As remote communication has become a regular feature of professional and personal life, many homeowners associations (HOAs) have inquired as to whether they can hold their membership meetings remotely, or at least “hybrid” remotely, rather than the traditional means of physical attendance. There are several reasons why an HOA may want to hold its membership meetings remotely. After all, it is frequently challenging to secure the in-person attendance of busy homeowners, making it difficult to obtain a quorum. Perhaps a community is not predominantly owner-occupied, and many of its owners live far away from where an in-person meeting would be held, or perhaps a community struggles to find a suitable venue for the size of its meetings. Whatever the reasons are, remote HOA membership meetings have been a hot topic and are something we have been seeing more frequently. For South Carolina HOAs, this is likely in large part due to a 2023 amendment to the South Carolina Nonprofit Corporation Act[1] (the “Act”) which simplified the legal question of remote meetings for many HOAs and serves as the topic of this article.
As we have noted in prior articles, the overwhelming majority of HOAs in South Carolina are nonprofit corporations. Accordingly, this article applies to those South Carolina HOAs that are nonprofit corporations and therefore subject to the Act and its provisions regarding remote meetings.
Of course, many HOAs sought to hold their membership meetings remotely during the pandemic.
However, prior to 2023, the authority to hold membership meetings remotely was unclear unless the HOA’s governing documents expressly and specifically allowed meetings to be held that way. For instance, the Act expressly provided that, unless the corporation’s articles or bylaws provided otherwise, board members could attend Board meetings by any means of communication by which they could all hear each other simultaneously.[2] However, the Act contained no such corresponding provision for members meetings, and principles of statutory construction arguably led to the conclusion that the inclusion of such a provision for Board meetings with the absence of such a provision for membership meetings indicated that membership meetings could not be held in such a manner unless expressly permitted by the corporation’s governing documents. That changed in 2023.
Effective May 19, 2023, the Act was amended to allow members not physically present at an annual or regular membership meeting to participate, vote, and be deemed present in person by using remote communication, whether the meeting is to be held at a designated place or solely by remote communication.[3] This allows many HOAs whose governing documents may have been silent on this subject to hold meetings solely by remote communication, or even a hybrid format where there is an in-person venue for people to attend, but with the option of participating remotely. The Act does provide that this is only if authorized by the corporation’s board, and such participation is subject to the guidelines and procedures that the board may adopt.[4] Therefore, the Act does not preclude a board from determining that remote communication for meetings is not best for their HOA and holding meetings strictly “in-person.” Nevertheless, many HOAs like the flexibility afforded by remote communication and find it particularly helpful in meeting quorum.
One potential “grey area” might be found where an HOA’s governing documents expressly prohibit member meetings by remote technology.
While it may be argued that the Act would supersede such a prohibition in the HOA’s governing documents, it is quite possible that a court would find that, since the board has the discretion to prohibit the use of remote communication under the Act, the board should prohibit it when the documents prohibit it because the board has a duty to administer its community in accordance with their governing documents. Relatively speaking, the 2023 Amendment is new law, so time will tell if a court will be faced with this question and how it might be resolved.
Boards should always consult with their own governing documents and carefully consider whether holding membership meetings with remote communication is right for their community under their specific circumstances, but the 2023 amendment to the Act certainly provides a more comfortable legal basis for many HOAs who decide they would like to make use of this increasingly common technology to facilitate their membership meetings.
This article is not intended to be an exhaustive discussion of remote communication and membership meetings, nor any guarantee of the outcome of any litigation regarding the same. Our attorneys at McCabe, Trotter & Beverly, P.C. are experienced and well-equipped to answer questions you may have regarding this topic. Please contact us at 803–724–5000 for further information.
Torin Asbill
McCabe, Trotter & Beverly, P.C. blogs and other content are for educational and informational purposes only. This is not legal advice and does not create an attorney/client relationship between McCabe, Trotter & Beverly, P.C. and readers. Readers should consult an attorney to understand how this information relates to their personal situation and circumstances. You should not use McCabe, Trotter & Beverly, P.C. blogs or content as a substitute for legal advice from a licensed attorney.
[1] S.C. Code Ann. § 33-31-101 et seq.
[2] S.C. Code Ann. § 33-31-820(c) (emphasis added).
[3] S.C. Code Ann. § 33-31-701(g).
[4] Id.