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TO AMEND SECTION 27-31-250, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO USE OF INSURANCE PROCEEDS TO RECONSTRUCT DAMAGED PROPERTY GOVERNED BY THE HORIZONTAL PROPERTY ACT, SO AS TO PROVIDE FOR REPAIR OR RECONSTRUCTION UPON A VOTE OF EIGHTY PERCENT OF THE CO-OWNERS, OR MORE IF REQUIRED BY THE PROPERTY BYLAWS, AND TO PROVIDE, FURTHER, FOR DISTRIBUTION OF INSURANCE PROCEEDS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 27-31-250 of the 1976 Code is amended to read:
"Section 27-31-250. In case of fire or any other disaster, the insurance indemnity must, except as provided in the following paragraph, be applied to reconstruct the building or other structure.
Reconstruction is not compulsory where it comprises the whole or more than two-thirds of the property. In this case, and unless otherwise unanimously agreed upon by the co-owners, the indemnity must be delivered pro rata to the co-owners entitled to it in accordance with provision made in the bylaws or in accordance with a decision of three-fourths of the co-owners if there is no bylaw provision.
Should it be proper to proceed with the reconstruction, the provisions for this eventuality made in the bylaws shall be observed, or, in lieu thereof, the decision of the council of co-owners shall prevail.
(A) A portion of the property for which insurance is required pursuant to Section 27-31-225 and which is damaged or destroyed must be repaired or replaced promptly by the council of co-owners unless:
(1) repair or replacement is illegal under a state statute or local health ordinance; or
(2) eighty percent of the co-owners, including the owner of an apartment which is not to be rebuilt, vote not to rebuild; except that the property bylaws may expressly require a percentage greater, but not less, than eighty percent of the co-owners.
(B) The cost of repair or replacement in excess of insurance proceeds and reserve must be considered a common expense.
(C) If the entire property is not repaired or replaced, the insurance proceeds:
(1) attributable to the damaged common elements must be used to restore the damaged area to a condition compatible with the remainder of the property;
(2) attributable to apartments and limited common elements that are not rebuilt must be distributed to the owners of those apartments and to the owners of those apartments to which limited common elements were allocated, or to the lienholders, as their interests may appear;
(3) remaining must be distributed to all of the co-owners or lienholders, as their interests may appear, in proportion to the percentage as described in Section 27-31-60.
(D) If the co-owners vote not to rebuild an apartment, that apartment's allocated interest must be reallocated automatically upon the vote and the council of co-owners promptly shall prepare, execute, and record an amendment to the master deed reflecting the reallocations."
SECTION 2. This act takes effect upon approval by the Governor and applies to all horizontal properties governed by the Horizontal Property Act, notwithstanding a provision in the master deed or bylaws to the contrary.
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