We have been publishing a series of articles regarding the record inspection rights belonging to members of South Carolina homeowners associations (HOAs), to include an introductory overview article and a more recent article regarding accounting records. Another item frequently requested for inspection by HOA members is the membership list. While those who have read our prior articles will note some familiar refrains regarding record inspection rights, there are also some provisions specifically applicable to membership lists that South Carolina HOAs must follow.
As 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 South Carolina’s Nonprofit Corporation Act (the “Act”).[1]
First, the Act sets forth specific provisions as to the compilation of a members list with regard to meetings.
Specifically, once a record date for a notice of a meeting has been fixed, an HOA is required to prepare an alphabetical list of the names of all of its members who are entitled to notice of the meeting, and the list must show the address and number of votes each member is entitled to vote at the meeting.[2] In the event that there are members who are entitled to vote at a meeting but not entitled to notice of the meeting, there shall be a list of them as well.[3] While reference should be made to the Act at S.C. Code Ann. 33-31-720 as well as the HOA’s governing documents for a complete description of necessary inclusions on the membership list, these provisions establish a requirement that an HOA compile a membership list.
As to inspection of the list with regard to meetings, the Act requires that the list of members must be available for inspection “by any member for the purpose of communication with other members concerning the meeting, beginning the day after notice is given of the meeting for which the list was prepared and continuing through the meeting.”[4] That said, the same Section regarding the membership list and meetings provides that a member may inspect and copy the list only if three factors are satisfied: “(i) their demand is made in good faith and for a proper purpose; (ii) they describe with reasonable particularity their purpose; and (iii) the list is directly connected with their purpose.”[5] Of course “communication with other members concerning the meeting” can safely be assumed to be a “proper purpose” under these provisions. We do note that perhaps there exists an argument that those three factors must only be satisfied if the member wishes to copy the list. However, the Official Comment to the Act, which a court would foreseeably find persuasive, provides that the right to inspect for the meeting is still subject to those factors which are restated in other Sections.[6] Therefore, it is reasonable to take the position that those factors must be met to inspect the membership list even when connected to a meeting, but inspection of the membership list should not be denied when the purpose enumerated is for communication with other members concerning the meeting.
In addition to the provisions specifically applicable to meetings, the Act also sets forth provisions for inspection of the membership list in other contexts.
The membership list is among those records which the Act requires to be made for inspection pursuant to written notice at least five business days before the date on which the member wishes to inspect them but only if, again, (i) the demand to inspect is made in good faith and for a proper purpose; (ii) the member describes with reasonable particularity the purpose and the records the member desires to inspect; and (iii) the records are directly connected with this purpose.[7] Now, “proper purpose” is a common point of contention. However, it is important to note that a “proper purpose” does not mean a purpose that the HOA Board, or even its attorney, smiles upon. A member may demand to the membership list for the purpose of reaching out to fellow members about removing the current board, and although the HOA board may disagree with the member’s opinion of the board, the enumerated purpose would likely be construed by a court to be a “proper purpose” because it is a part of lawful participation in their HOA.
Readers of our prior articles regarding record inspection are no strangers to those three factors for inspection of certain records. However, the Act singles out the membership list for some additional limiting language. Specifically, the Act provides that, “Without the consent of the board, a membership list or any part of a membership list may not be obtained or used by a person for any purpose unrelated to a member’s interest as a member.”[8] The same Section then proceeds to provide some examples of things the list cannot be used for without consent of the Board. Such prohibited uses include, but are not limited to, (1) soliciting money or property unless the money or property will be used solely to solicit votes of the members in an election to be held by the corporation; (2) any commercial purpose; or (3) for selling or purchasing by any person.[9] While the Act leaves open the possibility for the board to approve such uses, it would be prudent for an HOA board to consider whether allowing the membership list to be used for such a purpose would be in the best interest of the HOA pursuant to the board’s fiduciary duties.
As with HOA member inspection rights of other materials, an HOA board must also be aware of the provisions of their HOA’s own bylaws and other governing documents, as these documents may provide even broader membership list obligations and inspection rights than the Act. Also, it is prudent to consult with the HOA’s legal counsel with questions regarding the compilation or production of the membership list as they can advise based on their knowledge of the law and the specific provisions of your community.
This article is not intended to be an exhaustive discussion of applicable law regarding HOA membership lists, 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. § 33-31-720(a).
[3] Id.
[4] S.C. Code Ann. § 33-31-720(b).
[5] S.C. Code Ann. § 33-31-720(g).
[6] S.C. Code Ann. § 33-31-720 Official Comment (citing S.C. Code § 33-31-1602; -1605).
[7] S.C. Code Ann. § 33-31-1602(b).
[8] S.C. Code Ann. § 33-31-1605.
[9] Id.