As you might have heard on the local news, South Carolina recently passed the Homeowners Association Act (H.3886). If you live in a community with a Homeowners Association (HOA) or are interested in buying a home in an HOA-governed community, this law is important for you to know about. For the most part, this law increases protection for homeowners by requiring HOAs to follow a standard list of requirements. Let's take a look at what this means for you.

Main Points of the HOA Act

Here are the main points you need to know about the new Homeowners Association Act:

1. The HOA Act sets specific guidelines HOAs must follow and sets up an expectation of "good governance". This helps standardize the way HOAs operate and protect the interests of homeowners.

2. HOAs are required to file a copy of their governance documents (or by-laws) to with the Clerk of Court or Register of Deeds. If this documentation hasn't been filed, then the by-laws or governance documents can't be enforced by the HOA.

3. Adds a checkbox to the current Property Disclosure Statement that makes it easier for a buyer to see if the property is part of an HOA.

4. Requires the HOA to notify homeowners at least 48-hours before any increase of the HOA's annual budget can be approved.

5. Allows homeowners (or the HOA) to file a case with the Magistrate Court to resolve financial disputes.

6. Creates the position of a Homeowners Association Ombudsman in South Carolina's Department of Consumer Affairs.

What is an Ombudsman?

An ombudsman is often referred to as a public advocate or citizen representative. An ombudsman is a neutral third party that helps homeowners understand state HOA laws, answers questions about their HOA's by-laws and clarifies any questions about their rights and responsibilities or those of the HOA. An ombudsman also investigates complaints against the HOA and helps homeowners get a resolution or mediate a solution with the HOA. The person appointed as an ombudsman is required to be an active licensed attorney in the state with at least five years' experience with real estate law and HOA law. The ombudsman is also required to be a certified civil mediator.

The Homeowners Association Act aims to give homeowners a more transparent view of how the HOA is managed, how funds and budgets are used and a clear way to deal with any complaints or disputes they have with their HOA. By creating the ombudsman position, the law also gives homeowners and potential buyers a neutral resource to go to for questions, information or complaints.