5) expenses for refuse collection and utility services;
(6) expenses for lawn care;
(7) costs for building maintenance and repair;
(8) insurance costs;
(9) administrative and salary expenses; and
(10) general, maintenance, and depreciation reserves.
(B) The commission may adopt regulations which may require the
association to provide the unit owners with a complete set of financial
statements for the preceding fiscal year in lieu of the financial report
required by subsection (A). The financial statements must be delivered
following the end of the previous fiscal year or annually on another date
as provided by the bylaws. The commission regulations may require
that financial statements be compiled, reviewed, or audited, and must
take into consideration the accounting principles, policies, and standards
that the commission adopts. The requirement to have the financial
statements compiled, reviewed, or audited does not apply to an
association when a majority of the voting interests of the association
present at a called meeting of the association have waived this
requirement for a given fiscal year. The meeting may be held in
conjunction with the annual meeting, and the waiver is effective for only
one fiscal year.
Section 27-30-190. (A) The operation of the association must be
governed by the association bylaws, which must be included as an
exhibit to the recorded declaration of each condominium operated by the
association. No amendment to the bylaws is valid unless recorded with
a reference on the first page to the book and page in the public records
where the declaration of each condominium operated by the association
is recorded.
(B)(1) The method for amending the bylaws must be stated in the
bylaws. If not included, the bylaws may be amended by approval of the
owners of at least fifty-one percent of the voting interests.
(2) No bylaws may be revised or amended by reference to its
chapter or number only. Proposals to amend existing bylaws must
contain the full text of the bylaws to be amended; new words must be
inserted in the text underlined, and words to be deleted must be lined
through with hyphens. It is not necessary to use this procedure if the
proposed change is so extensive that it would hinder rather than assist
the understanding of the proposed amendment. Instead, a notation must
be inserted immediately preceding the proposed amendment stating:
`Substantial rewording of bylaw. See bylaw ___ for present text.'
(3) Nonmaterial errors or omissions in the bylaw amendment
process do not invalidate an otherwise properly promulgated
amendment.
Section 27-30-200. The association bylaws must provide for the
matters contained in this section and if these matters are not included,
they are considered a part of the bylaws:
(1) The form of administration of the association must be described,
indicating the title of the officers and board of administration and
specifying the powers, duties, manner of selection and removal, and
compensation, if any, of officers and boards. In the absence of this
provision the board of administration must be composed of at least three
members. In the absence of provisions to the contrary in the bylaws, the
board officers must be a president, a secretary, and a treasurer, who shall
perform the duties customarily performed by officers of corporations.
Unless prohibited in the bylaws, the board of administration may
appoint other officers and designate duties it considers appropriate.
Unless otherwise provided in the bylaws, the officers shall serve without
compensation and at the pleasure of the board.
(2)(a) Unless otherwise provided in the bylaws, a majority of the
voting interests is required for a quorum. Action may be taken by
owners of a majority of the voting interests represented at a meeting at
which a quorum is present. Unit owners may vote by proxy. Joinder as
defined in Section 27-30-30(19) is permitted.
(b) A proxy given is effective only for the specific meeting for
which it was given originally and any lawfully adjourned meetings of it.
In no event may a proxy be valid for longer than ninety days after the
date of the first meeting for which it was given. A proxy is revocable at
the pleasure of the unit owner executing the proxy.
(3) Meetings of the board of administration must be open to all unit
owners. Advance notice of all meetings must be provided to each unit
owner.
(4)(a) A meeting of the unit owners must be held annually. Unless
the bylaws provide otherwise, a vacancy on the board of administration
caused by the expiration of a director's term must be filled by electing
a new board member. If there is no provision in the bylaws for terms of
the members of the board, the terms expire upon the election of their
successors at the annual meeting.
(b) The bylaws must provide the method of calling meetings of
unit owners, including annual meetings. Written notice must be given
to each unit owner at least fourteen days before the annual meeting and
must be posted in a conspicuous place on the condominium property at
least fourteen days before the annual meeting. Unless a unit owner
waives in writing the right to receive notice of the annual meeting by
mail, the notice of the annual meeting must be sent by mail to each unit
owner. An affidavit shall be included in the official records of the
association affirming that a notice of the association meeting was mailed
or hand delivered in accordance with this subitem to each unit owner at
the address last furnished to the association.
(c) Approval by unit owners required by this chapter, the
declaration, or bylaws must be obtained at a meeting of unit owners
called in accordance with this chapter and is subject to requirements of
this chapter or the condominium documents relating to unit owner
action, except that unit owners may take action by written agreement,
without meetings, on matters for which action by written agreement
without meetings is expressly allowed by the bylaws, declaration, or any
provision of law.
(d) Unit owners may waive notice of specific meetings if allowed
by the bylaws, declaration, or any provision of law.
(5) The board of administration shall mail copies of the proposed
annual budget of common expenses to the unit owners at least fourteen
days before the meeting at which the budget will be considered.
(6)(a) The proposed annual budget of common expenses must be
detailed and shall show the amounts budgeted by accounts and expense
classifications, including, if applicable, but not limited to, those owner
expenses which must be included in a prospectus.
(b) In addition to annual operating expenses, the budget must
include reserve accounts for capital expenditures and deferred
maintenance items. These accounts may include, but are not limited to,
roof replacement, building painting, and pavement resurfacing. The
amount to be reserved must be computed by a formula based upon
estimated life and estimated replacement cost or deferred maintenance
expense of each reserve item. This subitem does not apply to budgets
in which the members of an association, by a vote of the majority of the
members present at a duly called meeting of the association, have
determined to provide no reserves or reserves less than those required by
this subitem. If a meeting of the unit owners is called to determine
whether or not to provide reserves and if no decision is reached or a
quorum is not present the reserves included in the budget must go into
effect.
(7) The manner of collecting a unit owner's share of the common
expenses must be stated in the bylaws. Assessments must be made
against units at least quarterly in an amount at least equal to that
required to provide funds in advance for payment of the anticipated
current operating expenses and for the unpaid operating expenses
previously incurred. Nothing in this item precludes the right of an
association to accelerate assessments of an owner delinquent in proper
payment of common expenses. Accelerated assessments are due and
payable on the date the claim of lien is filed. Accelerated assessments
include the amounts due for the remainder of the budget year in which
the claim of lien was filed.
(8) There must be a provision for fidelity bonding for each person
who controls or disburses funds of the association. The association shall
bear the cost of bonding unless otherwise provided by contract between
the association and an independent management company. A
condominium association may bond a person who controls or disburses
funds of the association and the association shall bear the cost of
bonding unless otherwise provided by contract between the association
and an independent management company. The board of the association
may waive the bonding requirement.
(9)(a) Subject to Article 3, a member of the board of administration
may be recalled and removed from office with or without cause by the
vote or agreement in writing by a majority of all the voting interests. A
special meeting of the unit owners to recall a member or members of the
board of administration may be called by ten percent of the voting
interests giving notice of the meeting as required for a meeting of unit
owners, and the notice must state the purpose of the meeting.
(b) If the recall is approved by a majority of all voting interests
by a vote at the meeting, the recall is effective immediately and the
recalled member of the board of administration shall turn over to the
board all records of the association in his possession within seventy-two
hours after the meeting.
(c) If the proposed recall is by written agreement by a majority of
all voting interests, the agreement must be served on the association by
certified mail. The board of administration shall call a meeting of the
board within seventy-two hours after receiving the agreement and shall
certify the written agreement to recall the member, in which case the
member must be recalled effective immediately and shall turn over to
the board within seventy-two hours all records of the association in his
possession or proceed as described in subitem (d).
(d) If the board does not certify the written agreement to recall the
member of the board or if the recall by a vote at a meeting is disputed
within seventy-two hours, the board shall file with the commission for
binding arbitration pursuant to this chapter. For the purposes of this
section, the unit owners who voted at the meeting or who executed the
written agreement constitute one party under the petition for arbitration.
If the arbitrator certifies the recall of the member of the board, the recall
is effective upon service of the final order of arbitration upon the
association. If the association fails to comply with the order of the
arbitrator, the commission may take action pursuant to its powers under
this chapter. A member who is recalled shall deliver to the board all
records of the association in his possession within seventy-two hours of
the effective date of the recall.
(10) The bylaws must contain a provision for voluntary binding
arbitration of internal disputes arising from the operation of the
condominium among developers, unit owners, associations, and their
agents, successors, and assigns.
Section 27-30-210. The association bylaws may provide:
(1) a method of adopting and amending administrative rules and
regulations governing the details of the operation and use of the
common elements;
(2) restrictions on and requirements for the use, maintenance, and
appearance of the units and the use of the common elements;
(3) other provisions not inconsistent with this chapter or with the
declaration.
Section 27-30-220. If an association fails to fill vacancies on the
board of administration sufficient to constitute a quorum in accordance
with the bylaws, a unit owner may petition the circuit court for the
appointment of a receiver to manage the affairs of the association. At
least thirty days before filing the petition, the unit owner shall mail to
the association and post in a conspicuous place on the condominium
property a notice describing the intended action. If the association still
fails to fill the vacancies, the unit owner may proceed with the petition.
If a receiver is appointed, the association is responsible for the
compensation of the receiver, court costs, and attorney's fees. The
receiver has all powers and duties of a constituted board of
administration and shall serve until the association fills vacancies on the
board sufficient to constitute a quorum.
Section 27-30-230. (A) Maintenance of the common elements is the
responsibility of the association. The declaration may provide that
limited common elements must be maintained by those entitled to use
the limited common elements.
(B) There must be no material alteration or substantial additions to
the common elements except as provided in the declaration.
(C) A unit owner may not make an alteration to his unit which would
remove a portion of, or make an addition to, the common elements or do
anything which would affect adversely the safety or soundness of the
common elements or a portion of the condominium property maintained
by the association.
Section 27-30-240. (A) Common expenses include the expenses for
the operation, maintenance, repair, or replacement of the common
elements, costs of carrying out the powers and duties of the association,
and any other expenses designated as common expenses by this chapter,
the declaration, the documents creating the condominium, or the bylaws.
Common expenses also include reasonable transportation services,
insurance for directors and officers, road maintenance and operation
expenses, in-house communications, security services, and other
expenses reasonably related to the general benefit of the unit owners
even if the expenses do not attach to the common elements or property
of the condominium. These common expenses must have been services
or items provided from the date the control of the board of
administration was transferred from the developer to the unit owners or
must be services or items provided for in the condominium documents
or bylaws.
(B) Funds for the payment of common expenses must be collected
by assessments against unit owners in the proportions or percentages
provided in the declaration.
(C) Common surplus is owned by unit owners in the same shares as
their ownership interest in the common elements.
Section 27-30-250. (A)(1) A unit owner is liable for all assessments
which are due while he is the unit owner regardless of how his title has
been acquired, including purchase at a judicial sale. Except as provided
for in Section 27-30-280, the grantee is jointly and severally liable with
the grantor for all unpaid assessments against the grantor for his share
of the common expenses up to the time of transfer of title without
prejudice to any right the grantee may have to recover from the grantor
the amounts paid by the grantee.
(2) Each owner of a time share interest is jointly and severally
liable for the payment of all assessments and other charges levied
against or with respect to that unit pursuant to the declaration or bylaws,
except to the extent that the declaration or bylaws may provide to the
contrary.
(B) The liability for assessments may not be avoided by waiver of
the use or enjoyment of any common element or by abandonment of the
unit for which the assessments are made.
(C) Assessments, special assessments, and installments on
assessments not paid when due bear interest at the rate provided in the
declaration from the due date until paid. This rate may not exceed the
rate allowed by law and if no rate is provided in the declaration, interest
accrues at the rate of eighteen percent a year. In lieu of interest, or in
addition to interest, the association has the right to assess reasonable late
charges on assessments, special assessments, and installments not paid
when due.
(D) The specific purpose of a special assessment approved in
accordance with the condominium documents must be contained in a
written notice of the assessment sent or delivered to each unit owner.
The funds collected pursuant to a special assessment must be used for
the specific purpose set forth in the notice. Upon completion of the
specific purpose any excess funds are considered common surplus.
Section 27-30-260. The association has a lien on each condominium
parcel for unpaid assessments with interest, late charges, and for
reasonable attorney's fees incurred by the association incidental to the
collection of the assessment or enforcement of the lien. Except as
otherwise provided in Section 27-30-280, the lien is effective from and
after the recording of a claim of lien in the public records in the county
in which the condominium parcel is located which states the description
of the condominium parcel, the name of the record owner, the amount
due, and the due dates. The claim of lien secures all unpaid regular and
special assessments, interest, late fees, costs, and attorney's fees due and
which may accrue subsequent to the recording of the claim of lien and
before entry of a final judgment. A claim of lien must be signed and
acknowledged by an officer or agent of the association. Upon payment
the association shall provide a satisfaction of the lien in recordable form.
Section 27-30-270. (A) The association may bring an action in its
name to foreclose a lien for assessment in the manner a mortgage of real
property is foreclosed and may also bring an action to recover a money
judgment for the unpaid assessments without waiving any claim of lien.
(B) No foreclosure action may be commenced until at least thirty
days after the association gives written notice to the unit owner of its
intention to foreclose its lien to collect the unpaid assessments. Notice
must be delivered to the unit owner or sent by certified or registered
mail, return receipt requested, addressed to the unit owner at his last
known address; and upon mailing the notice is considered to have been
given, and the court shall proceed with the foreclosure action and may
award attorney's fees and costs as permitted by law. If after diligent
search and inquiry the association is unable to locate the unit owner or
a mailing address for the unit owner, the court may proceed with the
foreclosure action and may award attorney's fees and costs as permitted
by law. The notice requirements of this subsection do not apply if an
action to foreclose a mortgage on the condominium unit is pending
before any court; if the rights of the association would be affected by the
foreclosure; and if actual, constructive, or substitute service of process
has been made on the unit owner.
(C) If the unit owner remains in possession of the unit and the claim
of lien is foreclosed, the association is entitled to the appointment of a
receiver to collect rent.
(D) Unless prohibited by the declaration, the documents creating the
association, or its bylaws, the association may purchase the
condominium parcel at the foreclosure sale and may hold, lease,
mortgage, or convey it.
Section 27-30-280. (A) A lien in favor of an association for unpaid
assessments for common expenses is prior to all other liens and
encumbrances on a unit except (1) liens and encumbrances recorded
before the recordation of the declaration (2) a first mortgage on a unit
recorded before the date on which the assessment sought to be enforced
became delinquent and (3) liens for real estate taxes and other
governmental assessments or charges against the unit. The lien is also
prior to the mortgages described in clause (2) above to the extent of the
common expense assessments based on the periodic budget adopted by
the association which would have become due in the absence of
acceleration during the six months immediately preceding institution of
an action to enforce the lien. This subsection does not affect the priority
of mechanics' or materialmen's liens, or the priority of liens for other
assessments made by the association.
(B) Recording of the declaration constitutes record notice and
perfection of the lien for common expense assessments. No further
recordation of any claim of lien for such assessment is required.
(C) A lien for unpaid assessment is extinguished unless proceedings
to enforce the lien are instituted within three years after the full amount
of the assessments become due.
(D) This section does not prohibit actions to recover sums for which
there exists a lien or prohibit an association from taking a deed in lieu
of foreclosure. A judgment or decree in any action brought under this
section must include costs and reasonable attorney's fees for the
prevailing party.
Section 27-30-290. (A) Until the association makes a common
expense assessment, the developer shall pay all common expenses.
After any assessment has been made by the association, assessments
must be made at least annually, based on a budget adopted at least
annually by the association.
(B) Except for assessments under subsections (C), (D), and (E), all
common expenses must be assessed against all the units in accordance
with the allocations set forth in the declaration. Any past due common
expense assessment or installment of the assessments bears interest and
late charges as established by the association.
(C) To the extent provided for by the declaration:
(1) Any common expense associated with the maintenance,
repair, or replacement of a limited common element may be assessed
against the units to which that limited common element is assigned,
equally, or in any other proportion that the declaration provides;
(2) any common expense or portion of it benefiting fewer than all
the units may be assessed exclusively against the units benefitted; and
(3) the costs of insurance may be assessed in proportion to risk
and the costs of utilities may be assessed in proportion to usage.
(D) Assessments to pay a judgment against the association may be
made only against the units in the condominium at the time the judgment
was entered, in proportion to their common expense liabilities.
(E) If any common expense is caused by the misconduct of a unit
owner, the association may assess that expense exclusively against his
unit.
(F) If common expense liabilities are reallocated, common expense
assessments and any installment of them not yet due must be
recalculated in accordance with the reallocated common expense
liabilities.
Section 27-30-300. (A) Unless otherwise provided in the
declaration, the condominium property may be removed from the
provisions of this chapter only by consent of all of the unit owners in a
recorded instrument and upon the written consent of all holders of
recorded liens affecting any of the condominium parcels. Upon
recording the instrument stating consent of all the unit owners to
terminate the condominium, the association shall notify the commission
within thirty working days of the termination and the date, the county,
and the book and page number of the public records where the document
was recorded.
(B) Unless otherwise provided in the declaration as originally
recorded or as amended in accordance with this chapter, upon removal
of the condominium property from the provisions of this chapter, the
condominium property is owned in common by the unit owners in the
same undivided shares as each owner previously owned in the common
elements. All liens must be transferred to the undivided share in the
condominium property attributable to the unit originally encumbered by
the lien in its same priority.
(C) The termination of a condominium does not bar the creation of
another condominium affecting all or any portion of the same property.
Section 27-30-310. In the event of substantial damage to or
destruction of all or a substantial part of the condominium property and
if the property is not repaired, reconstructed, or rebuilt within a
reasonable period of time, a unit owner may petition the court for
equitable relief, including termination of the condominium and a
partition.
Section 27-30-320. (A) The liability of the owner of a unit for
common expenses is limited to the amounts he is assessed for common
expenses in accordance with this chapter, the declaration, and bylaws.
(B) In a legal action in which the association may be exposed to
liability in excess of insurance coverage protecting it and the unit
owners, the association shall give notice of the exposure within a
reasonable time to all unit owners, and they have the right to intervene
in the action.
Section 27-30-330. (A) The provisions of a declaration relating to
a condominium parcel which has been sold for taxes or special
assessments survive and are enforceable after the issuance of a tax deed
or master's deed, upon foreclosure of an assessment, a certificate or lien,
a tax deed, tax certificate, or tax lien, to the same extent that they would
be enforceable against a voluntary grantee of the title immediately
before the delivery of the tax deed, master's deed, or clerk's certificate
of title.
(B) Condominium property divided into vacation time share
ownership plans must be assessed for purposes of ad valorem taxes and
special assessments as provided in Section 27-32-240.
Section 27-30-340. (A) After recording the declaration and while
the property remains subject to the declaration, no liens of any nature are
valid against the condominium property as a whole except with the
unanimous consent of the unit owners. During this period liens may
arise or be created only against individual condominium parcels.
(B) Labor performed on or materials furnished to a unit may not be
the basis for the filing of a mechanics' lien against the unit or
condominium parcel of a unit owner not expressly consenting to or
requesting the labor or materials. Labor performed on or materials
furnished to the common elements may not be the basis for a lien on the
common elements, but if authorized by the association, the labor is
considered to be performed or the materials are considered to be
furnished with the express consent of each unit owner and may be the
basis for filing a lien against all condominium parcels in the proportions
for which the owners are liable for common expenses.
(C) If a lien is placed against two or more condominium parcels,
each owner may relieve his condominium parcel of the lien as provided
by law or by payment of the proportionate amount attributable to his
condominium parcel. Upon payment the lienor shall release the lien of
record for that condominium parcel.
Section 27-30-350. If entered into before the board elected by the
unit owners pursuant to this chapter takes office, (1) any management
contract, employment contract, or lease of recreational or parking areas
of facilities, (2) any other contract or lease between the association and
the developer or any affiliate of the developer, or (3) any contract or
lease that is not bona fide or was unconscionable to the unit owners at
the time entered into under the circumstances then prevailing, may be
terminated without penalty by the association at any time after the board
elected by the unit owners pursuant to this chapter takes office upon not
less than ninety days notice to the other party. This section does not
apply to any lease the termination of which would terminate the
condominium or reduce its size, unless the real estate subject to that
lease was included in the condominium for the purpose of avoiding the
right of the association to terminate a lease under this section.
Section 27-30-360. All common elements, common areas, and
recreational facilities serving a condominium must be available for their
intended use to unit owners. The entity responsible for the operation of
the common elements, common areas, and recreational facilities may
adopt reasonable rules and regulations pertaining to their use.
Section 27-30-370. The statute of limitations for an action in law or
equity which a condominium association or a cooperative association
may have does not begin to run until the unit owners have elected a
majority of the members of the board of administration.
Section 27-30-380. If a contract or lease between a condominium
unit owner or association and a developer contains a provision allowing
attorney's fees to the developer, the court also shall allow reasonable
attorney's fees to the unit owner or association prevailing in an action
pertaining to the contract or lease.
Section 27-30-390. The commissioner shall appoint arbitrators to
conduct the binding arbitration hearings provided by this chapter. The
cost of arbitration shall be borne by the parties as determined by the
commissioner who may direct the arbitrators to apportion the costs as
part of the arbitration proceeding. The commission shall promulgate
regulations governing this arbitration procedure. The decision of an
arbitrator is final, but a decision is not necessarily final agency action in
the matter. A party may seek enforcement of the final decision of an
arbitrator in a court of competent jurisdiction.
Article 2
Rights and Obligations of Developers
Section 27-30-610. (A) Before construction begins on a proposed
condominium development and in the event of default on property taxes
or special assessments against the property or parcel before time of
closing, the developer shall post a bond or place money in escrow
pursuant to this section. The developer may select whether to post a
bond or place an amount of money in escrow, but if the developer does
not post a bond or deposit the required money in escrow before
beginning construction, the tax collector or his successor in the county
in which the property or parcels lie shall require compliance with this
section. The developer is exempt from the requirements of this section
upon furnishing the clerk of court evidence of payment of all taxes and
assessments due on the property or parcel.
(B) One hundred ten percent of the total ad valorem tax liability
against the property or parcel in the year immediately preceding the year
in which construction is proposed to begin must be posted for the bond
or placed in escrow with the clerk of court in the county in which the
property or parcel lies.
Section 27-30-620. (A) If a developer contracts to sell a
condominium parcel and the construction, furnishing, and landscaping
of the property has not been substantially completed in accordance with
the plans, specifications, and representations made by the developer in
the disclosures required by this chapter, the developer shall pay into an
escrow account all payments up to ten percent of the sale price received
by the developer from the buyer. The escrow agent shall give the
purchaser a receipt for the deposit upon request. In lieu of an escrow
account, the commissioner may accept other assurances, including, but
not limited to, a surety bond or an irrevocable letter of credit in an
amount equal to the escrow requirements of this section. Default
determinations and refund of deposits must be governed by the
following provisions:
(1) If a buyer properly terminates the contract pursuant to its
terms or pursuant to this chapter, the funds and interest earned must be
paid to the buyer.
(2) If the buyer defaults on his obligations under the contract of
purchase and sale, the funds must be paid to the developer. Interest on
the funds must be paid to the developer only if the buyer has executed
a separate document allowing interest to be paid to the developer in
compliance with Regulation 105-21.G.
(3) If the contract does not provide for the payment of interest
earned on the escrow funds and the funds are placed in an interest
bearing account, interest must be paid to the buyer at the closing of the
transaction unless the buyer has executed a separate document allowing
interest to be paid to the developer in compliance with Regulation
105-21.G.
(4) If the funds of a buyer have not been disbursed previously in
accordance with the provisions of this subsection, they may be disbursed
to the developer by the escrow agent at the closing of the transaction,
unless before the disbursement the escrow agent receives from the buyer
written notice of a dispute between the buyer and developer.
(B) All payments in excess of ten percent of the sale price pursuant
to a contract to purchase a condominium parcel which have been
received by the developer from the buyer before completion of
construction must be held in the escrow account established pursuant to
subsection (A) controlled by an escrow agent and may not be used by
the developer before closing the transaction except as provided in
subsection (C) or except for refund to the buyer. If the money remains
in this special account for more than three months and earns interest, the
interest must be paid as provided in subsection (A).
(C) If the contract for sale of the condominium unit provides for and
construction has begun, the developer may withdraw escrow funds
exceeding ten percent of the sale price from the special account required
by subsection (B). The funds may be used for the actual construction
and development of the condominium property in which the unit to be
sold is located. However, no part of these funds may be used for
salaries, commissions, or expenses of salesmen or for advertising
purposes. A contract which permits use of the advance payments for
construction purposes must include the following conspicuously printed
or stamped on the first page of the contract and immediately above the
place for the signature of the buyer: ANY PAYMENT IN EXCESS OF
TEN PERCENT OF THE PURCHASE PRICE MADE TO
DEVELOPER BEFORE CLOSING PURSUANT TO THIS
CONTRACT MAY BE USED FOR CONSTRUCTION PURPOSES BY
THE DEVELOPER.
(D) Failure to comply with subsections (A) through (C) renders the
contract voidable by the buyer and, if voided, all sums deposited or
advanced under the contract must be refunded with interest at the
highest rate then being paid on savings accounts, excluding certificates
of deposit, by savings and loan associations in the area in which the
condominium property is located.
(E) If a developer enters into a reservation agreement, the developer
shall pay into an escrow account all reservation deposit payments.
Reservation deposits must be payable to the escrow agent, who shall
give to the prospective purchaser a receipt for the deposit,
acknowledging that the deposit is being held pursuant to the
requirements of this subsection. The funds may be placed in
interest-bearing or noninterest-bearing accounts provided that the funds
must at all reasonable times be available for withdrawal in full by the
escrow agent. The developer shall maintain separate records for each
condominium or proposed condominium for which deposits are being
accepted. Upon written request to the escrow agent by the prospective
purchaser or developer, the funds must be refunded in full immediately
and without qualification to the prospective purchaser and interest must
be paid to the prospective purchaser, unless otherwise provided in the
reservation agreement and consented to by the prospective purchaser in
a separate document in compliance with Regulation 105-21.G. A
reservation deposit may not be released directly to the developer except
as a downpayment on the purchase price simultaneously with or after a
contract is executed. Upon the execution of a unit purchase agreement,
funds paid by the purchaser as a deposit to reserve the unit pursuant to
a reservation agreement and any interest on these funds cease to be
subject to the provisions of this subsection and instead are subject to the
provisions of subsections (A) through (D).
(F) An escrow account as defined by Section 27-30-30(17) required
by this section must be established with an escrow agent as defined by
Section 27-30-30. The escrow agent may not be located outside the
State unless, pursuant to the escrow agreement, the escrow agent
submits to the jurisdiction of the commission and the courts of this State
for any cause of action arising from the escrow. An escrow agent must
be independent of the developer, and no developer or officer, director,
affiliate, subsidiary, or employee of a developer may serve as escrow
agent. Funds in escrow accounts may be invested only in securities of
the United States or of its agencies or in accounts in institutions the
deposits of which are insured by an agency of the United States.
(G) A developer who willfully fails to comply with this section
concerning establishment of an escrow account, deposits of funds into
escrow, and withdrawal of funds from escrow is guilty of a felony and,
upon conviction, must be fined not more than ten thousand dollars or
imprisoned not more than five years, or both. Failure to establish an
escrow account or to place funds in an escrow account is prima facie
evidence of an intentional and purposeful violation of this section.
(H) For purposes of this section `completion of construction' means
issuance of a certificate of occupancy for the entire building or
improvement or the equivalent authorization issued by the governmental
body having jurisdiction, and in a jurisdiction where no certificate of
occupancy or equivalent authorization is issued, it means substantial
completion of construction, finishing, and equipping of the building or
improvements according to the plans and specifications.
Article 3
Rights and Obligations of Associations
Section 27-30-810. (A) When unit owners, excluding the developer,
own at least fifteen percent of the units in a condominium to be operated
by an association, these unit owners are entitled to elect no less than
one-third of the members of the board of administration of the
association. Unit owners, excluding the developer, are entitled to elect
no less than a majority of the members of the board of administration of
an association when the first of these occurs:
(1) Three years after fifty percent of the units to be operated by
the association have been conveyed to purchasers;
(2) three months after ninety percent of the units to be operated
by the association have been conveyed to purchasers;
(3) when all of the units to be operated ultimately by the
association have been completed and some of these units have been
conveyed to purchasers and none of the other units are being offered for
sale by the developer in the ordinary course of business;
(4) when all completed units in a completed phase of the units
have been conveyed to purchasers and none of the other units are being
constructed or offered for sale by the developer in the ordinary course
of business.
(B) The developer is entitled to elect at least one member of the
board of administration of an association as long as the developer holds
for sale in the ordinary course of business at least five percent of the
units operated by the association, in condominiums with fewer than five
hundred units, and two percent of the units operated by the association
in condominiums with more than five hundred units. After the
developer relinquishes control of the association, the developer may
exercise the right to vote any developer-owned units in the same manner
as any other unit owner except for purposes of reacquiring control of the
association or selecting the majority members of the board of
administration.
Section 27-30-820. (A) Within sixty days after the unit owners,
excluding the developer, are entitled to elect a member of the board of
administration of an association, the association shall call a meeting of
the unit owners to elect the members of the board of administration. The
meeting may be called and the notice given by a unit owner if the
association fails to do so. Upon election of the first unit owner,
excluding the developer, to the board of administration, the developer
shall forward to the commission the name and mailing address of the
unit owner board member.
(B) Before, or not more than sixty days after, the time that unit
owners, excluding the developer, elect a majority of the members of the
board of administration of an association, the developer shall relinquish
control of the association, and the unit owners shall accept control.
Simultaneously, the developer shall deliver to the association, at the
developer's expense, all property of the unit owners and of the
association held or controlled by the developer, including, but not
limited to, the following items, if applicable, relating to each
condominium operated by the association:
(1) The original or a photocopy of the recorded declaration of
condominium and all amendments. If a photocopy is provided, it must
be certified by affidavit of the developer or an officer or agent of the
developer as a complete copy of the actual recorded declaration;
(2) a certified copy of the articles of incorporation of the
association or if the association was created before the effective date of
this chapter and it is not incorporated, copies of the documents creating
the association;
(3) a copy of the bylaws;
(4) all minutes and other books and records of the association;
(5) rules and regulations which have been promulgated by the
association or on behalf of the association;
(6) resignations of officers and members of the board of
administration who are required to resign because the developer is
required to relinquish control of the association;
(7) financial records, including financial statements of the
association, and source documents since the incorporation of the
association through the date of turnover. The records must be reviewed
by an independent certified public accountant, unless waived by the
non-developer controlled board of administration. The minimum report
required must be a review in accordance with generally accepted
accounting standards as defined by regulation of the South Carolina
Board of Accountancy. The accountant performing the audit shall
examine, to the extent necessary, supporting documents and records,
including the cash disbursements and related paid invoices, to determine
if expenditures were for association purposes and the billings, cash
receipts, and related records to determine that the developer was charged
and paid the proper amounts of assessments;
(8) association funds or control of these funds;
(9) tangible personal property of the association, represented by
the developer to be part of the common elements or which is ostensibly
part of the common elements, and an inventory of that property;
(10) a copy of the as-built plans and specifications, including sewer
and all underground utilities, used in constructing or remodeling
improvements, in supplying equipment to the condominium, and in
constructing and installing all mechanical components serving the
improvements and the site with an affidavit of the developer, his agent,
or an architect or engineer authorized to practice in this State certifying
that the plans and specifications represent, to the best of his knowledge
and belief, the actual plans and specifications used in the construction
and improvement of the condominium property and for the construction
and installation of the mechanical components serving the
improvements. If the condominium property has been declared a
condominium more than three years after the completion of construction
or remodeling of the improvements, the requirements of this item do not
apply;
(11) insurance policies;
(12) copies of certificates of occupancy which may have been
issued for the condominium property;
(13) other permits applicable to the condominium property issued
by governmental bodies and in force or issued within one year before the
date the unit owners, excluding the developer, assumed control of the
association;
(14) written warranties of the contractor, subcontractors, suppliers,
and manufacturers that are still effective;
(15) a roster of unit owners, their addresses, and telephone
numbers, if known, as indicated on the developer's records;
(16) leases of the common elements and other leases to which the
association is a party;
(17) employment contracts or service contracts in which the
association is one of the contracting parties or in which the association
or the unit owners have an obligation or responsibility, directly or
indirectly, to pay some or all of the fee;
(18) all other contracts to which the association is a party.
(D) If this chapter or a regulation promulgated pursuant to this
chapter is violated by the association during the period before the
developer relinquishes control of the association pursuant to subsection
(C), the developer is responsible for the violation and is subject to the
administrative action provided in this chapter for the violation and is
liable for the violation to third parties.
Section 27-30-830. (A) A grant or reservation made by a
declaration, lease, or other document, and a contract made by an
association before unit owners, excluding the developer, assume control
of the association that provides for operation, maintenance, or
management of a condominium association or property serving the unit
owners of a condominium must be fair and reasonable, and the grant,
reservation, or contract may be canceled by unit owners, excluding the
developer:
(1) If the unit owners, excluding the developer, have assumed
control of the association the cancellation must be by concurrence of the
owners of at least seventy-five percent of the voting interests excluding
the voting interests owned by the developer. If a grant, reservation, or
contract is canceled and the unit owners, excluding the developer, have
assumed control of the association, the association shall enter a new
contract or otherwise provide for maintenance, management, or
operation in lieu of the canceled obligation at the direction of the owners
of at least a majority of the voting interests in the condominium,
excluding the voting interests owned by the developer.
(2) If the unit owners, excluding the developer, have not assumed
control of the association and if unit owners, excluding the developer,
own at least seventy-five percent of the voting interests in a
condominium operated by the association, a grant, reservation, or
contract for maintenance, management, or operation of buildings
containing the units in that condominium or of improvements used only
by the owners of that condominium may be canceled by concurrence of
the owners of at least seventy-five percent of the voting interests in the
condominium, excluding the voting interests owned by the developer.
No grant, reservation, or contract for maintenance, management, or
operation of recreational areas or other property serving more than one
condominium and operated by more than one association may be
canceled except pursuant to item (3).
(3) If the owners of units in a condominium have the right to use
property in common with owners of units in other condominiums and
those condominiums are operated by more than one association, no
grant, reservation, or contract for maintenance, management, or
operation of the property serving more than one condominium may be
canceled until unit owners, excluding the developer, have assumed
control of all of the associations operating the condominiums that are to
be served by the recreational area or other property, after which
cancellation may be effected by concurrence of the owners of at least
seventy-five percent of the total number of voting interests excluding
voting interests owned by the developer.
(B) A grant or reservation made by a declaration, lease, or other
document, or a contract made by the developer of the association before
the unit owners, excluding the developer, elect a majority of the board
of administration, that requires the association to purchase condominium
property or to lease condominium property to another party, must be
considered ratified unless rejected by a majority of the voting interests
of unit owners, excluding the developer, within thirty-six months after
those unit owners elect a majority of the board of administration. This
subsection does not apply to a grant or reservation made by a declaration
whereby persons other than the developer or his heirs, assigns, affiliates,
directors, officers, or employees are granted the right to use the
condominium property, so long as those persons are obligated to pay, at
a minimum, a proportionate share of the cost associated with the
property.
(C) A grant or reservation made by a declaration, lease, or other
document, and a contract made by an association, before or after the unit
owners, excluding the developer, assume control of the association that
provides for operation, maintenance, or management of a condominium
association or property serving the unit owners must not be in conflict
with the powers and duties of the association or the rights of the unit
owners as provided in this chapter.
(D) A grant or reservation made by a declaration, lease, or other
document, and a contract made by an association before the unit owners,
excluding the developer, assume control of the association must be fair
and reasonable.
(E) A person which, on behalf of the association or on behalf of the
unit owners operates, maintains, or manages the property of the
condominium or the association or property serving the unit owners of
a condominium, must be licensed as a condominium association
manager in accordance with the requirements of Chapter 57 of Title 40.
Section 27-30-840. No written contract to provide services or goods
to a condominium association or property serving the unit owners of a
condominium is valid or enforceable unless the contract:
(1) specifies the services, obligations, and responsibilities of the
party contracting to provide maintenance or management services to the
association;
(2) specifies those costs incurred in the performance of those
services, obligations, or responsibilities which must be reimbursed by
the association to the party contracting to provide maintenance or
management services;
(3) discloses financial or ownership interest which the developer
or any unit owner, holds with regard to the party contracting to provide
services or goods.
Section 27-30-850. (A) Each unit owner and each association must
be governed by and shall comply with this chapter, the declaration, the
documents creating the association, and the association bylaws. Actions
for damages or injunctive relief, or both, for failure to comply with this
chapter may be brought by the association or by a unit owner against the
association, a unit owner, directors who wilfully and knowingly fail to
comply, or directors designated by the developer for actions taken by
them before control of the association is assumed by unit owners,
excluding the developer. The prevailing party may recover reasonable
attorney's fees in an action brought pursuant to this subsection or in an
action in which the purchaser may void a contract. This relief does not
exclude other remedies provided by law.
(B) No provision of this chapter may be waived if the waiver would
adversely affect the rights of a unit owner or the purpose of the
provision, except that unit owners or members of a board of
administration may waive notice of specific meetings in writing if
provided by the bylaws.
(C) If the declaration or bylaws provide, the association may impose
reasonable fines against a unit for the failure of the unit owner or his
occupant, licensee, or invitee, to comply with the declaration, the
association bylaws, or reasonable rules of the association.
Article 4
Special Types of Condominiums
Section 27-30-1010. (A) A condominium may be created on land
held under lease or may include recreational facilities or other common
elements or commonly used facilities on a leasehold if on the date the
first unit is conveyed by the developer to a bona fide purchaser the lease
has an unexpired term of at least fifty years. If rent under the lease is
payable by the association or by the unit owners, the lease must include
the following requirements:
(1) The leased land must be identified by a description sufficient
to pass title, and the leased personal property must be identified by a
general description of the items and the approximate number of each
item the developer commits to furnish for each room or facility, or the
personal property may be identified by the minimum amount required
to purchase the personal property for the facility. Unless the lease is of
a unit, the identification of the land must be supplemented by a survey
showing the relation of the leased land to the land included in the
common elements, but land or personal property may be added in
accordance with the terms of the lease if there is no increase in rent or
material increase in maintenance costs to the individual unit owner.
(2) The lease may not contain a reservation of the right of
possession or control of the leased property by the lessor or a person
other than unit owners or the association and may not create rights to
possession or use of the leased property in a party other than the
association or unit owners of the condominium to be served by the
leased property, unless the reservation and rights created are disclosed
conspicuously. A provision for use of the leased property by anyone
other than unit owners of the condominium to be served by the leased
property requires the other users to pay a fair and reasonable share of the
maintenance and repair obligations and other exactions due from users
of the leased property.
(3) The lease must state the minimum number of unit owners
required, directly or indirectly, to pay the rent under the lease and the
maximum number of units to be served by the leased property. The
limitation of the number of units to be served does not preclude
enlargement of the facilities leased and an increase in capacity, if
approved by the association operating the leased property after unit
owners, excluding the developer, have assumed control of the
association. This item does not apply if the lessor is the United States,
this State, or its political subdivisions or an agency of a political
subdivision.
(B) If under the lease rent is a fixed amount for the full duration of
the lease and is payable by a person other than the association or the unit
owners, the commissioner may accept alternative assurances sufficient
to secure the payment of rent including, but not limited to, annuities with
an insurance company authorized to do business in this State or cash
deposits in trust in an amount to generate interest sufficient to meet lease
payments as they occur; the association must be the beneficiary of the
annuity or the trust. If the alternative assurances are accepted by the
commissioner, the following apply:
(1) Disclosures of a reservation of the right of possession or
control of the leased property, if not contained within the lease, must be
made by the developer.
(2) Disclosure of the minimum number of unit owners required,
directly or indirectly, to pay the rent under the lease and the maximum
number of units that are to be served by the leased property, if not
contained in the lease, must be stated by the developer.
(3) The provisions of section 27-30-1050 apply but are not
required to be stated in the lease.
(4) Section 27-30-1040 does not apply.
Section 27-30-1020. If the lease is of recreational facilities or other
commonly used facilities that are not completed, rent must not begin
until some of the facilities are completed. Until all of the facilities
leased are completed, rent must be prorated and paid only for the
completed facilities in proportion to the value the completed facilities
bear to the estimated completed value of all of the facilities that are
leased. The facilities are completed when they have been constructed,
finished, equipped, and are available for use. The provisions of this
section must be stated in the lease agreement.
Section 27-30-1030. (A) A lease of recreational or other commonly
used facilities entered into by the association or unit owners before the
unit owners, excluding the developer, assume control of the association
must grant the lessee an option to purchase the leased property, payable
in cash, on any anniversary date after the tenth anniversary of the
beginning of the lease, at a price then determined by agreement. If there
is no agreement on the price, then the price must be determined by
arbitration.
(B) If the lessor wishes to sell his interest and has received a bona
fide offer to purchase it, the lessor shall send the association and each
unit owner a copy of the executed offer. For ninety days following
receipt of the offer, the association or unit owners have the option to
purchase the interest on the terms and conditions in the offer. The
option must be exercised, if at all, by notice in writing to the lessor
within the ninety-day period. If the association or unit owners do not
exercise the option, the lessor has the right for sixty days after the
ninety-day period has expired to complete the transaction described in
the offer to purchase. If for any reason the transaction is not concluded
within the sixty days, the offer is abandoned, and the provisions of this
item must be reimposed.
(C) The option must be exercised upon approval by owners of
two-thirds of the units served by the leased property.
(D) The provisions of this section do not apply to a nonresidential
condominium and do not apply if the lessor is the United States, this
State, or its political subdivisions or, in the case of an underlying land
lease, a person or entity, not the developer or directly or indirectly
owned or controlled by the developer, did not obtain, directly or
indirectly, ownership of the leased property from the developer.
Section 27-30-1040. (A) The lease or a subordination agreement
executed by the lessor must provide that:
(1) a lien which encumbers a unit for rent, other monies, or
exactions payable is subordinate to a mortgage held by an institutional
lender; or
(2) upon foreclosure of a mortgage held by an institutional lender
or upon delivery of a deed in lieu of foreclosure, the lien for the unit
owner's share of the rent or other exactions may not be extinguished but
is unenforceable against the mortgagee with respect to that unit's share
of the rent and other exactions which mature or become due and payable
on or before the date of the final judgment of foreclosure, in the event
of foreclosure, or on or before the date of delivery of the deed in lieu of
foreclosure. The lien may automatically and by operation of the lease or
other instrument reattach to the unit and secure the payment of the unit's
proportionate share of the rent or other exactions coming due after the
date of final decree of foreclosure or the date of delivery of the deed in
lieu of foreclosure.
(B) The provisions of this section do not apply if the lessor is the
United States or this State or its political subdivisions or an agency of a
political subdivision.
Section 27-30-1050. (A) In an action by the lessor to enforce a lien
for rent payable or in an action by the association or a unit owner on the
obligations of the lessee or the lessor under the lease, any issue may be
raised or defense, legal or equitable, asserted relative to the lessor's
obligations under the lease. If the unit owner or the association initiates
an action or asserts a defense other than payment of rent under the lease,
the unit owner or the association upon service of process upon the lessor
shall pay to the clerk of court the rent alleged to have accrued and the
rent as it is due during the pendency of the proceeding. If the unit owner
or the association fails to pay the rent to the clerk of court, it is an
absolute waiver of the unit owner's or association's defenses, other than
payment, and the lessor is entitled to default. When the required funds
are deposited with the clerk of court, the unit owner or association shall
notify the lessor of the deposit and the lessor may apply to the court for
disbursement of all or part of the funds necessary for paying taxes,
mortgages, maintenance and operating expenses, and other necessary
expenses incident to maintaining and equipping the leased facilities or
necessary for the payment of other expenses arising out of personal
hardship resulting from the loss of rental income from the leased
facilities. After an evidentiary hearing the court may award all or part
of the funds on deposit to the lessor for these purposes. The court shall
require the lessor to post bond or other security as a condition to the
release of funds from the clerk when the value of the leased land and
improvements, apart from the lease itself, is inadequate to fully secure
the sum of existing encumbrances on the leased property and the
amounts released from the clerk of court.
(B) When the association or a unit owner has deposited funds with
the clerk of court pursuant to this item and has complied with his
obligations under the lease or agreement, except paying rent to the
lessor, the lessor may not hold the association or unit owner in default
on the rental payments, and the lessor may not file a lien or initiate
foreclosure proceedings against the unit owner. If the lessor places a
lien or initiates a foreclosure, the lessor may be liable for damages,
attorney's fees, and costs that the association or unit owner incurs in
satisfying the lien or foreclosure.
Section 27-30-1060. A developer may create a condominium by
converting existing, previously occupied improvements to condominium
ownership by complying with Article 1. A developer of a condominium
must comply with Article VI of this chapter but the failure to comply
does not affect the validity of the condominium.
Section 27-30-1070. (A) Notwithstanding the provisions of this
article regarding amending the declaration, a developer may develop a
condominium in phases, if the original declaration of condominium
submitting the initial phase to condominium ownership or an
amendment to the declaration approved by the unit owners and unit
mortgagees provides for and describes in detail all anticipated phases;
the impact, if any, the completion of subsequent phases would have
upon the initial phase; and the time period, not to exceed seven years
from the recording date of the declaration of condominium, within
which all phases must be added to the condominium and comply with
the requirements of this section and at the end of which the right to add
additional phases expires.
(B) The original declaration of condominium or an amendment to
the declaration approved by all unit owners, all unit mortgagees, and the
developer, must describe:
(1) the land which may become part of the condominium and the
land on which each phase is to be built. The descriptions must include
metes and bounds or other legal descriptions of the land for each phase,
plot plans, and surveys. Plot plans, attached as an exhibit, must show
the approximate location of all existing and proposed buildings and
improvements that may be contained within the condominium. The unit
or building types in the plot plan may be modified by the developer to
the extent that these changes are described in the declaration. If
provided in the declaration, the developer may make nonmaterial
changes in the legal description of a phase;
(2) the maximum number and general size of units in each phase;
(3) each unit's percentage of ownership in the common elements
as each phase is added. In lieu of describing specific percentages as
units are added to the condominium by the addition of land, the
declaration or amendment may describe a formula for reallocating each
unit's percentage of ownership in the common elements and the manner
of sharing common expenses and owning common surplus. The basis
for allocating percentage of ownership among units in added phases
must be consistent with the basis for allocation made among the units
originally in the condominium;
(4) the recreational areas and facilities to be owned as common
elements by all unit owners, all personal property to be provided as each
phase is added to the condominium, and those facilities or areas which
may not be built or provided if a phase is not developed and added as a
part of the condominium. The developer may reserve the right to add
additional common element recreational facilities;
(5) if time share interests are or may be created in units in any
phase and the degree, quantity, nature, and extent of these interests,
specifying the minimum duration of the recurring periods of rights of
use, possession, or occupancy that may be established in a unit.
Section 27-30-1080. If the declaration requires the developer to
convey additional land or facilities to the condominium after the
completion of each phase and the developer fails to do so within a time
which must be specified, the association may enforce the obligation
against the developer or bring an action against the developer for
damages caused by the developer's failure to convey the additional land
or facilities.
Section 27-30-1090. (A) Notwithstanding other provisions of this
chapter, an amendment by the developer adding land to the
condominium must be consistent with the provisions of the declaration
granting the right and must contain or provide:
(1) a statement submitting the additional land to condominium
ownership as an addition to the condominium;
(2) the legal description of the land being added to the
condominium;
(3) an identification by letter, name, or number, or a combination
of these for each unit within the land added to the condominium to
ensure that no unit in the condominium, including the additional land,
will have the same designation as another unit;
(4) a survey of the additional land and a graphic description of the
improvements in which any units are located, a plot plan, and a
certificate of a surveyor, in conformance with these requirements for a
declaration;
(5) the undivided share in the common elements appurtenant to
each unit in the condominium stated as a percentage or fraction which,
in the aggregate, must equal the whole and must be determined in
conformance with the manner of allocation stated in the original
declaration of condominium;
(6) the percentage of and the manner of sharing common
expenses and owning common surplus, which for a unit must be the
same as the undivided share in the common elements. Unit owners are
not required to execute or consent to an amendment adding phases to a
condominium unless the amendment permits the creation of time share
interests in a unit of the additional phase and the creation is not
authorized by the original declaration.
(B) An amendment to the declaration of condominium adding land
to the condominium must be recorded in the public records of the county
where the land is located and must be executed and acknowledged in
compliance with the requirements of a deed. A person who has recorded
title to the interest in the land submitted to condominium ownership, or
his lawfully authorized agent, must execute the amendment. Every
amendment must comply with the execution requirements for a
declaration.
Article 5
Administration and Registration of Condominiums
Section 27-30-1310. Before January second of each year, each
condominium association operating more than two units shall pay the
commission an annual fee for that year calculated on a per unit basis for
each unit in condominiums operated by the association, and shall file
any informational report in a form as the commission may require. The
fee for the first year this chapter is in effect must be calculated at the rate
of two dollars per unit, and must thereafter be adjusted by the
commission as necessary to defray the costs of administering the
chapter. If the fee is not paid by March first, the association must be
assessed a penalty of ten percent of the amount due, and the association
does not have standing to maintain an action in the courts of this State
or an arbitration proceeding under this chapter until the amount due plus
any penalty is paid.
Section 27-30-1320. (A) Every condominium or phase of a
condominium in which a unit is first offered for sale or lease for an
unexpired term of more than five years by a developer after the effective
date of this chapter and which is located or is to be located in this State
must be registered with the commission. A developer of a condominium
shall furnish the commission one copy of each document and item
required to be furnished to a buyer or lessee in a prospectus or offering
circular pursuant to this chapter, as well as an opinion of legal counsel
to the effect that all of the documents enumerated in Section
27-30-1350(21), insofar as applicable to the instant registration, comply
in all material respects with the requirements of this chapter. The
submission shall be in a form and shall include additional information
as the commissioner may require to determine compliance with the
chapter. The commission staff shall review these documents and items
within sixty days after receipt of a complete registration submission, and
shall notify the developer of any deficiencies. Until the developer has
received the commission's approval of these documents and items or the
Commission's Order of Registration, a contract for sale of a unit or lease
of a unit for more than five years is voidable by the purchaser or lessee.
(B) Upon filing the documents and items required by subsection (A),
the developer shall pay the commission a filing fee of twenty-five
dollars for each unit to be sold by the developer described in the
documents filed. The minimum filing fee is $500; the maximum filing
fee is $2,500. If the condominium is to be built or sold in phases,
payment of the fee in respect to units within phases not currently being
offered for sale may be deferred and must be paid before offering units
for sale in a subsequent phase.
(C) A material change to the registration required by subsection (A)
must be filed with the commission with supporting documentation
within thirty days of the implementation of the change and is subject to
the approval of the commission. A filing of a material change must be
accompanied by a one hundred dollar filing fee.
(D) As long as sales of original inventory continue by the developer
within the condominium property, the filing as required by subsection
(A) must be renewed on January first of each year by paying a five
hundred dollar renewal fee to the commission and certifying that the
plan of sale has not changed from that previously approved by the
commission. The commission is not required to give a developer notice
that the renewal is due. If the renewal fee and certification are not
received by the commission by January first, a late fee of one hundred
dollars must be charged through January thirty-first. Failure to renew
by January thirty-first of each year results in termination of the filing
and a new filing must be submitted to the commission, including
payment of all fees for an original filing.
Section 27-30-1330. (A) Until registration of the plan of sale with
the commission, a developer may not offer a contract for purchase of a
unit or lease of a unit for more than five years but may accept deposits
for reservations upon approval of a fully executed escrow agreement and
reservation agreement filed with the commission and upon payment of
a fee to the commission of five hundred dollars a filing. Reservations
may not be taken on a proposed condominium unless the developer has
an ownership, leasehold, or contractual interest in the land upon which
the condominium is to be developed. The commission shall notify the
developer of any deficiencies within twenty days of receiving the
reservation filing. The notification does not preclude the determination
of reservation filing deficiencies at a later date, and it does not relieve
the developer of any responsibility under the law. The escrow
agreement and the reservation agreement form must provide that the
prospective purchaser must be given an immediate unqualified refund
of the reservation deposit upon written request to the escrow agent by
the prospective purchaser or the developer.
(B) The executed escrow agreement signed by the developer and the
escrow agent must contain:
(1) a statement that the escrow agent will give a prospective
purchaser an immediate unqualified refund of the reservation deposit
upon written request to the escrow agent or to the developer;
(2) a statement that the escrow agent must not release money
directly to the developer except as a downpayment on the purchase price
at the time a contract is signed by the purchaser if the contract allows
funds to be released to the developer.
(C) The reservation agreement form must include:
(1) a statement of the developer's obligation to file condominium
documents with the commission before entering into a binding purchase
agreement or a binding agreement for a lease of more than five years;
(2) a statement of the prospective purchaser's right to receive all
condominium documents as required by this chapter;
(3) the name and address of the escrow agent;
(4) a statement that the developer assures that the purchase price
represented in or pursuant to the reservation agreement must be the price
in the contract for purchase and sale, or that the price represented may
be exceeded within a stated amount or percentage, or that no assurance
is given regarding the price in the contract for purchase or sale;
(5) a statement that the deposit must be payable to the escrow
agent and that the escrow agent must provide a receipt to the prospective
purchaser;
(6) a statement that the escrow agent shall give a prospective
purchaser an immediate unqualified refund of the reservation deposit
upon written request to the escrow agent or to the developer;
(7) a statement that the escrow agent must not release money
directly to the developer except as a downpayment on the purchase price
at the time a contract is signed by the purchaser if the contract allows
funds to be released to the developer.
Section 27-30-1340. A contract for the sale of a unit by a developer
or a lease of a unit for an unexpired term of more than five years must:
(1) contain in conspicuous type: THIS AGREEMENT IS
VOIDABLE BY BUYER BY DELIVERING WRITTEN NOTICE OF
THE BUYER'S INTENTION TO CANCEL WITHIN SEVEN DAYS
AFTER THE DATE THIS AGREEMENT IS EXECUTED BY THE
BUYER, AND RECEIPT BY BUYER OF ALL OF THE ITEMS
REQUIRED TO BE DELIVERED TO HIM BY THE DEVELOPER
UNDER THE SOUTH CAROLINA CONDOMINIUM ACT. THIS
AGREEMENT IS ALSO VOIDABLE BY BUYER BY DELIVERING
WRITTEN NOTICE OF THE BUYER'S INTENTION TO CANCEL
WITHIN SEVEN DAYS AFTER THE DATE OF RECEIPT FROM
THE DEVELOPER OF ANY AMENDMENT WHICH MATERIALLY
ALTERS OR MODIFIES THE OFFERING IN A MANNER THAT IS
ADVERSE TO THE BUYER. A PURPORTED WAIVER OF THE
BUYER'S RIGHT TO VOID THIS AGREEMENT IS OF NO EFFECT.
THE BUYER MAY EXTEND THE TIME FOR CLOSING FOR A
PERIOD OF NOT MORE THAN SEVEN DAYS AFTER THE BUYER
HAS RECEIVED ALL OF THE ITEMS REQUIRED. THE BUYER'S
RIGHT TO VOID THIS AGREEMENT TERMINATES AT CLOSING;
(2) contain in conspicuous type on the first page of the contract:
ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS
CORRECTLY STATING THE REPRESENTATIONS OF THE
DEVELOPER. FOR CORRECT REPRESENTATIONS, REFERENCE
SHOULD BE MADE TO THIS CONTRACT AND THE
DOCUMENTS REQUIRED BY THE SOUTH CAROLINA
CONDOMINIUM ACT TO BE FURNISHED BY A DEVELOPER TO
A BUYER OR LESSEE;
(3) contain a statement that the unit has been occupied if occupied
by someone other than the buyer;
(4) if the contract is for the sale or transfer of a unit subject to a
lease, include as an exhibit a copy of the executed lease and it must
contain within the text in conspicuous type: THE UNIT IS SUBJECT
TO A LEASE (OR SUBLEASE);
(5) if the contract is for the lease of a unit for five years or more,
include as an exhibit a copy of the proposed lease;
(6) if the contract is for the sale or lease of a unit that is subject
to a lien for rent payable under a lease of a recreational facility or other
commonly used facility, contain within the text in conspicuous type:
THIS CONTRACT IS FOR THE TRANSFER OF A UNIT THAT IS
SUBJECT TO A LIEN FOR RENT PAYABLE UNDER A LEASE OF
COMMONLY USED FACILITIES. FAILURE TO PAY RENT MAY
RESULT IN FORECLOSURE OF THE LIEN;
(7) state the name and address of the escrow agent required by
this chapter and state that the purchaser may obtain a receipt for his
deposit from the escrow agent upon request;
(8) if the contract is for the sale or transfer of a unit in a
condominium in which time share interests have been or may be created,
contain within the text in conspicuous type: UNITS IN THIS
CONDOMINIUM ARE SUBJECT TO TIME SHARE INTERESTS.
Section 27-30-1350. A developer of a condominium shall prepare
a prospectus or offering circular and file with and receive approval of
the commission before entering into an enforceable contract of purchase
and sale of a unit or lease of a unit for more than five years and shall
furnish a copy of the prospectus or offering circular to each buyer or
lessee. The prospectus or offering circular may include more than one
condominium, although not all units are being offered for sale as of the
date of the prospectus or offering circular. The prospectus or offering
circular must contain:
(1) on the front cover or the first page only:
(a) the name of the condominium;
(b) the following in conspicuous type:
(i) THIS PROSPECTUS (OFFERING CIRCULAR)
CONTAINS IMPORTANT MATTERS TO BE CONSIDERED IN
ACQUIRING A CONDOMINIUM UNIT.
(ii) THE STATEMENTS CONTAINED IN THIS
PROSPECTUS (OFFERING CIRCULAR) ARE ONLY SUMMARY
IN NATURE. A PROSPECTIVE PURCHASER SHOULD REFER TO
ALL REFERENCES, ALL EXHIBITS, THE CONTRACT
DOCUMENTS, AND SALES MATERIALS.
(iii) ORAL REPRESENTATIONS CANNOT BE RELIED
UPON AS CORRECTLY STATING THE REPRESENTATIONS OF
THE DEVELOPER. REFER TO THIS PROSPECTUS (OFFERING
CIRCULAR) AND ITS EXHIBITS FOR CORRECT
REPRESENTATIONS.
(iv) NO STATE AGENCY HAS JUDGED THE MERITS OR
VALUE OF THIS PROPERTY, NOR HAS ANY STATE AGENCY
DETERMINED THE VALIDITY OF THE DOCUMENTS CREATING
THE CONDOMINIUM OR INSPECTED THE PHYSICAL
CONSTRUCTION OF THE BUILDINGS.
(2) On the next page all statements required to be in conspicuous
type in the prospectus or offering circular;
(3) a separate index of the contents and exhibits of the prospectus;
(4) beginning on the first page of the text, excluding the summary
and index, a description of the condominium, including, but not limited
to:
(a) its name and location;
(b) a description of the condominium property, including, without
limitation:
(i) the number of buildings, the number of units in each
building, and the total number of units if the condominium is not a phase
condominium or the maximum number of buildings that may be
contained within the condominium, and the maximum number of units
in each building, if the condominium is a phase condominium;
(ii) the page in the condominium documents where a copy of
the plot plan and survey of the condominium is located;
(iii) the estimated latest date for completing the construction,
finishing, and equipping. In lieu of a date, the description must include
a statement that the estimated date of completion of the condominium
is in the purchase agreement and a reference to the article or paragraph
containing that information;
(c) the maximum number of units that shall use facilities in
common with the condominium. If the maximum number of units may
vary, a description of the basis for variation and the minimum amount
per unit to be spent for additional recreational facilities or enlargement
of these facilities. If the addition or enlargement of facilities shall result
in a material increase of a unit owner's maintenance expense or rental
expense, the maximum increase and limitations must be stated;
(5)(a) a statement in conspicuous type describing whether the
condominium is created and being sold as fee simple interests or as
leasehold interests. If the condominium is created or being sold on a
leasehold, the location of the lease in the disclosure materials must be
stated;
(b) a statement in conspicuous type if time share interests are or
may be created and sold in units in the condominium;
(6) a description of the recreational and other commonly used
facilities for use only by unit owners of the condominium, which must
include, but is not limited to:
(a) each room, its intended purpose, and location;
(b) the general location of each swimming pool, approximate
capacity, and whether heated;
(c) the number of each additional facility, its approximate
location, approximate size, and approximate capacity;
(d) a general description of the items of personal property;
(e) the estimated date when each room or other facility will be
available for use by the unit owners;
(f)(i) an identification of each room or other facility to be used
by unit owners that shall not be owned by the unit owners or the
association; and
(ii) a reference to the location in the disclosure materials of the
lease or other agreements providing for the use of those facilities;
(g) a statement whether the developer may provide additional
recreational or other commonly used facilities not already described in
the prospectus or offering circular and the maximum additional common
expense or cost to a unit owner that may be charged during the first
annual period of operation of the modified or added facilities;
(7) a description of the recreational and other facilities to be used in
common with other condominiums requiring payment of maintenance
and expenses of these facilities, directly or indirectly, by the unit
owners. The description must include, but is not limited to:
(a) each building and facility committed to be built;
(b) facilities committed to be built only under certain conditions,
and a statement of those conditions or contingencies;
(c) a statement whether facilities in subitem (a) or (b) will be
owned by the unit owners having the use of the facility or by an
association or other entity which are to be controlled by the unit owners
or others and the location in the exhibits of the lease or other documents
providing for use of those facilities;
(d) the year in which each facility shall be available for use by the
unit owners or the maximum number of unit owners in the project at the
time each or all of the facilities are committed to be completed;
(e) a general description of the items of personal property;
(f) a description of the lease, if any, including the length of the
term, the rent payable, and a description of an option to purchase;
(8) recreation lease or associated club membership:
(a) If recreational facilities or other facilities offered by the
developer and available to or to be used by unit owners are to be leased
or have a club membership the following in conspicuous type must be
included: THERE IS A RECREATIONAL FACILITIES LEASE
ASSOCIATED WITH THIS CONDOMINIUM; or THERE IS A CLUB
MEMBERSHIP ASSOCIATED WITH THIS CONDOMINIUM. There
must be a reference to the location in the disclosure materials where the
recreation lease or club membership is described in detail.
(b) if unit owners are required to pay a fee, rent, dues, or other
charges under a recreational facilities lease or club membership for the
use of facilities, there must be in conspicuous type the applicable
statement:
(i) MEMBERSHIP IN THE RECREATIONAL FACILITIES
CLUB IS MANDATORY FOR UNIT OWNERS;
(ii) UNIT OWNERS ARE REQUIRED, AS A CONDITION
OF OWNERSHIP, TO BE LESSEES UNDER THE RECREATIONAL
FACILITIES LEASE;
(iii) UNIT OWNERS ARE REQUIRED TO PAY THEIR
SHARE OF THE COSTS AND EXPENSES OF MAINTENANCE,
MANAGEMENT, UPKEEP, REPLACEMENT, RENT, AND FEES
UNDER THE RECREATIONAL FACILITIES LEASE (OR THE
OTHER INSTRUMENT PROVIDING THE FACILITIES); or
(iv) a similar statement of the nature of the organization or the
manner in which the use rights are created and that unit owners are
required to pay. Immediately following the applicable statement from
this subitem the location in the disclosure materials where the
development is described in detail must be stated.
(c) If the developer or a person, other than the unit owners and
other persons having use rights in the facilities, receives or is entitled to
receive rent, a fee, or other payment for the use of the facilities, then this
statement must appear in conspicuous type: THE UNIT OWNERS OR
THE ASSOCIATION(S) MUST PAY RENT OR LAND USE FEES
FOR RECREATIONAL OR OTHER COMMONLY USED
FACILITIES. Immediately following this statement the location in the
disclosure materials where the rent or land use fees are described in
detail must be stated.
(d) If in a leasehold, club, or other recreation format a person
other than the association has the right to a lien on the units to secure the
payment of assessments, rent, or other exactions, a statement must
appear in conspicuous type in substantially this form:
(i) THERE IS A LIEN OR LIEN RIGHT AGAINST EACH
UNIT TO SECURE THE PAYMENT OF RENT AND OTHER
EXACTIONS UNDER THE RECREATION LEASE. THE UNIT
OWNER'S FAILURE TO MAKE THESE PAYMENTS MAY RESULT
IN FORECLOSURE OF THE LIEN; or
(ii) THERE IS A LIEN OR LIEN RIGHT AGAINST EACH
UNIT TO SECURE THE PAYMENT OF ASSESSMENTS OR OTHER
EXACTIONS COMING DUE FOR THE USE, MAINTENANCE,
UPKEEP, OR REPAIR OF THE RECREATIONAL OR COMMONLY
USED FACILITIES. THE UNIT OWNER'S FAILURE TO MAKE
THESE PAYMENTS MAY RESULT IN FORECLOSURE OF THE
LIEN.
Immediately following the applicable statement, the location in the
disclosure materials where the lien or lien right is described in detail
must be stated;
(9) if the developer or another person has the right to increase or add
to the recreational facilities any time after the establishment of a
condominium in which unit owners have use rights without requiring
consent of the unit owners or association, a statement must appear in
conspicuous type in substantially this form: RECREATIONAL
FACILITIES MAY BE EXPANDED OR ADDED WITHOUT
CONSENT OF UNIT OWNERS OR THE ASSOCIATION(S).
Immediately following this statement, the location in the disclosure
materials where these reserved rights are described must be stated;
(10) a statement whether the developer's plan includes a program of
leasing units rather than selling them or leasing units and selling them
subject to the leases. If the developer's plan includes one of these
programs, there must be a description of the plan, including the number
and identification of the units, the provisions and term of the proposed
leases, and this statement in boldfaced type: THE UNITS MAY BE
TRANSFERRED SUBJECT TO A LEASE.
(11) The arrangements for management of the association and
maintenance and operation of the condominium property and other
property that shall serve the unit owners of the condominium property
and a description of the management contract and other contracts for
these purposes having a term in excess of one year, including:
(a) names of contracting parties;
(b) term of the contract;
(c) nature of the services included;
(d) monthly and annual compensation and provisions for
increasing compensation;
(e) reference to the volumes and pages of the condominium
documents and of the exhibits containing copies of these contracts.
Copies of these contracts must be attached as exhibits. If there is a
contract for the management of the condominium property, then a
statement in conspicuous type in substantially this form, identifying the
proposed or existing contract manager: THERE IS (IS TO BE) A
CONTRACT FOR THE MANAGEMENT OF THE CONDOMINIUM
PROPERTY WITH (NAME OF THE CONTRACT MANAGER).
Immediately following this statement the location in the disclosure
materials of the contract for management of the condominium property
must be stated;
(12) if the developer or a person other than the unit owners may retain
control of the board of administration of the association for more than
one year after the closing of the sale of a majority of the units in that
condominium to persons other than successors or alternate developers,
then a statement in conspicuous type in substantially this form: THE
DEVELOPER (OR OTHER PERSON) HAS THE RIGHT TO RETAIN
CONTROL OF THE ASSOCIATION AFTER A MAJORITY OF THE
UNITS HAVE BEEN SOLD. Immediately following this statement the
location in the disclosure materials where this right to control is
described in detail must be stated;
(13) if there are restrictions upon the sale, transfer, conveyance, or
leasing of a unit, then a statement in conspicuous type in substantially
this form: THE SALE, LEASE, OR TRANSFER OF UNITS IS
RESTRICTED OR CONTROLLED. Immediately following this
statement the location in the disclosure materials where the restriction,
limitation, or control of the sale, lease, or transfer of units is described
in detail must be stated;
(14) if the condominium is part of a phase project:
(a) a statement in conspicuous type in substantially this form:
THIS IS A PHASE CONDOMINIUM. ADDITIONAL LAND AND
UNITS MAY BE ADDED TO THIS CONDOMINIUM. Immediately
following this statement the location in the disclosure materials where
the phasing is described must be stated;
(b) a summary of the provisions of the declaration providing for
phasing;
(c) a statement whether residential buildings and units added to
the condominium may be substantially different from the residential
buildings and units originally in the condominium. If the added
residential buildings and units may be substantially different, there must
be a general description of the extent to which they may differ, and a
statement in conspicuous type in substantially this form: BUILDINGS
AND UNITS WHICH ARE ADDED TO THE CONDOMINIUM MAY
BE SUBSTANTIALLY DIFFERENT FROM THE OTHER
BUILDINGS AND UNITS IN THE CONDOMINIUM. Immediately
following this statement the location in the disclosure materials where
the extent to which added residential buildings and units may
substantially differ is described must be stated;
(d) a statement of the maximum number of buildings containing
units and the maximum numbers of units in each building;
(15) if the condominium is created by conversion of existing
improvements:
(a) the statements and disclosure requirements for a conversion
concerning the condition of the buildings and estimated replacement
costs;
(b) a statement that there are no express warranties unless they are
stated in writing by the developer;
(16) a summary of the restrictions to be imposed on units concerning
the use of the condominium property, including statements whether
there are restrictions regarding children, pets and parking, and reference
to the volumes and pages of the condominium documents where these
restrictions are found or if these restrictions are contained in other
documents, then a copy of the documents containing the restrictions
must be attached as an exhibit;
(17) if there is any land offered by the developer for use by the unit
owners not owned or leased to the unit owners, the association, or an
entity controlled by unit owners and other persons having the use rights
to the land, a statement must be made how the land shall serve the
condominium. If a part of that land shall serve the condominium, the
statement must describe the land, the nature and term of service, and the
declaration or other instrument creating the servitude must be included
as an exhibit;
(18) the manner in which a private utility and other services
including, but not limited to, sewage and waste disposal, water supply,
storm drainage, telephone and cable television are to be provided and the
person or entity furnishing them;
(19) an estimated operating budget for the condominium and the
association and a schedule of the unit owner's expenses must be attached
as an exhibit and must contain the estimated monthly and annual
expenses of the condominium and the association collected from unit
owners by assessments;
(20) the identity of the developer and the chief operating officer or
principal directing the creation and sale of the condominium and a
statement of their experience in this field;
(21) copies of these exhibits, if applicable:
(a) the declaration of condominium or the proposed declaration
if the declaration has not been recorded;
(b) the articles of incorporation creating the association;
(c) the bylaws of the association;
(d) the ground lease or other underlying lease of the
condominium;
(e) the management agreement and maintenance and other
contracts for management of the association and operation of the
condominium and facilities used by the unit owners having a service
term exceeding one year;
(f) the estimated operating budget for the condominium and the
required schedule of unit owners' expenses;
(g) a copy of the floor plan of the unit and the plot plan showing
the location of the buildings and the recreation and other common areas;
(h) the lease of recreational and other facilities to be used only by
unit owners of the condominium;
(i) the lease of facilities used by owners and others;
(j) the form of unit lease, if the offer is of a leasehold;
(k) a declaration of servitude of properties serving the
condominium but not owned by or leased to unit owners or the
association;
(l) the statement of condition of any existing building, if the
offering is of units in a building being converted to condominium
ownership;
(m) the statement of termite inspection for damage and treatment
of the existing improvements, if the condominium is a conversion;
(n) the form of agreement for sale or lease of units;
(o) a copy of the agreement for escrow of payments made to the
developer before closing;
(p) a copy of the documents containing a restriction on use of the
property;
(22) a brief narrative description of the location and effect of existing
and intended easements located or to be located on the condominium
property, excluding those described in the declaration;
(23) If time share interests may be created in a unit in the
condominium, a statement in conspicuous type: UNITS IN THIS
CONDOMINIUM ARE SUBJECT TO TIME SHARE INTERESTS.
Section 27-30-1360. If a developer in good faith has attempted to
comply with the requirements of this article and if the developer has
substantially complied with the disclosure requirements of this chapter,
nonmaterial errors or omissions in the disclosure materials are not
actionable.
Section 27-30-1370. (A) A person who reasonably relies upon a
material statement or information that is false or misleading and
published by or under authority from the developer in advertising and
promotional materials, including, but not limited to, a prospectus, the
items required as exhibits to a prospectus, brochures, and newspaper
advertising, and pays anything of value toward the purchase of a
condominium parcel located in South Carolina has a cause of action to
rescind the contract or collect damages from the developer for his loss
before the closing of the transaction. After the closing of the
transaction, the purchaser has a cause of action against the developer for
damages under this section from the time of closing until one year after
the last of these occurs, but in no event longer than three years after the
close of the transaction:
(1) the closing of the transaction;
(2) the first issuance by the applicable governmental authority of
a certificate of occupancy or other evidence of sufficient completion of
construction of the building containing the unit to allow lawful
occupancy of the unit. For the purpose of this section in counties or
municipalities in which certificates of occupancy or other evidences of
completion sufficient to allow lawful occupancy are not customarily
issued, evidence of lawful occupancy is considered given or issued upon
the date that the lawful occupancy of the unit is first allowed under
prevailing applicable laws, ordinances, or statutes;
(3) the completion by the developer of the common elements and
the recreational facilities, whether or not they are common elements, that
the developer is obligated to complete or provide under the written
contract or written agreement for purchase or lease of the unit;
(4) if there is no written contract or agreement for sale or lease of
the unit, then the completion by the developer of the common elements
and the recreational facilities, whether or not they are common elements
which the developer would be obligated to complete under law
applicable to the developer's obligation.
(B) The prevailing party may recover reasonable attorney's fees in
an action for relief under this section or to void a contract for the sale of
a unit or a lease for five years or more.
Section 27-30-1380. It is a violation of this chapter for a developer
of condominiums to:
(1) Use or publish the names of individual consumers in its
promotion or advertisement unless the individual whose name is used
has given the person using the individual's name express permission for
the use and publication;
(2) misrepresent when the condominium and condominium property
shall be available to any buyer or lessee;
(3) misrepresent or deceptively represent the location of the offered
condominium property;
(4) misrepresent the size, nature, extent, qualities or characteristics
of the offered condominium and condominium property;
(5) misrepresent the nature or extent of services incident to the
condominium and condominium property;
(6) make misleading or deceptive representations with respect to the
contents of the contract or the buyer's or lessee's rights or privileges
under the contract;
(7) fail to honor and comply with all terms of the contract with the
buyer or lessee;
(8) misrepresent the length of a sales presentation conducted by a
salesperson or team of salespersons;
(9) misrepresent that the developer's condominiums have been
approved or inspected by a state agency;
(10) fail to amend the prospectus, offering circular or other materials
delivered to the buyer or lessee when the materials in the prospectus are
no longer factually accurate; fail to file a material change to the
registration with the commission pursuant to Section 27-30-1320(C); fail
to provide to the buyer or lessee an amendment which materially alters
or modifies the offering in a manner that is adverse to the buyer;
(11) engage in an unlawful act or practice;
(12) violate a provision of this chapter, the commission's regulations
or an order of the commissioner;
(13) conceal, divert or dispose of funds or assets of a person in a
manner which may impair the rights of the buyers or lessees of
condominiums;
(14) fail to perform a stipulation or agreement made to induce the
commissioner to issue an order of registration or to otherwise approve
of a plan relating to a condominium or to reinstate a registration or to
approve a promotional plan or advertisement;
(15) make a false promise of a character likely to influence, persuade,
or induce;
(16) fail to promptly account for funds held in trust or in escrow, or
fail to display all records, books, and accounts of the funds to the
commission upon demand;
(17) fail to respond to all notices of complaint or investigation issued
by the commission within the time prescribed by the commission;
(18) make intentional misrepresentations or conceal material facts in
an application for registration;
(19) do any other act which constitutes fraud, misrepresentation or
failure to make a disclosure of a material fact.
Section 27-30-1390. (A) The commissioner may initiate
investigations within or outside this state which he considers necessary
to determine whether a person has violated this chapter or an order or
regulation authorized by this chapter, or to aid in the enforcement of this
chapter or in the prescribing of regulations and forms under this chapter.
The commission has the power to reprimand or fine a developer or
revoke or suspend the registration of a condominium if a developer is
found by the commissioner to have violated a provision of this chapter
or the commission's regulations or guidelines. The commissioner may
assess all reasonable costs of investigation and prosecution of all
violations.
(B) For the purpose of an investigation or proceeding under this
chapter, the commissioner or a duly authorized assistant or deputy
appointed by him may administer oaths or affirmations, and upon his
own motion or upon request of any party may issue subpoenas for the
attendance of witnesses to compel their attendance, take evidence, and
require the production of a matter which is relevant to the investigation,
including the existence, description, nature, custody, condition, and
location of books, documents, or other tangible things and the identity
and location of persons having knowledge of relevant facts or any other
matter reasonably calculated to lead to the discovery of material
evidence.
(C) Upon failure of a person to obey a subpoena or to answer
questions propounded by an investigating officer of the commission, and
upon reasonable notice to all persons affected by the failure, the
commissioner may apply to circuit court for an order compelling
compliance.
(D) Before suspending or revoking an order of registration, the
commissioner shall notify the developer of the charges and must grant
the developer an opportunity to be heard. The hearing must be held not
less than thirty days nor more than ninety days after the developer is
notified of the charges. Hearing of the charges must be at the time and
place designated by the commissioner and must be conducted in
accordance with Chapter 23 of Title I.
(E) The commissioner may issue an order requiring a person to cease
and desist from an unlawful practice and to take action, which in the
judgment of the commissioner, shall carry out the purposes of this
chapter after notice and hearing.
(F) The commissioner may make findings of fact in writing that the
public interest shall be irreparably harmed by delay in issuing an order
and in such a case may issue a temporary cease and desist order. Before
issuing the temporary cease and desist order, the commissioner,
whenever possible by telephone or otherwise, shall give notice of the
proposal to issue a cease and desist order to the person. Every
temporary cease and desist order shall include in its terms a provision
that upon request a hearing must be held promptly to determine whether
or not it becomes permanent.
(G) If upon investigation by the commissioner, a person is found to
have violated this chapter in a minor nature, the commissioner shall
inform the person of the violation by certified mail, return receipt
requested, and may assess a monetary fine. Within ten days from receipt
of the certified mail, the person found in violation of this chapter may
pay the fine or take other remedial steps as the commissioner may
require. If no fine is paid and no other remedial agreement is reached
within the time allowed or an extension of time granted by the
commissioner, the person may be prosecuted for the violation as
otherwise provided in this chapter. Upon payment of a fine or
agreement for remedial action, the commissioner may release a person
found in violation of this chapter from further liability to the state arising
from the violation.
(H) The commission may prepare and disseminate a prospectus and
other information to assist prospective owners, buyers, lessees, and
developers of condominiums in assessing the rights, privileges, and
duties pertaining to condominiums.
(I) The commission shall establish policies and guidelines and
promulgate regulations necessary to implement, enforce, and interpret
this chapter.
Article 6
Conversions to Condominiums
Section 27-30-1510. Conversions of rental units to condominium
ownership are governed by Article 2 of Chapter 31 of Title 27. Any
resulting condominium created after December 31, 1993, is subject to
this chapter."
SECTION 2. Section 40-57-10 of the 1976 Code, as last amended by
Act 12 of 1991, is further amended by adding at the end:
"(8) `Condominium association manager' means a person who
performs the following services when the condominium association,
associations, or unit owners served contain more than 50 units or have
an annual budget or budgets in excess of one hundred thousand dollars:
controlling or disbursing funds of a condominium association, preparing
budgets or other financial documents for a condominium association,
assisting in the noticing or conduct of condominium association
meetings, and coordinating maintenance for the development and other
day-to-day services involved with the operation of a condominium
association. A person who performs clerical or ministerial functions
under the direct supervision and control of a licensed manager or who
is charged only with performing the maintenance of a condominium
association and who does not assist in any of the management services
described in this item is not required to be licensed under this
chapter."
SECTION 3. Section 40-57-20 of the 1976 Code, as last amended by
Act 12 of 1991, is further amended to read:
"Section 40-57-20. It is unlawful for any a
person to act as a real estate broker, counsellor, real estate salesman,
property manager, condominium association manager, or real
estate auctioneer or to advise or assume to act as such without first
having obtained a license issued by the Real Estate
Commissioner Commission. Any A
person violating this provision section is guilty of a
misdemeanor and, upon conviction, must be punished by a fine
of fined not more than five hundred dollars or by
imprisonment for a term of imprisoned not more than six
months, or both, in the discretion of the court."
SECTION 4. Section 40-57-40 of the 1976 Code, as last amended by
Act 12 of 1991, is further amended to read:
"Section 40-57-40. The provisions of this
This chapter are is applicable only to those
persons holding themselves out to the public as real estate brokers,
counsellors, auctioneers, real estate salesmen, condominium
association manager, and property managers and shall
does not apply to agencies and instrumentalities of the state or
federal government nor to employees of any lender or public officials
making appraisals for federal, state, and local units of the
government."
SECTION 5. Section 40-57-90 of the 1976 Code, as last amended by
Act 12 of 1991, is further amended to read:
"Section 40-57-90. Licenses as real estate broker, counsellor,
real estate salesman, auctioneer, condominium association
manager, or property manager must be granted only to persons who
submit satisfactory proof to the commissioner that they are trustworthy
and bear a good reputation for honesty and fair dealing, and are
competent to transact the business of a real estate broker, counsellor, real
estate salesman, auctioneer, condominium association manager,
or property manager in that manner as to safeguard the interest of the
public. A person applying for a license or an examination shall first
submit to a credit report and satisfy requirements established by
regulation. A real estate salesman must be employed by a real estate
broker-in-charge in order to be licensed."
SECTION 6. Section 40-57-100(1) of the 1976 Code, as last amended
by Act 12 of 1991, is further amended to read:
"(1) Any A person desiring to act as a real
estate broker, counsellor, salesman, property manager, condominium
association manager, or auctioneer shall file with the Real Estate
Commissioner an application in writing upon that form and with that
detail as the South Carolina Real Estate Commission prescribes, and
each applicant shall first pass to the satisfaction of the commissioner, the
examination prescribed, unless he the applicant is
exempt therefrom from the examination."
SECTION 7. Section 40-57-100 of the 1976 Code, as last amended by
Act 12 of 1991, is further amended by adding at the end:
"(10) To be eligible for licensure by the commission as a
condominium association manager, the applicant must pass an
examination administered or approved by the commission which
demonstrates that the applicant has a fundamental knowledge of the state
and federal laws relating to the operation of all types of condominium
associations and state laws relating to corporations and nonprofit
corporations, proper preparation of condominium budgets, proper
procedures for noticing and conducting association meetings, insurance
matters relating to condominium associations, and management skills.
A person who has been acting as a condominium association manager
for five consecutive years, before January 1, 1994, or who is designated
as a condominium association manager approved by the commission, is
exempt from the examination prescribed in this item but only if the
person applies for and is issued a license by January 1, 1995."
SECTION 8. Section 40-57-110 of the 1976 Code, as last amended by
Act 12 of 1991, is further amended to read:
"Section 40-57-110. In addition to the proof of honesty,
integrity, truthfulness, and good reputation of an applicant for a license,
either real estate broker, counsellor, salesman, property manager,
condominium association manager, or auctioneer, the applicant
shall submit to a written examination to be prepared and conducted by
the commissioner or an institution designated by the commission."
SECTION 9. Section 40-57-120 of the 1976 Code is amended to read:
"Section 40-57-120. The commissioner shall issue licenses for
three four classifications: one for each real estate
broker; one for each real estate salesman; one for each condominium
association manager; and one for each property manager. The
Commissioner commission shall issue designated
licenses within each classification as necessary and as established by
regulation. No person may be licensed in more than one classification
at any one time, except that a condominium association manager
may be licensed in one of the other three classifications."
SECTION 10. Section 40-57-140(A) of the 1976 Code, as last
amended by Act 609 of 1988, is further amended to read:
"(A) A nonresident of this State may become a real estate
broker, real estate salesman, condominium association
manager, or property manager upon complying with all the
provisions and conditions of this chapter. A person who is licensed
as a real estate broker, real estate salesman, condominium
association manager, or property manager in another state, territory
of the United States, or the District of Columbia shall submit a
certificate of licensure from the real estate regulatory authority from the
other jurisdictions at the time of filing an application for examination
and copies of the records of any disciplinary actions taken against the
applicant's license. In the application for examination, all questions of
equivalency of academic and experience requirements of other states,
territories, or the District of Columbia must be determined by the
commission and, at the discretion of the commission, the nonresident
applicant must comply with additional requirements specified by the
commission."
SECTION 11. Section 40-57-160 of the 1976 Code, as last amended
by Act 12 of 1991, is further amended to read:
"Section 40-57-160. It is the duty of the commissioner to issue
a license to engage in the business of real estate broker, counsellor,
salesman, condominium association manager, property
manager, or auctioneer to all applicants who are duly qualified under,
and who comply with, all requirements of this chapter and all
regulations of the commissioner. The license must be in that form and
size as the commissioner prescribes and must is not
be transferable. The licenses expire on June thirtieth of each
year."
SECTION 12. Section 40-57-170(A) of the 1976 Code, as last
amended by Act 12 of 1991, is further amended to read:
"(A) The commissioner may, upon his own motion or a
verified complaint together with evidence, documentary or otherwise,
presented in connection therewith, making out a prima facie case,
investigate the actions of any real estate broker, counsellor, salesman,
auctioneer, condominium association manager, property
manager, or any person who has unlawfully assumed to act in either
capacity within this State and has the power to suspend, revoke, and
cancel any license issued under the provisions of this chapter and
assess fines at any time where the licensee has by material
misrepresentation obtained a license, or where the licensee is found by
the commissioner to be guilty of any of the following acts:
(1) making any substantial misrepresentation;
(2) making any false promises of a character likely to influence,
persuade, or induce;
(3) pursuing a continued and flagrant course of
misrepresentation, or making false promises through agents or
salesmen or any medium of advertising, or otherwise;
(4) any conduct in a real estate transaction which demonstrates
bad faith, dishonesty, untrustworthiness, or incompetency in a manner
as to endanger the interest of the public;
(5) acting for more than one party in a transaction without the
knowledge of all parties for whom he acts;
(6) acting in the dual capacity of broker and undisclosed principal
in any transaction;
(7) representing or attempting to represent, if a salesman, a real
estate broker other than his employer without the express knowledge and
consent of his employer;
(8) guaranteeing or, authorizing, or
permitting any person to guarantee future profits which may result from
the resale of real property;
(9) making of dual sets of contracts, written or otherwise, which
would falsify the transaction by stating a sales price higher than the
actual sales price in an effort to obtain a larger loan from any lender or
lending institution or for the purpose of misinforming any governmental
agency;
(10) being convicted in any court of competent jurisdiction of this
State, any other state, or any federal court of forgery, embezzlement,
breach of trust, larceny, obtaining money or property under false
pretense, extortion, fraud, conspiracy to defraud, or any other offense
involving moral turpitude, or pleading guilty or nolo contendere to any
such offense;
(11) failing, within a reasonable time, to account for or to remit any
monies coming into his possession which belong to others;
(12) paying a commission or compensation to any person for
performing the services of a real estate broker, salesman,
condominium association manager, or property manager who
has not first secured his license under the South Carolina Real Estate
Licensing Act. A South Carolina licensed broker may pay a part of his
commission on a cooperative basis to a licensed broker of another state
if the nonresident broker does not conduct in this State any of the
negotiations for which a fee, compensation, or commission is paid;
(13) failing, if a broker, to place, as soon after receipt as is
practicably possible, any deposit money or other money received
by him in a real estate transaction in a separate real estate trust or escrow
account maintained by him in a banking institution authorized to do
business in this State, wherein the funds must be kept until the
transaction is consummated or otherwise terminated, at which time a full
accounting thereof must be made by the broker. Records relative to the
deposit, maintenance, and withdrawal of the funds must be properly
maintained and made available to a representative of the South Carolina
Real Estate Commission upon request;
(14) violating any provision of law relating to a buyer's
freedom of choice in choosing an attorney, insurance agent, or title
insurance agent to handle his real estate transaction;
(15) failing, if a broker, condominium association
manager, or property manager, to deposit all security deposits,
damage deposits, advance fees, and rental proceeds received by the
broker, condominium association manager, or property manager
on or before the next banking day in a separate escrow or real estate trust
account so designated. All these funds except rental proceeds shall
remain until the lease or rental transaction expires or is terminated, at
which time a full accounting must be made by the broker,
condominium association manager, or property manager.
Rental proceeds must be disbursed within a reasonable time after deposit
and clearance of the deposit by the bank. Records relative to the receipt,
deposit, maintenance, and withdrawal of the funds must be properly
maintained and made available to a representative of the South Carolina
Real Estate Commission upon request;
(16) failing, if a licensee, to report to the commission in writing by
certified mail, return receipt requested, within ten days after receipt by
the licensee of those convictions set forth in item (10) of this subsection;
(17) a real estate licensee shall disclose on a form approved by the
commission for which party he is acting and may not receive
compensation from more than one party except with the full knowledge
and consent of all parties;
(18) violating any regulation promulgated by the
commission."
SECTION 13. Section 40-57-240 of the 1976 Code, as last amended
by Act 12 of 1991, is further amended to read:
"Section 40-57-240. Any real estate broker, counsellor,
salesman, auctioneer, condominium association manager, or
property manager who fails to renew or register his license annually and
continues to engage in such business is guilty of a misdemeanor and,
upon conviction, must be punished by a fine of fined
not more than five hundred dollars or imprisonment of
imprisoned not more than six months, or both, in the discretion
of the court."
SECTION 14. Section 16-1-10 of the 1976 Code, as last amended by
Act 412 of 1992, is further amended by adding to the list of crimes
classified as a felony:
"Section 27-30-620 (failure of condominium developer to
properly handle escrow funds)."
SECTION 15. The governing entity of every condominium existing
on January 1, 1994, shall file with the commission before July 1, 1994,
an informational filing, giving the name and address (including the
county) of the condominium, the number of units, the name and address
of the condominium manager, if any, the year of creation of the
condominium, and any other information the commissioner may require.
SECTION 16. This act takes effect January 1, 1994.
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