SC Iss. 4, 2017 (w)

Palmetto Communities

The official publication of the South Carolina Chapter of CAI

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Issue 4, 2017

Should HOAs, POAs and Condominium Associations prepare and file their own liens without using an attorney, after the February 2017 S.C. Supreme Court decision in Rogers Townsend & Thomas, PC v. Peck? By Sean A. O’Connor, Esq.

President’s Message. I t’s hard to believe 2017 is over and it’s January 2018. I feel like my first two years on the board of the South Carolina Chapter of CAI have flown by. When I was asked if I would accept the nomination of President Elect in 2017 I did a lot of thinking about the chapter and if I would be able to help in the development and growth of this

Donald Hucks, CMCA, AMS, PCAM

organization. I thought about what we had done and where we were headed as a group. With the help of my fellow board members we have made a lot of changes in the past two years. We hired our current CED, Ray Dickey, my first year on the board. Ray has brought new life to the chapter with his vast resources and experience from other CAI chapters he works with. He continues to maximize sponsorship sales, as well as attendance at events. The events are filled with association board members, volunteers and managers — people who want to learn how to properly conduct business in the com- munity association world. We changed our Annual Conference & Expo to a one-day event. When I was elected to the board I, along with others, felt the chapter had gotten stale, doing the same old, same old every year. We moved the Annual Conference and Expo to Charleston in 2016 then Columbia in 2017. We had record crowds at both events, and even provided transportation for those who didn’t want to make the drive. “We have focused our efforts to increase attendance and participation, bringing in more association volunteers, board members and managers.” We started a program where we could have the same events all over the state in the same week. We currently hold events in Hilton Head, Charleston, Columbia, Greenville and Myrtle Beach. We have focused our efforts to increase attendance and participation, bringing in more association volunteers, board members and managers. Most of our events in 2017 provided cost-free attendance for these groups, and we are getting a great response. The last event I attended had over one-hun- dred people, with 90 percent of the attendees being association volunteers and board members. While attending the CAI National Conference this year, we were asked what could be done to help bring in more associa- tion boardmembers and volunteers. National listened and now we have new membership pricing for our Homeowner Leader (HL) members (formerly called Community Association Volunteer Leader members – CAVL). Up to 15 members can join for $250 a year. Please make sure all of your association boards, and fellow board members are aware of this change. All of this couldnot have beenpossiblewithout the leadership

“In South Carolina, our Supreme Court has a constitutional power to regulate and define the practice of law.”

INTRODUCTION It iscommonandfrequent for HOAs, POAs, Condominium Associations and other com- munity associations (collec- tively, “Associations”) to have a need to file liens against homeowners when assess- ments, regime fees and other amounts owed pursuant to the recorded covenants are un- paid and past due. In South Carolina, an Association in the position of needing to file such liens typically has undertaken this task one of three ways: (1) by retaining an attorney to prepare and file the liens; (2) by having its third-party property manager to do so if the Association has one; or (3) by doing it “in-house,” often by a Board member. The method numbered (1) above is clearly lawful and is thus the safe route. However, many Associations have sought to avoid incurring le- gal fees where possible; they may consider themselves too small to afford that cost, or they might simply view it as an optional and thus avoid- able expense. So instead, some Associations opt for methods numbered (2) or (3) above. The key question is, are methods (2) and (3) above lawful in South Carolina? Could an Association that utilizes methods numbered

(2) or (3) above be found to be engaging in unauthor- ized practice of law, a mis- demeanor or felony 1 in South Carolina? And, importantly, are liens prepared and filed by third party property man- agers or by Associations in- house potentially void and subject to being considered a legal nullity, meaning they would not operate as a valid lien upon the homeowner’s property? In February 2017, in Rogers Townsend & Thomas, PC v. Peck, 419 S.C. 240, 797 S.E.2d 396 (February 22, 2017), the South Carolina Supreme Court expressly held that having a third-party proper- ty manager prepare and file liens for an Association is un- lawful, as such action consti- tutes the unauthorized prac- tice of law if done without the supervision of an attorney. But the Supreme Court left some questions unanswered in its decision. This article explores the legality of the frequent practice of method (3) above — the recording of liens by Associations in South Carolina without the supervi- sion of an attorney. In short, if your Association is preparing and in recording liens “in- house,” such as by having a Board member do it, the an- swer to the question posed in

CONTINUES ON PAGE 7. In South Carolina, our Supreme Court has a con- stitutional power to regulate and define the practice of law. Since the early 1990s, the S.C. Supreme Court specifi- cally encouraged “interested individuals” to bring declar- atory judgment actions to the Court in order to further clar- ify what conduct is defined as unauthorized practice of law. The Court has been defining and clarifying what exactly is the practice of law for over 100 years. Throughout this period, the Court on several the title of this article is most likely yes—your Association is most probably acting un- lawfully by engaging in un- authorized practice of law. Further and importantly, in so doing, such Associations are running the risk that any liens prepared and/or filed either by third party property managers or by Associations in-house could be deemed by a court as void and subject to being considered a legal nullity, meaning they do not operate as a valid lien upon the homeowner’s property if such a lien were to be chal- lenged by the homeowner or her/his attorney. UNAUTHORIZED PRACTICE OF LAW IN SOUTH CAROLINA

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