Home Owners Associations are almost always started by the developer. It provides them with the the legal ability to "control" the community while they are building and keep up the community standards, which assists them in making sales. Beyond that, the HOA is necessary for any community that has their own parks (or greenways) and amenities. Someone has to take care of them. Someone has to cut the grass, chlorine and clean the pool. Someone has to have the legal authority to keep residents from putting abandoned vehicles up on blocks in their front yard. HOA's are as much about protecting community home values as they are about maintaining all of the amenities and common properties.
Most developers have a boiler plate document they use called "Master Covenants and By-laws". They modify it to accomodate the new community and to ensure it adheres to state and local laws and ordinances. In South Carolina it is a public document. It had to be filed with the State of South Carolina and, effective in May 17, 2018, had to be filed with the Dorchester County Registrar of Deeds office.
Since the Master Covenants is a public document, we have included it here on this page for you to bring up and view. It can also be found in the First Services Residential Portal as "Ponds Master" or on the Document Repository page under this same "Ponds of Summerville" options.
When you read the Covenants, you will see the developer name "Greenwood" everywhere. This was the original developer and created the original Covenants and By-laws. Subsequent developers are under no obligation to go back and change that in the governing documents. Once buying out the development rights, Kolter Homes LLLP became the "Declarant" which is the legal entity in the documents.
The Master Covenants and By-Laws are two different documents, the smallest of which are the By-Laws. They are joined as one huge document for filing purposes since both must be registered with the State of South Carolina and now Dorchester County.
The By-Laws details the creation of the Home Owners Association (The Ponds Community Association) (PCA). Some of the contents are:
- Organization and purpose
- Member composition
- Voting Rights
- Required meetings
- Composition of the Board of Directors and their terms
- Nomination and election process of board members
- Duties of the officers of the PCA
- Accounting control and financial reports required
- Idemnification of the officers so they cannot be sued
- The creation of a Covenants Committee that can review and suggest changes to the Covenants. They also act as the Appeals Board for any violations of the governing documents. That means that residents who have been given violations notices can appeal to the Covenants Committee if they think they have been incorrectly sited.
The Master Covenants is the largest document of the two. It details out many things. Some of them are:
- Introduction of the PCA with the governing documents and definitions of terms
- General Plan of development
- Land use restrictions
- The creation of the Design Review Board (DRB) and the Design Guidelines. This allows the DRB to create the Community Standards in a Design Guidelines document for the control of all Landscaping and Architecture. It indicates what actions require DRB approval and what actions do not require DRB approval
- Restrictions on Residential Units
- Environmental Controls
- The definition of the Ponds Community Association, its limitations and duties, the definition of its power and authority, authorized services, insurance requirements and financial requirements
- Common Property use by residents and the authority of the PCA to pass rules and regulations controlling them
- The establishment of the Rules and Regulations that is to be used to reguate Open Spaces, Common Properties and Easements. This is not the actual Rules and Regulations document, just the authority of the Board of Directors and the PCA to create and enforce them.
- Easements necessary for water, sewer, electric, cable, fire control (hydrants), street lights, transformers, etc...
- How to go about making amendments
- Dispute resolution
We just minimized a ton of information into a few bullet points. You really must read the document to get a full picture of the contents of the Covenants. There are some key reading points for many residents. It may clear up some misunderstandings.
Some of the key clauses of the Covenants that interest residents the most
Section 3.2 Architecture and Landscaping - General
(a) Approval Required
No structure or thing shall be placed, erected or installed upon any Unit and improvements or other work (including staking, clearing, excavation, grading and other work, exterior alterations of existing improvements, or planting or removal of landscaping) shall take place within the Community, except in compliance with this Article III and the Design Guidelines. For purposes of this Article III, "structure" and "improvement" are to be broadly construed and shall include, without limitation, site work, landscaping, structures (habitable or non-habitable), telecommunications equipment, sports play and maintenance equipment, yard and decorative items and similar items placed or stored in any Unit in a manner or location visible from outside any existing structure.
The PCA has used this clause to allow the DRB to control almost anything you want to do the the exterior of your home or anything you build/place/erect outside of your home.
(b) Approval Not Required
No approval shall be required to repaint the exterior of a structure in accordance with the originally approved color scheme or to rebuild in accordance with the originally approved plans and specifications. Any Owner may remodel, paint or redecorate the interior of a structure on his or her Unit without approval except that modifications to the interior of screened porches, patios, and similar portions of a Unit visible from outside the structure shall be subject to approval.
Section 3.3 Design Review and Section 3.4 Guidelines and Procedures
These sections covers the Design Review definition, the creation of the Design Review Board (DRB), the creation of the Design Guidelines and the procedures to be taken for the submission and review of residents requests for approval. There is a lot of text in those sections.
Section 3.10 Specific Construction Related Restrictions
Contains many different restrictions. Item (f) allows the DRB to control Satellite Receivers, Solar Panels and Towers. Item (g) defines a "Grand Tree" of twenty-four (24) inches or greater diameter, protects them and requires approval of the DRB and possibly Dorchester County. It also establishes that a tree of siz (6) inches in diameter at a distance of four (4) feet above the ground can be removed without DRB approval. Item (h) provides the need for Screening to hide trash receptacles, gas meters, air conditioning equipment and similar outside functions.
Section 3.11 Miscellaneous Restrictions
These are restrictions apply to all Units in the Community.
Item (a) restricts animals, livestock, poultry of any kind from being raised, bred, kept or pastured. It also restricts dogs with a prior history of causing bodily injury established through insurance records.
Item (b) is a general clause for Unsightly Conditions covering any unclean, unsightly, or unkempt conditions.
Item (c) covers Offensive Activity.
Item (d) covers Signs. It forbids any commercial signs that has not been approved by the DRB.
Item (e) allows for restrictions on traffic flow, parking any other regulations on private roads (this includes alleys which will not belong to the Dorchester County).
Item (f) covers restrictions on types of Vehicles and Boats.
Item (g) covers Landscaping Maintenance.
Item (h) permits the PCA, or a company it designates, to remedy any condition that the owner refuses to correct. This means if you refuse to mow your lawn, the PCA can have a company come in and mow it and then charge you for it.
Item (j) covers all rental and lease restrictions for your house. This was put in to avoid short term rentals like Air B&B. It requires a minimum of three (3) months for rentals
Section 6 covers the Ponds Community Association. It defines the membership as one vote per Residential Unit (household).
Section 6.4 covers voting and explains how the developer maintains control over the PCA. There are two voting classes of membership. Each household has one (1) voting share of a Class A license. The developer holds the only Class B membership. The developer is officially known as "Declarant" in the documents. The Class "B" member may appoint all members of the Board of Directors. Their Class "B" membership shall expire at the earliest of:
- December 31, 2035; or
- when, in its discretion, Declarant so determines and declares in a recorded instrument (filing with the County); or
- when ninety-five (95%) percent of the Units planned for the Community per the Development Agreement plus any other Units developed by Declarant on Additional Property, have been conveyed to Class "A" members (house has been sold and a now has a resident).
Note: Here is the wording in Section 6.4 that allows the developer to outvote the residents:
Prior to the termination of the membership held by the Class "B" Member, the Class "B" Member shall have one (1) vote plus the number of votes held by the Class "A" Members as a group.
What does that mean? It means if there are 960 resident occupied homes in the Community, the developer holds 961 votes on the board. Before people see conspiracies in this, it is a common practice for developers to do this while building out the community. It allows them to make sure that residents cannot vote to allow every resident to park a vehicle up on blocks in their front yard, install statues of cartoon characters or some other action that would cause them not to be able to sell the houses being built in the community.
Section 10 covers the establishement of the Rules and Regulations. The Rules and Reguations themselves do not need to be enumerated in the Covenants and can be changed as often as the PCA wants to change them. Residents that do not follow the Rules and Regulations can be fined and have their owner rights to vote in the PCA suspended. They can also suspend any suspended residents from using Common Properties and Amenities. This document can be found in the First Service Residential Portal. It has recently undergone a "scrubbing" when it was deternined that the Rules and Regulations added that placed restrictions on Residential Units were not enforceable. Section 10.1 made it very clear that the Rules and Regulations were for the protection and enforcement of Easement Areas, Open Spaces and the Common Property. That clause covered everything except Residential Units. Any restrictions to Resiential Units was enumerated specifically in Section 3 or delegated to the DRB through the Design Review Guidelines.
You cannot receive a violation of the Rules & Regulations for anything pertaining to your residential property. That constitutes an unenforceable violation. This has already been supported by the HOA lawyers once it was brought to them in 2020. Violations must be either from the residential restrictions outlined in Section 3 of the Covenants or of the Design Guidelines. Rules & Regulations ONLY apply to Open Spaces, Common Properties (amenities) and Easements (which includes the street in front of your house and the public sidewalks).
Section 18 covers Dispute Resolution and Limitation on Litigation. In this section, residents agree to try to resolve issues through negotiatons first directly with the board or its assigned representative. Then, failing that, to submit the claim to an entity designated by the PCA or to an independant agency providing dispute resolution within Dorchester County or South Carolina. If a mediator comes to a settlement, any party that does not comply with the settlement can then be sued for compliance. Each party of any claim is responsible for any deiation costs or lawyers fees.
Some of the key clauses of the By-Laws that interest residents the most
Section 1.1 Organization and Purpose. Ponds Community Association ("Association" or "PCA") is a South Carolina not-for-profit corporation formed and organized for such purposes and with such powers as are set forth in its Articles of Incorporation. Such purposes include the administration of certain mixed use properties within the planned unit development located in Dorchester County, South Carolina, and kno»m as The Ponds ("Ponds" or "Community") in accordance with the Declaration of Covenants, Conditions and Resfrictions for The Ponds recorded by Greenwood Development Corporation, as Declarant, in the ROD Office for Dorchester County, South Carolina, as may be amended from time to time ("Declaration"). These By-Laws provide for the management and operation of the PCA.
POWERS AND DUTIES
Section 7.1 General Authority. The Board of Directors shall be responsible for conducting the affairs of the PCA and shall be authorized to exercise all rights and powers of the PCA and to do all acts and things on behalf of the PCA except those which the Governing Documents or South Carolina law specifically require to be done or approved by the membership. The Board of Directors shall have all powers necessary for the administration of the PCA's affairs.
Section 7.2 Authorized Services and/or Duties. Authorized services and/or duties of the Board of Directors shall include, without limitation:
(a) preparing and adopting, in accordance with the Declaration, an annual budget establishing each Owner's share of the PCA's expenses;
(b) levying and collecting such Assessments from the Owners as outlined in the Declaration;
(c) providing for the operation, care, upkeep, and maintenance of the Common Property and open space;
(d) designating, hiring, and dismissing personnel necessary to carry out the PCA's rights and responsibilities and where appropriate, providing for compensation of such personnel and for the purchase of equipment, supplies, and materials to be used by such personnel in the performance of their duties;
(e) opening bank accounts on behalf of the PCA and designating the signatories required;
(f) depositing all funds received on behalf of the PCA in a bank depository which it shall approve, and using such funds to operate the PCA; provided, any reserve funds may be deposited in depositories other than banks if the Board of Directors, in the exercise of its business judgment, determines it appropriate to do so;
(g) making and amending Rules and Regulations in accordance with the Declaration;
(h) making or contracting for the making of repairs, additions, and irnprovements to or alterations of the Common Property in accordance with the Declaration and these By-Laws;
(i) enforcing by legal means the provisions of the Goveming Documents, including the filing of liens for unpaid Assessments, and bringing any proceedings which may be instituted on behalf of or against the Owners conceming the PCA;
(j) obtaining and carrying property and liability insurance and fidelity bonds, as provided in the Declaration paving the cost thereof, and filing and adjusting clairns, as appropriate;
(k) paying the cost of all services rendered to the PCA;
keeping books with detailed accounts of the PCA's receipts and expenditures;
(m) making available to any prospective purchaser of a Unit, any Owner, and the holders, insurers, and guarantors of any mortgage on any Unit, current copies of the Governing Documents and all other books, records, and financial staternents of the PCA as required by these By-Laws;
(n) permitting utility suppliers to use portions of the Common Property reasonably necessary to the ongoing development or operation of the Ponds;
(o) indemnifying a director, officer or comrnittee member, or former director, officer or committee member of the PCA to the extent such indemnity is required by South Carolina law, the Articles of Incorporation or the Declaration; and
(p) providing services directly to the Owners which relate to the quality of life within the Community and which may include, by way of example, services for Owners relating to shopping, cultural events, health care, etc. and transportation for such services.
Note: Look closely at item (a). This actually gives the board of directors the authority to calculate and adjust the HOA dues based on the expected Operating Expenses of the PCA for the coming year. Kolter has never invoked this authority and chose to backfill the budget as well as cover any budget shortfalls. You can be sure that it has been for sales posturing having a community with lower and stable HOA dues.
Section 9.1 Committees. In addition to those committee specifically authorized elsewhere in the Governing Documents, the Board of Directors may appoint such committees as it deems appropriate to perform such tasks and to serve for such periods as the Board ofDirectors may designate by resolution. Each committee shall operate in accordance with the terms of its enabling resolution.
Note: All of the committees operate under the authorization of the board of directors. Section 9.2 allows the board to delegate many of their authorized duties to a professional management agent (which they did - FirstService Residential) and have that agent be the chairperson for those committees.
Section 9.2 Management Agent. The Board of Directors may employ for the PCA a professional management agent or agents at such compensation as the Board ofDirectors may establish, to perform such duties and services as the Board of Directors shall authorize. The Board of Directors may delegate such powers as are necessary to perform the manager ' s assigned duties, but shall not delegate policy-making or decision-making authority or ultimate responsibility for those duties set forth in Section 7.2.
The Board of Directors may delegate to one of its members the authority to act on the Board of Directors' behalf on all matters relating to the duties of the managing agent or manager, if any, which may arise between Board of Directors meetings.
Note: This is the clause that authorizes the board of directors to delegate many of their duties. That is how we have FirstService Residential as our HOA Management company.
Section 9.4 Right of Class "B" Member to Disapprove Actions. So long as the Class "B" membership exists, the Class "B" Member shall have a right to disapprove any action, policy or program of the PCA, the Board of Directors and any committee which, in the sole judgment of the Class "B" Member, would tend to impair rights of Declarant under the Declaration or these By-Laws, or interfere with development or construction of any portion ofThe Ponds, or diminish the level of services being provided by the PCA.
Note: This is the clause that allows Kolter (the sole Class "B" member) to unilaterally veto anything that the board of directors or one of the authorized committees produces. Since Kolter also maintains majority control on the board of directors, this would never happen.
Section 12.1 Covenants Committee. The Board of Directors may appoint a Covenants Committee consisting of at least three (3), and no more than seven (7), Members. Acting in accordance with the provisions of the Declaration and these By-Laws, the Covenants Committee, if established, shall be the hearing tribunal ofthe PCA and shall conduct all hearings held pursuant to this Article 12 of these By-Laws. The Board of Directors shall also serve as a Board of Appeals to handle appeals from decisions of the Covenants Committee in accordance with such procedures as the Board may establish.
Section 12.2 Notice and Hearing Procedures. The PCA shall have the power, as provided in the Declaration, to impose sanctions for any violation of the Governing Documents. To the extent specifically required by the Declaration, the Board of Directors and/or Covenants Committee, if applicable, shall comply with the following procedures prior to imposition of sanctions:
(a) Notice. The Board of Directors or the Covenants Committee, if applicable, shall serve the alleged violator with a written demand to cease and desist from the alleged violation that specifies:
the alleged violation;
(ii) the action required to abate the violation; and
(iii) a time period of not less than five (5) days during which the violation may be abated without further sanction, if such violation is a continuing one, or if the violation is not a continuing one, a statement that any further violation ofthe same provision of this Declaration, the By-Laws, or of the Rules and Regulations of the PCA may result in the imposition of sanctions after notice and hearing.
(b) Notice of Hearing. If the violation continues past the period allowed in the demand for abatement without penalty, or if the same violation subsequently occurs within twelve (12) months of such demand, the Board or Covenants Committee, if applicable, may serve such person with written notice of a hearing to be held by the Board or Covenants Committee, as applicable, in executive session. The notice shall contain:
the nature of the alleged violation;
(ii) the time and place of the hearing, which time shall be not less than ten (10) days from the giving of the notice;
an invitation to attend the hearing and produce any statement, evidence and witnesses on his/her behalf; and
(c) Hearing. The hearing shall be held by the Board or the Covenants Committee, as applicable, pursuant to the notice and shall afford the alleged violator a reasonable opportunity to be heard. Prior to the effectiveness of any sanction hereunder, proof of notice and the invitation to be heard shall be placed in the minutes of the meeting. Such proof shall be deemed adequate if a copy of the notice together with a statement of the date and manner of delivery is entered by the officer, director or other individual who delivered such notice. The notice requirement shall be deemed satisfied if an alleged violator appears at the meeting. The minutes of the meeting shall contain a written staternent of the results of the hearing and the sanction imposed, if any.
Section 12.3 Right of Appeal. If a Covenants Committee is established, a violator shall have the right to appeal any adverse decision by the Covenants Cornmittee to the Board of Directors in accordance with procedures that the Board may establish. To exercise this right, a written notice ofappeal must be received by the PCA's managing agent, President, or Secretary within ten (10) days after receipt of notice of the adverse decision of the Covenants Committee. The Board may accept such written statements as it deems appropriate to assist it, but shall not be required to conduct the hearing.
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