Every homeowners association (HOA) board quickly becomes familiar with the concept and implications of a quorum requirement when they attempt to hold a meeting or vote of the members. For those unfamiliar, a “quorum” can generally be defined as the minimum number of members who must be present for the meeting to be held and business conducted thereat. Unfortunately, we have seen some HOAs fail to meet their quorum requirements and be unable to have regular meetings or elections as a result. This can be a real hurdle to effective administration of the HOA, and we know HOA board members can vouch as to how much valuable time can be spent just trying to meet a lofty quorum requirement. Naturally, we sometimes receive requests from HOAs to lower their quorum requirement. This article sets forth some introductory information as to how an HOA might be able to lower their quorum requirement, as well as some factors to keep in mind when doing so. [Please note that this article discusses quorum requirements in the context of HOAs that are not horizontal property regimes, which would involve a different analysis to be discussed in a later article.]
HOAs typically have their quorum requirement specified in their bylaws, which is generally the document providing for the governance of the HOA.
That said, if an HOA’s governing documents do not specify the quorum requirement, and the HOA is part of the overwhelming majority of HOAs in South Carolina which are nonprofit corporations, then the South Carolina Nonprofit Corporation Act (the “Act”) provides for a “default” quorum requirement of “ten percent of the votes entitled to be cast on a matter.”[1] To be clear, the Act’s “ten percent” provision only applies if the governing documents of the HOA do not specify otherwise.
HOAs who find themselves with a difficult quorum requirement in their bylaws might consider pursuing an amendment to the bylaws to provide for a lower quorum requirement.
To do this, the HOA must first review their bylaws to determine what is required to amend the bylaws. In most cases, the bylaws will provide for a homeowner vote of some percentage to amend the bylaws. If and when an HOA does hold a vote of the members to amend the bylaws to provide for a lower quorum requirement, it is very important that the preexisting, greater quorum requirement be met with that vote.[2] While this can be a hurdle, at least future actions would be subject to the lower quorum requirement if the amendment vote succeeds.
In light of the frequent difficulties in meeting quorum, it is unsurprising that many HOA boards would take the position of, “the lower the quorum, the better.”
While it is certainly beneficial to have an attainable quorum requirement, there may also be some practical danger of setting a quorum too low when lowering a quorum requirement. The HOA may find that setting the quorum requirement too low could allow for major decisions to be adopted upon the vote of a small minority of members who do not represent the opinion of the community at large but just so happened to be the only members at a given meeting. The most ideal quorum requirement likely varies from community to community, and there is not a hardline “bare minimum” quorum requirement set under South Carolina law, perhaps the presence of ten percent of the votes entitled to be cast on a matter in person or by proxy could be interpreted to serve as a reasonable “floor” when considering where to set a lowered quorum requirement in light of the South Carolina Nonprofit Corporation Act’s default quorum provision discussed above.
On a practical note, prior to endeavoring to amend the HOA bylaws to lower a quorum requirement, an HOA board may want to ensure they are doing all they can, within reason, to notify members of meetings and votes and encouraging participation. Nevertheless, sometimes an HOA’s quorum requirement is just too unrealistic for any number of reasons, and the HOA may benefit from amending their documents accordingly, if they can make at least one push to achieve quorum to approve that amendment.
This article is not intended to be an exhaustive discussion of applicable law regarding lowering quorum requirements 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.
Ashley Green
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 § 33-31-722(a).
[2] S.C. Code § 33-31-722(c).