People who live in a planned development are usually part of a condominium owners’ association (COA) or homeowners' association (HOA), which is typically a nonprofit corporation responsible for managing and maintaining the community. A COA or HOA has a lot of power over the residences and homeowners in a planned community. The association creates and enforces the rules of the community, as well as determines how much members have to pay in dues and assessments (collectively referred to as “assessments”).
Residents who live in a community setting—whether it’s a condominium, townhouse, or single-family home—in South Carolina usually have to pay assessments to their COA or HOA. If you fall behind in those payments, in most cases, the COA or HOA can get a lien on your home that could lead to a foreclosure.
In this article, you’ll learn about COA and HOA foreclosures and related laws in South Carolina.
The Horizontal Property Act (S.C. Code Ann. §§ 27-31-10 through 27-31-440) governs COAs in South Carolina. For decades, South Carolina didn’t have laws that governed HOAs. Then, in 2018, the state passed legislation creating the South Carolina Homeowners Association Act (SCHA). (S.C. Code Ann. §§ 27-30-110 through 27-30-170).
COAs and HOAs are also controlled by their governing documents, which typically include a Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and bylaws. The specific rules regarding assessments liens can usually be found in these governing documents. You likely received copies of the CC&Rs and bylaws when you purchased your property.
Under the SCHA, in order to be enforceable, all governing documents for an HOA must be recorded in the public records of the county where the property is located. The HOA's rules, regulations, and amendments to the rules and regulations also have to be recorded. (S.C. Code Ann. § 27-30-130).
In most cases, a COA or HOA has the power to place a lien on your property if you become delinquent in paying the assessments. Generally, the lien will automatically attach to the home from the time that the assessment comes due.
State law and the COA or HOA’s governing documents will usually set out the type of charges that may be included in the lien.
COAs. In South Carolina, a COA lien consists of all unpaid sums for common expenses. (S.C. Code Ann. § 27-31-210 (a)).
HOAs. Typically, an HOA is permitted to include the following in its lien:
To find out which charges a particular South Carolina HOA may include in its lien, check the association's CC&Rs or other governing documents.
Be aware that, under the SCHA, local magistrate courts have concurrent jurisdiction (presumably with the Circuit Court) to adjudicate monetary disputes of up to $7,500 between homeowners and HOAs. (S.C. Code Ann. § 27-30-160).
Lien priority determines what happens to other liens, mortgages, and lines of credit if a COA or HOA lien is foreclosed. (To learn more about lien priority and its importance in HOA foreclosures, see What happens to my mortgages if the HOA forecloses on its lien?)
COAs. In South Carolina, a COA’s lien is prior to all other liens, except for:
HOAs. To find out the priority of an HOA lien, check the association’s governing documents.
If you default on the assessments, the COA or HOA can foreclose. A common misconception is that the association can’t foreclose if you’re current with your mortgage payments. But the association’s right to foreclose has nothing to do with whether you’re caught up on your home loan.
In South Carolina, a COA lien may foreclose its lien by filing a lawsuit. (S.C. Code Ann. § 27-31-210 (a)). (Learn more about general foreclosure laws and procedures in South Carolina.)
An HOA’s foreclosure rights come from the governing documents of the association. To find out the process that the HOA must follow to foreclose a lien for unpaid assessments, read the association’s governing documents.
If you’re behind in assessments and facing a COA or HOA foreclosure, consider consulting with an attorney licensed in South Carolina to discuss all legal options available in your particular circumstances.