Indicates Matter Stricken

Indicates New Matter

 

Committee Report

March 27, 2024

 

H. 3180

 

Introduced by Reps. Rutherford, Kilmartin and Taylor

 

S. Printed 03/27/24--H.

Read the first time January 10, 2023

 

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The committee on House Labor, Commerce and Industry

To whom was referred a Bill (H. 3180) to amend the South Carolina Code of Laws by amending Section 15-41-30, relating to property exempt from attachment, levy, and sale, so as to provide that a debtor's, etc., respectfully

Report:

That they have duly and carefully considered the same, and recommend that the same do pass with amendment:

 

    Amend the bill, as and if amended, by deleting SECTION 1.

Amend the bill further, SECTION 2, by striking Section 27-30-130(2)(B)(2) and inserting:

       (2) In order to remain enforceable, a homeowners association's rules, regulations, and amendments to rules and regulations must be recorded in the clerk of court's, Register of Mesne Conveyance (RMC), or register of deeds office in the county in which the property is located by January tenth of eachthe year following their adoption or amendment.

Amend the bill further, SECTION 2, by striking Section 27-30-130(2)(D) and inserting:

    (D) Effective January 1, 2025, any provision in a homeowners association's governing documents granting the homeowners association the authority to foreclose on the property of a homeowners association member must adhere to the requirements of Section 29-3-810.

Amend the bill further, SECTION 3, by striking Section 29-3-810 and inserting:

    Section 29-3-810.  Effective January 1, 2025, any homeowners association with the authority granted in its governing documents to foreclose on the property of a homeowners association member must in the case of a default by a defendant property owner make application for a rule to show cause to be issued to the defendant property owner. No foreclosure sale may be noticed prior to the issuance of the rule to show cause.

 

Renumber sections to conform.

Amend title to conform.

W.E. "BILL" SANDIFER for Committee.

 

 

statement of estimated fiscal impact

Explanation of Fiscal Impact

State Expenditure

This bill precludes HOAs from foreclosing on properties of members but allows them to place liens for unpaid dues, fines, or other fees. Currently, HOAs may place a lien on property as well as initiate a foreclosure proceeding for failure to pay dues, fines, or other fees. 

Judicial anticipates this bill may result in a shift in court cases from foreclosure proceedings to filing for judgment of a lien and that any change in court proceedings can be managed with existing staff and within existing appropriations. Therefore, this bill will have no expenditure impact on Judicial.

 

Local Expenditure

This bill prohibits a homeowners' association (HOA) from foreclosing on a property of its members for failure to pay dues, fines, or other fees but specifies that an HOA is able to place a lien on property for failure to pay.

 

RFA contacted all 46 counties, SCAC, and MASC. We received a response from Florence County, Dorchester County, and MASC.  Florence stated this bill will have no fiscal or operational impact to the county. Dorchester reported that there may be minimal impact to the workload and expenditures for the register of deeds office. MASC responded that this bill will not impact municipal government expenses as these governments are not involved in the forfeiture or lien processes. Based on these responses, we anticipate this bill will have no local expenditure impact.

 

 

Frank A. Rainwater, Executive Director

Revenue and Fiscal Affairs Office

 

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A bill

 

TO AMEND the south carolina code of laws by amending SECTION 15-41-30, RELATING TO PROPERTY EXEMPT FROM ATTACHMENT, LEVY, AND SALE, SO AS TO PROVIDE THAT A DEBTOR'S INTEREST IN REAL PROPERTY USED AS A PRIMARY RESIDENCE MAY NOT BE SOLD IF THE ACTION WAS INSTITUTED BY A HOMEOWNERS ASSOCIATION ATTEMPTING TO COLLECT UNPAID DUES, FEES, OR FINES; by amending SECTION 27-30-130, RELATING TO THE ENFORCEABILITY OF A HOMEOWNERS ASSOCIATION'S GOVERNING DOCUMENTS, SO AS TO PROHIBIT THE ENFORCEABILITY OF A PROVISION GRANTING A HOMEOWNERS ASSOCIATION THE AUTHORITY TO FORECLOSE ON PROPERTY; AND BY ADDING SECTION 29-3-810 SO AS TO PROHIBIT A FORECLOSURE ACTION NOT AUTHORIZED BY STATUTE.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Section 15-41-30(A) of the S.C. Code is amended by adding an item to read:

 

    (16) The debtor's interest in real property that the debtor uses as a primary residence if the sale under a mesne or final process issued by a court was solely instituted by a homeowners association attempting to collect unpaid dues, fees, or fines.

 

SECTION 2.  Section 27-30-130 of the S.C. Code is amended to read:

 

    Section 27-30-130. (A)(1) Except as otherwise provided in this section, in order to be enforceable, a homeowners association's governing documents must be recorded in the clerk of court's, Register of Mesne Conveyance (RMC), or register of deeds office in the county where the property is located.

       (2) To continue to be enforceable, any governing document not recorded prior to the effective date of this section must be recorded by January tenth of the year following the effective date of this section in the clerk of court's, Register of Mesne Conveyance (RMC), or register of deeds office in the county where the property is located.

    (B)(1) Rules, regulations, and amendments to rules and regulations:

           (a) are effective upon passage or adoption; and

           (b) must be made accessible to a homeowners association member upon the request of that member of the homeowners association, and, at the option of the homeowners association, via electronic mail or through methods provided by the homeowners association's bylaws that ensure actual notice, unless they are:

               (i) posted in a conspicuous place in a common area in the community; or

               (ii) available on an Internet website maintained by the homeowners association, where they may be downloaded by the homeowner.

       (2) In order to remain enforceable, a homeowners association's rules, regulations, and amendments to rules and regulations must be recorded in the clerk of court's, Register of Mesne Conveyance (RMC), or register of deeds office in the county in which the property is located by January tenth of each year following their adoption or amendment.

    (C) Homeowners associations in existence on the effective date of this section must record the documents required by subsections (A)(1) and (B)(2) by January tenth following the effective date of this section.

    (D) Effective July 1, 2023, any provision in a homeowners association's governing documents granting the homeowners association the authority to foreclose on the property of a homeowners association member may not be enforced. However, a homeowners association may place a lien on the property for unpaid dues, fines, or other fees.

    (E) The recording of the rules, regulations, bylaws, and amendments to rules and regulations are not subject to the requirements of witnesses and acknowledgements required under Section 30-5-30.

 

SECTION 3.  Article 7, Chapter 3, Title 29 of the S.C. Code is amended by adding:

 

    Section 29-3-810.  Effective July 1, 2023, all foreclosure actions must be authorized by statute. Nothing in this section affects a cause of action existing before July 1, 2023.

 

SECTION 4.  This act takes effect upon approval by the Governor.

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