A fundamental, yet often misunderstood, feature of horizontal property regimes (condominiums) in South Carolina is the manner in which the unit owners are to be assessed for their share of the common expenses. While there are many legal principles which apply to both horizontal property regimes and single-family home communities, the South Carolina law specific to horizontal property regimes and the method for their assessments differs substantially from how most single-family home communities are assessed. While this article is not intended to, nor could it, serve as a thorough summary of all issues pertaining to common expenses for horizontal property regimes, we hope this serves as a helpful introduction to the particular method of assessments for horizontal property regimes, even for horizontal property regimes that have not historically been assessing in this manner.
In South Carolina, horizontal property regimes are subject to the South Carolina Horizontal Property Act (the “Act”).[1]
The Act sets forth specific provisions as to the assessment of common expenses. While the Act’s provisions are routinely reiterated, and sometimes word-for-word, in condominium master deeds, the Act itself prescribes as follows: “The co-owners of the apartments are bound to contribute pro rata in the percentages computed according to Section 27-31-60 toward the common expenses of administration and of maintenance repair of the general common elements and, in the proper case, of the limited common elements of the property and toward any other expense lawfully agreed upon.”[2] In other words, the owner’s responsibility for assessments is proportional to their assigned percentage interest in the property. Looking to the referenced Section 27-31-60 of the Act, that section provides for each unit to have an assigned percentage interest in relation to the whole property, and these percentages cannot be altered without the acquiescence of the co-owners representing all the units in the regime.[3] The percentages to be expressed in the condominium’s master deed are very often found in a chart/list in an exhibit to the master deed.[4] These percentage values are to be used to determine that unit’s pro rata share of the common expenses.
As a simplified example for how this may work in practice: Imagine a horizontal property regime was levying annual assessments for common expenses in the total amount of $100,000.00 for the whole regime. If Unit 1 had a percentage value of 2% assigned by the master deed, then that unit’s pro rata share would be $2,000.00. At the same time, if Unit 2 in the same regime had a percentage value of 3% assigned to it by the master deed, its pro rata share would be $3,000.00, and the other units in the regime would be assessed accordingly pursuant to their own percentages assigned by the master deed.
As noted above, it is not uncommon for a horizontal property regime to realize that it has not been historically assessing this way.
One reason could be that it is a concept unique to horizontal property regimes. Also, it can seem counterintuitive, particularly when there may not be an obvious differentiation in the actual composition of the units or the “real-world” values of the units, but yet they are assigned different values under the master deed.[5] Nevertheless, it is legally appropriate to assess the units pro rata in accordance with the percentages set forth in the master deed as required by the Horizontal Property Act. To that point, even if a horizontal property regime has not historically assessed in this manner, it would be prudent to assess in accordance with the Act going forward. It is also important to review your community’s own governing documents for potentially applicable provisions.
This article is not intended to be an exhaustive discussion of common expense assessments for horizontal property regimes 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.
Lir Patrick Derieg
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. § 27-31-10 et seq.
[2] S.C. Code Ann. § 27-31-190 (emphasis added).
[3] S.C. Code Ann. § 27-31-60(a) (emphasis added).
[4] S.C. Code Ann. § 27-31-100(d).
[5] In fact, the Act at S.C. Code Ann. § 27-31-60(A) provides that the assigned percentage value shall not prevent each co-owner from fixing a different circumstantial value to the apartment in all types of acts and contracts.