Ocean Villas HOA Risk Assessment: Workable with rules

02 The five questions

What the documents decide
before your first guest books.

Five dots is the best answer for an owner who wants to run the unit themselves. One dot is a red flag. Open “What the documents say” under each for the exact words.

Can you rent it your way?

Favorable

Whether the deed and rules let you rent short-term on your own terms: no requirement to use the on-site program, no minimum stay that kills weekend bookings, and no rule against saying where the condo is.

Meets every 5-point test on paper (leasing to tenants and lessees is a deed-level right, no minimum stay, no registration, no on-site program or rental-program budget line, no listing or disclaimer rules, and rules cannot override the deed), but held to 4 because the 6-person occupancy cap carries immediate eviction, guests may not bring pets, the rental-office clause contemplating an HOA-employed rental company is only partly legible even in the second scan, and the Manager can add binding rules with no owner vote.

Short-term rentalsAllowed

Must use on-site programNo

Owner may rent it personallyYes

Off-site manager allowedYes

Owner-use limitsNone stated. Apartments are restricted to residential use by the co-owner, immediate family, guests, tenants, lessees, licensees and invitees (Master Deed Art. XIII(1)); no document sets a minimum rental term, a cap on rental nights, an owner-use requirement or a lease-approval step. The only occupancy limit is the 2006 Rule 25 cap of 6 overnight occupants (4 adults and 2 children or a combination), enforced by immediate eviction. Rule 32 limits 'business operations' to the ground floor, which reads as a bar on commercial use of apartments rather than on leasing, since the same documents expressly contemplate tenants and rentals. The 2020 budget does not touch rentals (no rental-registration fee, guest fee or rental-program line).

Registrationunstated. No guest, lease, tenant or manager registration with the Association or Manager appears in any document. The only standing requirements are that the Management Company hold a pass key to every unit (Rules 30), that the owner deposit a key with the Association if required (Master Deed Art. XVI) and that a copy of any owner HO6 policy be filed (By-Laws Sec. 10(b)(v); Rules 31).

Advertising rulesNo sign, advertisement, notice or lettering may be displayed on the unit's limited common area, the common areas or the property without the Association's written permission (Rules 18), and no 'For Sale' signs may be visible from common elements (Master Deed Art. XIII 'For Sale' sign clause, page 9). Nothing restricts online listings, use of the Ocean Villas name or photographs.

Disclaimer in your listingNot required

Vote to change rental rulesThe residential/leasing use clause sits in the Master Deed, which can be amended only with approval of co-owners holding at least 66% of the apartments and 66% of the common-element interest AND the holders of first mortgages on at least 66% of the apartments and 66% of the interest (Master Deed Art. XXVI). By-Laws change with the vote of members owning 51% of the total value of the property at a joint special meeting (By-Laws Sec. 9(c)). Rules and Regulations can be added by the Manager (while the Management Agreement is in effect) or the Board 'without consent of the Association and its members' (Rules 23), so operational rental rules can tighten without any owner vote.

What the documents say (14)

“All Apartments are hereby restricted to residential use only by the Co-Owner or Co-Owners thereof, their immediate families, guests, tenants, lessees, licensees and invitees.”Master Deed, Article XIII(1), page 8

“The General Common Elements shall be, and the same are hereby declared to be subject to a perpetual non-exclusive easement in favor of all of the Co-Owners of Apartments in the Regime for their use and the use of their immediate families, tenants, lessees, licensees, guests, and invitees, for all proper and normal purposes, and for the furnishing of services and facilities for which the same are reasonably intended, for the enjoyment of Owners of Apartments.”Master Deed, Article IX, page 7

“[opening of clause illegible in OCR] ... rental company employed by the Homeowners Association, or time sharing company employed by the Developer for the purpose of marketing and sales of apartments owned by the Developer. Such right by the Developer shall terminate upon the sale of the last unit owned by the Developer. Sale as herein defined shall refer to the initial conveyance by the Developer to a Grantee owner.”Master Deed (earlier copy, 12092f99-CCAR_738501.txt), Article XIII, rental-office clause (follows (2); sub-number illegible in OCR), page 9

“GG) ue Developer herein opecitisally reserves the right to soiat >) ¥ : meet, SeatalOfttov, ms chow aft cosiguatet on the Beg! ae, wit Featal company esployed by the Nomecwsers Apeceiation, or tine sharing oom. ad paay employed by the Developer for the purpose cf marketing and sales of spert- ments omed by the Developer. Such right by the Developer shall terainate wpoa the sale of the last unit omed by the Developer.”Master Deed (second scan, 707f9f58-1_Master_Deed_MLS_2528722.txt); OCR as printed, reads as: '(3) The Developer herein specifically reserves the right to joint [use of the] rental office, as shown and designated on the Regime [Plans], with [a] rental company employed by the Homeowners Association, or time sharing company employed by the Developer ...', Article XIII, rental-office clause (printed as 'GG)' between (2) and the unsold-units clause), page 9

“The Developer further specifically reserves the right to the use of any of the unsold units owned by the Developer for use as a sales office, model, managerial/rental office or other professional office usage. The right of the Developer to such use shall terminate upon the sale of the last unit owned by the Developer. The Developer further specifically reserves the right for such signage as Developer may deem necessary for the sale and/or rent of any of the unsold units owned by Developer.”Master Deed, Article XIII, unsold-units clause (OCR prints '(3)'; sub-paragraph numbering after (2) is garbled in both scans), page 9

“The Developer herein specifically reserves the right to submit certain Apartments, owned by Developer, to the provisions of the South Carolina Vacation Time Sharing Plan Act, Title 27, Chapter 32, Code of Laws of South Carolina.”Master Deed, Article XIII(2), page 9

“Included in the General Common Elements are the rental office, the elevator, stairways, steps and railings, parking areas, swimming pool, jacuzzi, and related facilities and landscaping.”Master Deed, Exhibit B, page 20

“Owners will be responsible for any clean-up due to rentals, contractors or etc. in the common areas.”Rules & Regulations June 2006, Rule 7, page 1

“Maximum overnight occupancy of a Unit shall be limited as follows. The units are designed for 4 adults and 2 children or a combination there of with a maximum of 6 people. Any disregard for this ruling will result in immediate eviction.”Rules & Regulations June 2006, Rule 25, page 2

“Condos are for residential use only. No business operations above the ground floor are permitted. Refer to Page 8, Section 13 of the Master Deed.”Rules & Regulations June 2006, Rule 32, page 2

“No sign, advertisement, notice or other lettering shall be exhibited, displayed, inscribed, painted or affixed in, on or upon any part of the Unit's limited common area, common areas, or subject property by any Owner or occupant without written permission of the Association.”Rules & Regulations June 2006, Rule 18, page 2

“The Manager, as long as the Management Agreement remains in effect and thereafter, the Board of Directors of the Association, reserves the right to make additional Rules and Regulations as may be required from time to time without consent of the Association and its members. These additional Rules and Regulations shall be binding as all other Rules and Regulations previously adopted.”Rules & Regulations June 2006, Rule 23, page 2

“Subject to the provisions of Article XI of this Master Deed, and subject to any applicable laws requiring a greater majority, neither this Master Deed nor any of its provisions shall be revoked or amended without the approval of the Co-Owners owning at least sixty-six (66%) percent of the Apartments and at least sixty-six (66%) percent of the total interest in the Common Elements and the record holders of first mortgages affecting at least sixty-six (66%) percent of the Apartments and at least sixty-six (66%) percent of the total interest in the Common Elements, except that the system of administration as set forth in the Certificate of Incorporation and By-Laws of the Association may be amended and modified from time to time in accordance with the provisions of the Act and other applicable law, the Certificate of Incorporation, and By-Laws of the Association.”Master Deed, Article XXVI, page 13

“(b) All present or future Co-Owners, tenants, future tenants, or their employees, or any other person that might use the Regime or any of the facilities thereof in any manner, are subject to the regulations set forth in these By-Laws and in said Certificate of Incorporation and Master Deed (and any anendments thereto).”By-Laws, Section 1(b), page 18

Will your guests be treated like guests?

Favorable

Whether a guest who booked through you gets the same resort as a guest who booked through the front desk: the same pools, parking, wristbands and check-in, or a second-class version of them.

Tenants and guests hold the same perpetual easement over the pool, jacuzzi, pool building, grills, parking, elevator and community room with no wristbands, passes or fees (the 2020 budget has no such revenue line) and bulk cable is included, which beats the 3-point 'owner handles passes' case, but there is no front desk, check-in, linen or housekeeping service, guests cannot bring pets and parking is first-come only, so it falls short of 5.

Amenities for your guestsSame as program guests

Wristbands & parking passesNo wristbands, guest passes, parking permits or fees appear in any document, and the 2020 budget has no parking, pass or guest-fee revenue line. Parking is first-come with no reserved spaces; boats, motorcycles, trailers, mobile homes and recreational vehicles may not be stored or parked on the property (Rules 13). The Association retains the right to make rules granting exclusive use of parking spaces (Master Deed Art. IX, page 8). A 'Security Contract' of $3,525 is budgeted for 2020 but what it covers is unstated.

Check-inowner handles. No front desk, check-in procedure or key hand-off service is described; the Manager's office collects dues and keeps a pass key for pest control and the fire marshal (Rules 22, 30).

TrashRefuse and bagged garbage go only to the dumpster in the parking lot; boxes may not be left in hallways; nothing may be stored on balconies or entry ways; owners pay for any common-area clean-up caused by their rentals (Rules 3, 6, 7). Trash removal ($4,300 in 2020) is a common expense.

ElevatorsOne elevator, a General Common Element (Master Deed Exhibit B, page 20), with a $13,000 maintenance line in the 2020 budget. No service-elevator, move-in or vendor-hour restriction is stated.

Housekeeping & linenNone provided by the Association. Coin-operated washers and dryers are on the ground floor and change/supplies are not available (Rules 9); the 2020 budget books $2,000 of laundry income to the Association. Linens, towels and laundry may not be hung from balconies or windows (Rules 3; Master Deed Art. XIII towels/sheets clause, page 9). Bulk cable TV service ($18,420) is a common expense, so guests get cable without the owner contracting for it.

What the documents say (10)

“Parking spaces are provided on a first come basis, and there are no reserved spaces. No owner shall store or park boats, motorcycles, trailers, mobile homes, recreational vehicles and the like on the subject property.”Rules & Regulations June 2006, Rule 13, page 1

“Guests are not permitted to have pets on the premises. Owners are not permitted to have more than 2 pets and the pets must be on a leash when outside the owner's unit. Owners are required to clean up after their pets.”Rules & Regulations June 2006, Rule 26, page 2

“Refuse and bagged garbage shall be deposited only in the area provided therefore. Please do not place boxes or similar items in the hallways as they block passage and create health problems. Use dumpster in parking lot.”Rules & Regulations June 2006, Rule 6, page 1

“Coin operated washers and dryers are located on the ground floor. Change and laundry supplies are not available; please bring those items with you.”Rules & Regulations June 2006, Rule 9, page 1

“Private grills are not to be used on the premises. Grills are available by the pool. Grates must be cleaned after use and returned. Please ensure you turn off the gas supply after using the grill.”Rules & Regulations June 2006, Rule 12, page 1

“No bottles, glasses or breakable items allowed in pool deck area.”Rules & Regulations June 2006, Rule 10, page 1

“The community room on the ground floor may be used during the hours of 9 am to 11 pm. Rules are posted on community room door.”Rules & Regulations June 2006, Rule 27, page 2

“Rules and Regulations as to use of the pool and facilities shall be posted as specified in the By-Laws of Ocean Villas Homeowners Association, Inc. and each Owner shall observe all Rules and Regulations relating thereof.”Rules & Regulations June 2006, Rule 24, page 2

“The Regine Plane show, in detail, the location of isprovesents each 28 the elevator, hallways, driveways, walkways, parking areas, sviaaing pool, §mounszi, pool building and greenery. All of the taprovements described in this paragraph are General Comson Elements.”Master Deed (second scan; OCR as printed: 'the elevator, hallways, driveways, walkways, parking areas, swimming pool, jacuzzi, pool building and greenery'), Exhibit B, page 20

“Cable TV Service 18,420$”Ocean Villas 2020 Approved Budget, Utilities, page 1

How much work lands on you?

Favorable

What the rules make the owner personally responsible for: a local contact who answers in minutes, keys and passes, trash, fines for guest behaviour, vendor hours and elevators.

Close to normal hosting: no local-contact, response-time, service-elevator or fine-schedule rules; the owner only keeps a pass key with the Management Company and a key on deposit if asked, files an HO6 copy, maintains in-unit systems that the deed treats as personal property, carries in-unit liability, pays rental clean-up costs and answers for lessees' rule compliance, which is lighter than the 3-point case.

Locks & keysThe owner must deposit a key to the apartment under the Association's control if the Association requires it, for immediate emergency entry (Master Deed Art. XVI, page 9). The Management Company must retain a pass key to all units for the fire marshal and monthly pest control, and every unit must have a working smoke detector (Rules 30). Non-emergency entry for common-element maintenance is at reasonable times with reasonable advance notice (Master Deed Art. XVII, page 10).

FinesNo fine schedule exists. Owners pay for any common-area clean-up caused by their rentals or contractors (Rules 7); the Board or Manager may clear, repair or refurbish a cluttered balcony, patio or hallway at the owner's expense (Rules 14); the owner is liable for damage caused by family, guests, employees, agents or lessees to the extent not covered by Association insurance, including any resulting insurance-rate increase (Master Deed Art. XXVII(B)); the Association recovers its attorney's fees when it prevails in an enforcement action and the owner never does (Master Deed Art. XXVII(C); Rules 29); over-occupancy brings immediate eviction of the occupants (Rules 25).

Contractors & vendorsunstated. No service-elevator, contractor-hours or vendor-registration rules. Owners may not direct, supervise or send off the Manager's or Association's employees (Rules 15); complaints about common areas must be in writing to the Management Company while the Management Agreement is in effect (Rules 19); no external wiring, antennas or equipment without written Board consent (Rules 17; Master Deed Art. XVIII); no structural modifications, balcony enclosures, awnings or storm panels without the Association's written consent (Master Deed Art. XVIII).

AlsoThe owner maintains, repairs and replaces everything inside the apartment including air conditioning and heating equipment wherever located, water heaters, stoves, refrigerators, fans, other appliances, doors and screen doors, windows and glass, and the plumbing, wiring and vents serving only that apartment (Master Deed Art. V(3), XX); Exhibit B adds that in-unit appliances, HVAC units and water heaters are the owner's personal property, not common elements (page 20). Window coverings visible from outside must be white-lined (Master Deed Art. XIII window-covering clause, page 9). The owner, not the Association, is liable for accidents inside the apartment to the same degree a house owner would be, so in-unit liability cover for guests is the owner's job (Master Deed Art. XXII, page 11). Any owner hazard policy must be copied to the Board within 30 days and the 2006 Rules ask for an HO6 policy copy on file with the Management Company (By-Laws Sec. 10(b)(v); Rules 31). Dues are paid at the Manager's office by check to Ocean Villas HOA (Rules 22). Tenants and anyone who occupies or rents an apartment are bound by the Master Deed, By-Laws and Rules by the mere act of occupancy (Master Deed Art. XXVIII, page 14; By-Laws Sec. 1(b), page 18), and the owner must use best efforts to see that lessees and guests observe the Rules (Rules preamble, page 1). All laws, zoning ordinances and regulations of governmental authorities must be observed in every apartment (Master Deed Art. XV, page 9), so city short-term-rental licensing is an HOA covenant too.

What the documents say (13)

“In case of any emergency originating in or threatening any Apartment, regardless of whether the Co-Owner is present at the time of such emergency, the Board of Directors of Association or any other person or firm authorized by it, or the building superintendent or managing agent, shall have the right to enter such Apartment for the purpose of remedying or abating the cause of such emergency, and such right of entry shall be immediate, and to facilitate entry in the event of any such emergency, the Co-Owner of each Apartment if required by the Association, shall deposit under the control of the Association a key to such Apartment.”Master Deed, Article XVI, page 9

“The Management Company must retain a pass key to all Units for the fire marshal and monthly pest control service. Please ensure they have one. All units must have a working smoke detector.”Rules & Regulations June 2006, Rule 30, page 2

“If an owner allows the patio, hallway or balcony appurtenant to the Unit he is occupying to become cluttered or unsightly in any manner, he shall be required to correct such conditions immediately. If he fails to do so, then the Board of Directors or Manager may correct such condition (including the removal of any unsightly items) and/or repair or refurbish the patio or balcony at the Owner's expense.”Rules & Regulations June 2006, Rule 14, page 1

“The Co-Owner or Co-Owners of each Apartment shall be liable for the expense of any maintenance, repair or replacement rendered necessary by his act, neglect or carelessness, or by that of any member of his family or his or their guests, employees, agents or lessees, but only to the extent that such expense is not met by the proceeds of insurance carried by Association.”Master Deed, Article XXVII(B), page 14

“The Association shall be entitled to recover attorney's fees in the event of an action brought against an Owner to enforce these Rules and Regulations.”Rules & Regulations June 2006, Rule 29, page 2

“Employees of the Association or Manager shall not be sent off the premises by any Owner at any time for any purpose. No owner or resident shall direct, supervise or in any manner attempt to assert any control over the employees of the Manager of the Association.”Rules & Regulations June 2006, Rule 15, page 2

“The Co-Owner of each Apartment shall be liable and responsible for the maintenance, repair and replacement, as the case may be, of all air conditioning and heating equipment (wherever located), stoves, refrigerators, fans, or other appliances or equipment, including any fixtures and/or their connections required to provide water, light, power, telephone, sewage and sanitary service to his Apartment and which may now or hereafter be situated in his apartment.”Master Deed, Article XX, page 10

“All kitohen and other electrical eppliances, air conditioning and heating unite and hot water heaters located in each Apartment ere neither General Comson Eleweats nor Limited Common Elemeats, but are the personal pro- perty of each Apartaest owner(s).”Master Deed (second scan; OCR as printed), Exhibit B, page 20

“The Co-Ouner of an Apartuent shall have no personal liability foe any deeages caused by the Association or in Connection with the use of the Common Elements. the Co-Ouner of an Apartaent shall be liable for injuries or denage Pesulting frog af acci- dent in his own Apertaent, rooltent eo eeat td degree that the Coctweer oe!T house would be liable for an accident occurring within the house.”Master Deed (second scan; OCR as printed, reads as: 'The Co-Owner of an Apartment shall have no personal liability for any damages caused by the Association or in connection with the use of the Common Elements. The Co-Owner of an Apartment shall be liable for injuries or damage resulting from an accident in his own Apartment ... [to the same] degree that the [owner of a] house would be liable for an accident occurring within the house.'), Article XXII, page 11

“Any owner who obtains hazard insurance on his Apartment for his own benefit shall within thirty (30) days of obtaining the same deliver to the Board of Directors a copy of the policy of insurance.”By-Laws, Section 10(b)(v), page 27

“The Ocean Villas Board of Directors recommends all owners have an HO6 Policy on their condo. If you secure an HO6 policy for your unit, the Master Deed requires a copy be on file with the Management Company. Please refer to Page 34, Section (v) of the By-Laws.”Rules & Regulations June 2006, Rule 31, page 2

“All present or future Co-Owners, tenants or any other person who might use the facilities of the Regime in any manner, are subject to the provisions of this Master Deed and all documents appurtenant hereto and incorporated herewith, and the acquisition or rental of any Apartment or the mere act of occupancy of any Apartment, shall signify: (1) That the provisions of this Master Deed are accepted and ratified in all respects”Master Deed, Article XXVIII, page 14

“The Owners shall, at all times, obey said Rules and Regulations and shall use their best efforts to see that they are faithfully observed by their families, guests, invitees, servants, lessees and persons over whom they exercise control and supervision.”Rules & Regulations June 2006, Preamble, page 1

Is the money healthy?

Caution

Whether the association can pay for the building without surprise bills: reserves, special assessments, insurance deductibles, how fast dues are rising, and how much of the fee passes through to a master association.

The first budget on file (2020) shows the warning signs the guide lists for a 1-2: a $35,880 special assessment of unstated purpose on top of $312,039 of regular dues, insurance at 27.4% of the budget, reserve transfers at only 7.8% (well under 15%) for a 35-year-old oceanfront tower, and interest expense implying debt; it is lifted off 1 because dues are a moderate $433 a month per unit with strong inclusions (cable, water, sewer, gas, trash, pest control), the by-laws mandate segregated reserves and an annual audit, the budget funds a $29,655 contingency and the deductible is a common expense, but the figures are six years old and no reserve balance, current budget or insurance detail is on file.

2020 budget$367,479

Reserves8% of budget

Special assessments2020 $35,880 budgeted as 'Special Assessments' revenue (about $598 per apartment across 60 lots) unstated. The budget does not say what the special assessment funds; the same budget carries $6,225 of 'Interest Expense', $17,000 of earmarked roofing and waterproofing reserve transfers and a $1,650 'Roof Inspection', but no link between them is stated.

InsuranceBy-Laws Sec. 10 require the Association to insure all apartments and common elements at full replacement cost (no depreciation) with a replacement-cost rider, plus $1,000,000 single-limit premises liability and workers' compensation, from South Carolina admitted carriers rated 'A' or better and class 10 or better in Best's; cost is a common expense. Policies may not be allowed to lapse without a majority co-owner resolution, must carry 30 days' non-cancellation notice, and any co-owner or lienholder may request duplicate copies of the hazard policies with proof of premium payment (Sec. 10(a)(iv), 10(b)(i), page 26). Proceeds are paid to an Insurance Trustee (a bank with $5 million or more capital and surplus); a 75% vote of value is needed to decide not to rebuild. If proceeds are insufficient, rebuilding costs fall on the co-owners directly affected in proportion to value. Owners insure their own contents, improvements and in-unit liability (HO6 recommended). The only premium figure on file is the 2020 budget's $100,714; no carrier, deductible, prior-year premium or claims history is on file, so the trend since 2020 for this 1985 oceanfront tower is unknown.

Wind deductibleunstated. The 2020 budget shows a single 'Insurance' line of $100,714 (27.4% of the budget, about $1,679 per apartment) with no split between property, wind, flood and liability. The 1985 By-Laws cap the Association hazard deductible at $25,000 per loss and make it a common expense; whether today's policy carries a percentage named-storm deductible is not on file.

Floodunstated. The By-Laws set required terms for 'all policies of hazard and flood insurance' obtained by the Board and give the Board exclusive authority to settle such claims, but do not expressly mandate a flood policy and no declarations page is on file; the 2020 budget does not break flood out of the single insurance line.

DelinquencyAssessments are in default the day after the due date; the Board may accelerate the whole year's assessment on 10 days' notice; after 30 days the Association may foreclose its lien and seek rent and a receiver; a 10% late penalty is added; the owner is personally liable for interest, collection costs and attorney's fees whether or not suit is brought; the lien is subordinate to the lien of any mortgage and a foreclosure purchaser is not liable for prior arrears (which are absorbed by all owners as a common expense), but a voluntary grantee is jointly liable with the grantor, delinquent assessments are paid first out of sale proceeds, and a special assessment levied with a grace period becomes due at closing (By-Laws Sec. 11(h)-(n), pages 29-31). The Association must notify a mortgagee when an assessment is more than 60 days past due (Sec. 11(n), page 30). The budget and proposed assessments must be sent to each member by January 1 (Sec. 7(b)(ii), page 24). The 2020 budget plans for $3,000 of 'Bad Debt Expense' (about 1% of regular assessments) and $826 of 'Delinquent Asmt-Contract Fixed Costs'; no delinquency report is on file.

What the documents say (31)

“Regular Assessments (60 lots) 312,039$”Ocean Villas 2020 Approved Budget, Revenues, page 1

“IOA Lease 6,000$ Roof Rent 10,560$ Laundry 2,000$ Special Assessments 35,880$ Vending Fees 1,000$ Total Revenues 367,479$”Ocean Villas 2020 Approved Budget, Revenues, page 1 (lines as printed, one per row)

“Insurance 100,714$”Ocean Villas 2020 Approved Budget, General & Administrative, page 1

“Interest Expense 6,225$”Ocean Villas 2020 Approved Budget, General & Administrative, page 1

“Bad Debt Expense 3,000$”Ocean Villas 2020 Approved Budget, General & Administrative, page 1

“Management Services 13,900$ Admin.Services-Contract Fixed Costs 2,065$ Delinquent Asmt-Contract Fixed Costs 826$ Admin.Services-variable costs 600$”Ocean Villas 2020 Approved Budget, General & Administrative, page 1 (lines as printed, one per row)

“Transfer to Reserves-roofing 5,000$ Transfer to Reserves-waterproofing 12,000$ Transfer to Reserves 11,500$ Operating Contingency 29,655$ Total 58,515$”Ocean Villas 2020 Approved Budget, Other Expenses, page 1 (lines as printed, one per row)

“Maintenance Contract 38,856$”Ocean Villas 2020 Approved Budget, Repairs & Maintenance, page 1

“Cable TV Service 18,420$ Electric 14,000$ Gas 7,500$ Telephone 6,060$ Trash Removal 4,300$ Water & Sewer 20,000$ Total 70,280$”Ocean Villas 2020 Approved Budget, Utilities, page 1 (lines as printed, one per row)

“Total Expenses 367,479$ Net Income -$”Ocean Villas 2020 Approved Budget, page 1

“The assessments will initially be on a quarterly basis unless changed by a vote of the majority of the Board of Directors.”By-Laws, Section 7(c), page 24

“All assessments levied against the Co-Owners of Apartments shall, unless specifically otherwise provided for in these By-Laws, be in the same proportion to the total assessment made against all Co-Owners of Apartments and their Apartments as the undivided interest in the Common Elements appurtenant to each Apartment bears to the total undivided interest in the Regime.”By-Laws, Section 11(a), page 28

“Common expense budget, which shall include without limiting the generality of the foregoing, the estimated amounts necessary for maintenance and operation of Common Elements, landscaping, streets and walkways, office expense, swimming pool, utility services, casualty insurance, liability insurance, administration and reserves (operating and replacement);”By-Laws, Section 7(b)(i), page 24

“The portion of the assessments which are designated for reserves and replacement shall be segregated and deposited in a separate account from the general operating funds and to the extent provided by law, shall be placed in an interest bearing account.”By-Laws, Section 7(d), page 24

“An audit of the accounts of the Association shall be made annually and a copy of the report shall be furnished to each member not later than April 1st of the year following the year for which the report is made.”By-Laws, Section 7(e), page 24

“Should the Board of Directors at any time determine, in the sole discretion of said Board of Directors, that the assessments levied are or may prove to be insufficient to pay the costs of operation and management of the Regime, or in the event of emergencies, said Board of Directors shall have the authority to levy such additional assessment or assessments as it shall deem to be necessary.”By-Laws, Section 11(d), page 28

“The amount collected and allocated to the reserve fund for replacements from time to time shall be maintained in separate account by Association, although nothing herein contained shall limit Association from applying any monies in said reserve fund for replacements to meet other needs or requirements of Association in operating or managing the project in the event of emergencies or in the event the sums collected from the Co-Owners of Apartments are insufficient to meet the then fiscal financial requirements of Association, and it shall not be a requirement that these monies be used for such latter purposes, as a separate assessment may be levied therefor if deemed to be preferable by the Board of Directors of the Association in the sole discretion of said Board of Directors.”By-Laws, Section 11(e), pages 28-29

“In the event any assessment installment, or accelerated assessments are not paid within thirty (30) days after their due date, the Association, through its Board of Directors, may proceed to enforce and collect the said assessments against the Apartment Co-Owner owing the same in any manner provided for by the Act, including the right of foreclosures and sale. When in default, the delinquent assessment or delinquent installment thereof due to the Association shall be assessed a late penalty of ten (10%) percent, which amount shall be added to the assessment or installment due and shall be collected as part of the assessment or installment as herein set forth.”By-Laws, Section 11(h), page 29

“In the event that the co-owner or Co-Owners are in default in payment of any assessment or installment thereof owed to the Association, such Co-Owner or Co-Owners of the Apartment shall be personally liable for interest on such delinquent assessment or installment thereof, as above provided, and for all costs of collecting such assessment or installment thereof and interest thereon, including reasonable attorney's fee, whether suit be brought or not.”By-Laws, Section 11(i), page 29

“The claim of lien filed by the Association shall be subordinate to the lien of any mortgage encumbering the Apartment.”By-Laws, Section 11(l), page 30

“In any voluntary conveyance of an Apartment (other than a deed in lieu of foreclosure as set forth above), the Grantee shall be jointly and severally liable with the Grantor for all unpaid assessments against Grantor made prior to the time of such voluntary conveyance, without prejudice to the rights of the Grantee to recover from the Grantor the amounts paid by the Grantee thereof.”By-Laws, Section 11(n), page 31

“All Apartments and all Common Elements shall be insured for the full replacement cost thereof (without deduction or allowances for depreciation), and the policy of insurance shall have a full replacement cost rider.”By-Laws, Section 10(a)(i), page 25

“The hazard insurance obtained by the Association may provide that an amount not to exceed $25,000.00 Dollars shall be deductible from any indemnity payable on account of a single loss, but any such deductible portion shall be borne by the Association as a Common Expense regardless of the number of co-owners or Apartments directly affected by the loss.”By-Laws, Section 10(a)(i), page 25

“The Association shall also obtain premises liability insurance on all Apartments and Common Elements and the Association providing for a single-limit indemnity of not less than one million $1,000,000.00 Dollars and covering bodily and personal injury and property damage.”By-Laws, Section 10(a)(ii), page 25

“The Insurance Trustee shall be a state or federally chartered bank selected by the Board of Directors and having trust powers and capital and surplus of Five Million ($5,000,000.00) Dollars or more.”By-Laws, Section 10(b)(iv), page 27

“Where the insurance proceeds are insufficient to cover the cost of reconstruction, the rebuilding costs shall be paid by all the co-owners directly affected by the damage, in proportion to the value of their respective apartments, or as may be provided in the By-Laws; and if any one or more of those composing the minority shall refuse to make such payments, the majority may proceed with the reconstruction at the expense of all the co-owners benefited thereby, upon proper resolution setting forth the circumstances of the case and the cost of the works, with the intervention of the Association.”By-Laws, Section 10(b)(vi), page 27

“All Unit voting rights, percentage of assessments, monthly or special, and every other Unit right or liability are based on this percentage.”Master Deed, Article VI, page 7

“Payment of HOA dues shall be made to the office of the Manager. Payments made in the form of checks shall be made to the order of Ocean Villas HOA.”Rules & Regulations June 2006, Rule 22, page 2

“Copies of the proposed budget and proposed assessments shall be transmitted to each member on or before January 1st of the year for which the budget is made.”By-Laws, Section 7(b)(ii), page 24

“Duplicate originals or copies of all policies of hazard insurance obtained on the Regime by the Board of Directors, together with proof of payment of the premiums thereon, shall be delivered upon request to any co-owner or any entity holding a lien upon or security interest in any Apartment.”By-Laws, Section 10(b)(i), page 26

“Although all funds and other assets of the Association, and any increments thereto or profits derived therefrom, or from the leasing or use of General Common Elements, shall be held for the benefit of the members of the Association, who shall own a common surplus in the proportions of their percentage of undivided interest in the Regime, no member of the Association shall have the right to assign, hypothecate, pledge or in any manner transfer this membership interest therein, except as an appurtenance to his Apartment.”By-Laws, Section 11(g), page 29

Who's really in charge?

Favorable

Who holds the power the documents hand out: an owner-elected board, or a developer or commercial-unit owner with deed-level rights over rentals, guest services and the building's name.

Developer control ended in 1987, the five-member board is owner-elected with staggered two-year terms, there is no commercial unit or rental monopoly, the management fee is modest and contracts are capped at three years and terminable on 90 days' notice, but the Manager can adopt binding rules without member consent, the Board may delegate all its powers to that contractor, common elements have been leased out under an unexplained 'IOA Lease' and roof rent, and Master Deed changes need first mortgagees on 66% of apartments as well as 66% of owners, which is heavier than ordinary.

StructureOne association

Commercial unitNone

BoardFive directors. The 1985 text starts them on one-year terms, then from the first annual meeting (1986) three directors serve two years and two serve one year, after which every seat is a two-year staggered term elected by plurality at the annual meeting held on a Saturday between February and May; each apartment gets one vote per seat, non-cumulative; vacancies filled by remaining directors; directors removable under South Carolina corporate law; directors unpaid. President and Secretary must be directors; officers are elected annually by the Board (By-Laws Sec. 3, 4, 6, pages 19-23). The 2020 budget funds an $800 annual meeting.

Developer rightsOcean Villas Development Corporation appointed the whole board while it owned five or more apartments and a majority while it owned one to four, with the power ending June 30, 1987; its directors and its membership vote were exempt from conflict-of-interest recusal on management contracts (Master Deed Art. XXIX; By-Laws Sec. 4(a)). It reserved use of unsold units as sales, model and managerial/rental offices, joint use of the rental office with any rental company employed by the Association or its own timeshare company, signage, the right to submit its own units to the Vacation Time Sharing Plan Act, the right to add Phase II (up to 38 apartments) by December 31, 1990, and perpetual access/utility easements across Phase I for Phase II (Master Deed Art. XIII, XXXIII). The office and signage rights ended on sale of its last unit; the easements are perpetual. Developer units were exempt from assessments until June 30, 1987, paying deficits instead (By-Laws Sec. 11(p)). Nothing on file suggests any Developer right survives today; the 2020 budget bills all 60 lots.

Commercial-unit rightsNo commercial unit and no deed-level rental or guest-services monopoly. The rental office is a General Common Element owned by all co-owners (Master Deed Art. V(4), Exhibit B); the deed contemplates a 'rental company employed by the Homeowners Association' sharing it with the Developer (Art. XIII rental-office clause, page 9, now partly legible in the second scan), so an Association-run or contracted rental program is possible but nothing on file says one exists or that owners must use it. The 2020 budget shows the Association leasing common elements for income ('IOA Lease' $6,000 and 'Roof Rent' $10,560) but no rental-program revenue or expense line. The 2006 Rules bar business operations above the ground floor (Rules 32). Management contracts may not exceed three years and must be terminable without cause or fee on 90 days' notice (By-Laws Sec. 4(j)(v)); the Board may employ or contract with a director for management (Sec. 6(f)), may delegate all Association powers to a management contractor except those the Master Deed reserves to the Board or members (Sec. 4(j)(vi)), may acquire, lease and operate apartments (Sec. 4(j)(v)), and income from leasing General Common Elements such as the rental office belongs to the members (Sec. 11(g)). Board-made rules may not conflict with the Master Deed (Sec. 4(j)(iv)), so the deed's leasing right cannot be overridden by a rule.

VotesMembership is automatic with ownership. Quorum is a majority (51% of the value of the property); except where a greater vote is required, 51% of the apartments represented at a meeting with a quorum binds the members; proxies allowed if filed before the meeting; multi-owner units vote through a designated person on file. Director elections are one vote per apartment per seat regardless of percentage interest; other matters follow percentage interest, which is equal at 1.6666% per Phase I apartment (By-Laws Sec. 2, 4(b)(v); Master Deed Art. VI, Exhibit C). Special members' meetings must be called on written request of owners of a majority of apartments (Sec. 3(b)). Notice of members' meetings is 10 to 60 days (Sec. 3(c)).

Changing the deedMaster Deed: 66% of apartments and 66% of common-element interest, plus first mortgagees on 66% of apartments and interest (Art. XXVI). Terminating the regime, changing any apartment's percentage interest or assessment share, or selling/encumbering common elements needs prior written approval of all first mortgagees and all non-Developer owners (Art. XI). Common-element improvements costing more than 10% of the prior year's budget need 75% of ownership (Art. XIX); against the 2020 budget that threshold is about $36,700. By-Laws: proposed by a Board majority or owners of a majority of value, adopted by owners of at least 51% of total value at a joint special meeting held 20-60 days later; Developer board-designation rights could not be amended without Developer consent (Sec. 9). Rules: adopted or added by the Board, or by the Manager while the Management Agreement is in effect, without member consent (Rules preamble and Rule 23).

Disputes or lawsuitsunstated. No minutes, litigation or dispute records are on file. The 2020 budget carries only $1,000 of legal fees, which does not suggest active litigation in that year. There is no arbitration or mediation clause; enforcement goes to court (Master Deed Art. XXVII(C) refers to fees 'as may be determined by the Court'). Enforcement remedies are damages, injunction and lien foreclosure; the Association recovers attorney's fees if successful and the owner is expressly denied them (Master Deed Art. XXVII; Rules 29); the Board has exclusive authority to settle hazard and flood claims (By-Laws Sec. 10(b)(iii)).

What the documents say (20)

“The first Board of Directors of the Association and succeeding Boards of Directors, shall consist of five (5) persons, each serving one (1) year terms.”By-Laws, Section 4(a), page 20

“The power of the Developer to designate directors as above referred to shall terminate on June 30, 1987.”By-Laws, Section 4(a), page 20

“Thereafter, as many directors of the Association shall be elected at the annual meeting as there are regular terms of office and directors expiring at such time, and the term of the directors so elected at the annual meeting of the members each year shall be for two (2) years expiring at the second annual meeting following their election, and thereafter until their successors are duly elected and qualified or until removed in the manner elsewhere provided or as may be provided by law for the removal of directors of South Carolina corporations for profit.”By-Laws, Section 4(b)(iv), page 21

“In the election of directors, there shall be appurtenant to each Apartment as many votes for directors as there are directors to be elected (regardless of the percentage interest in Common Elements appurtenant to such Apartment); provided, however, that no member or co-owner of any Apartment may cast more than one vote for any person nominated as director, it being the intent hereof that voting for directors shall be non-cumulative.”By-Laws, Section 4(b)(v), page 21

“The quorum at members' meetings shall consist of persons entitled to cast a majority (51% of the value of the property) of the votes of the entire membership.”By-Laws, Section 2(b), page 19

“Except where otherwise required under the provisions of the Certificate of Incorporation, these By-Laws, the Master Deed, or where the same may otherwise be required by law, the affirmative vote of the co-owners of a fifty-one (51%) percent of the Apartments represented at any duly called members' meeting at which a quorum is present shall be binding upon the members.”By-Laws, Section 2(f), page 19

“provided, however, that any agreement for professional management of the Regime, or any other contract providing for services of the Developer, may not exceed three (3) years. Any such agreement must provide for termination by either party without cause and without payment of a termination fee on ninety (90) days or less written notice;”By-Laws, Section 4(j)(v), page 22

“In order for such amendment or amendments to become effective, the same must be approved by an affirmative vote of the members owning not less than fifty-one (51%) percent of the total value of the property in the Regime.”By-Laws, Section 9(c), page 25

“So long as the Developer is the Co-Owner of Five (5) or more Apartments in the Regime, the said Developer shall have the right to designate and select all of the persons who shall serve as members of each Board of Directors of the Association; and so long as the Developer is the Co-Owner of at least One (1) but not more than Four (4) Apartments, the Developer shall have the right to designate and select a majority of the persons who shall serve as a member of each Board of Directors of the Association.”Master Deed, Article XXIX, page 15

“Anything to the contrary notwithstanding, the power in the Developer to designate directors shall terminate on June 30, 1987.”Master Deed, Article XXIX, page 15

“Any representative of the Developer serving on the Board of directors of the Association shall not be required to disqualify himself upon any vote upon any management contract or other matter between the Developer and the Association where the Developer may have a pecuniary or other interest.”Master Deed, Article XXIX, page 15

“The rental office, and the premises for the lodging of janitors or persons in charge of the property, except as otherwise provided or stipulated;”Master Deed, Article V, General Common Elements (4), page 6

“Subject to the other provisions of this Article XI, unless all of the first mortgagees (based upon one vote for each first mortgage owned), and Owners (other than the Developer) of the Apartments have given their prior written approval, the Association shall not be entitled to: (a) by act or omission, seek to abandon or terminate the Regime; (b) change the pro rata interest or obligations of any Apartment for the purposes of: (i) levying assessments or charges or allocating distributions of hazard insurance proceeds or condemnation awards, or (ii) determining the pro rata share of ownership of each Apartment in the Common Elements;”Master Deed, Article XI, page 8

“and the cost of such alterations, modifications or improvements shall be assessed as common expenses and collected from the Co-Owners of all Apartments according to their percentage of ownership of the Common Elements, and provided that the cost of any such alteration, modification or improvement contemplated under this paragraph may not exceed an amount equal to ten (10%) percent of the Association's budget for the prior year, without the approval of seventy-five (75%) percent of the Association ownership.”Master Deed, Article XIX, page 10

“In any proceeding arising because of any such alleged default by the Co-Owner or Co-Owners of any Apartment, the Association, if successful, shall be entitled to recover against the Apartment and have a lien for the costs of the proceedings, and such reasonable attorney's fees as may be determined by the Court, but in no event shall the Co-Owner or Co-Owners of any Apartment be entitled to such attorney's fees.”Master Deed, Article XXVII(C), page 14

“The Rules and Regulations hereinafter enumerated as to the subject premises shall be deemed in effect until amended by the Board of Directors of Ocean Villas Homeowners Association, Inc. (the "Association"), and shall apply to and be binding upon all Owners.”Rules & Regulations June 2006, Preamble, page 1

“The maximum number of apartments in Phase I shall be sixty (60). The maximum number of apartments in Phase II shall be thirty-eight (38). The Developer hereby submits Phase I to the Regime. The Developer shall elect on or before December 31, 1990, whether to submit Phase II to the Regime.”Master Deed, Article II, page 4

“To make and amend regulations governing the use of the property, real and personal, in the Regime so long as such regulations or amendments thereto do not conflict with the restrictions and limitations which may be placed upon the use of such property under the terms of the Master Deed;”By-Laws, Section 4(j)(iv), page 22

“to contract for the management of the common areas and facilities in the Regime and to designate to such contractor all of the powers and duties of the Association, except those which may be required by the Master Deed to have approval of the Board of Directors or membership of the Association;”By-Laws, Section 4(j)(vi), page 22

“In the event of any conflict between the provisions of the Master Deed and the provisions of these By-Laws, the provisions of the Master Deed shall control.”By-Laws, Section 13, page 31

03 Pros and cons

For the owner who runs it themselves.

The same building reads very differently to an owner on the rental program and an owner on Airbnb. This list is for the second one.

Working for you

Leasing is expressly permitted: the Master Deed restricts apartments to residential use by the owner, immediate family, guests, tenants, lessees, licensees and invitees, and no document sets a minimum stay, rental cap, lease-approval step or registration (Master Deed, Art. XIII(1), page 8)
Tenants, lessees and guests hold the same perpetual non-exclusive easement over all General Common Elements as owners, so the pool, jacuzzi, pool building, parking, elevator and community room are open to off-program guests with no amenity carve-outs (Master Deed, Art. IX, page 7; Exhibit B, page 20; Rules & Regulations June 2006, Rule 27, page 2)
There is no requirement to use an on-site rental program and no commercial unit: the rental-office rights belonged to the Developer and expired on the sale of its last unit, the rental office itself is a General Common Element owned by all co-owners, and the 2020 budget has no rental-program line (Master Deed, Art. XIII rental-office and unsold-units clauses, page 9; Art. V(4), page 6; 2020 Approved Budget, page 1)
No wristbands, guest passes, parking permits or check-in fees appear anywhere, and the 2020 budget has no pass, parking or guest-fee revenue; parking is first-come with no reserved spaces (Rules & Regulations June 2006, Rule 13, page 1; 2020 Approved Budget, Revenues, page 1)
The 2006 Rules openly acknowledge rentals and simply make the owner responsible for related common-area clean-up, rather than restricting them (Rules & Regulations June 2006, Rule 7, page 1)
Dues cover bulk cable TV ($18,420), water and sewer ($20,000), gas, trash, pest control, fire alarm, generator, elevator and pool, so the owner's recurring utility set-up for guests is light (2020 Approved Budget, Utilities and Repairs & Maintenance, page 1)
The Association earns about $19,560 a year outside dues from roof rent, an 'IOA Lease', laundry and vending, income that belongs to the members and offsets about 5% of the budget (19,560 / 367,479 = 5.3%) (2020 Approved Budget, Revenues, page 1; By-Laws, Sec. 11(g), page 29)
Regular dues work out to roughly $433 a month per one-bedroom apartment on the 2020 budget, with every apartment paying the same share (2020 Approved Budget, Revenues, page 1; Master Deed, Exhibit C, pages 28-29)
Developer control ended June 30, 1987; the five-member board is owner-elected by plurality with one vote per apartment per seat and staggered two-year terms (Master Deed, Art. XXIX, page 15; By-Laws, Sec. 4(a)-(b), pages 20-21)
Management contracts are capped at three years and must be terminable by either party without cause or fee on 90 days' notice, so owners are never locked into a manager; the 2020 management fee is a modest $13,900 (By-Laws, Sec. 4(j)(v), page 22; 2020 Approved Budget, General & Administrative, page 1)
Every Phase I apartment carries an equal 1.6666% interest, so assessments are split evenly and cannot be reweighted without unanimous owner and first-mortgagee consent, the one exception being the automatic decrease to 0.9311% if Phase II were ever submitted (Master Deed, Art. VI, page 7; Art. XI, page 8; Exhibit C, pages 28-29)
The By-Laws require both a replacement reserve and a general operating reserve, kept in a segregated interest-bearing account, with an annual audit delivered to every member by April 1; the 2020 budget does fund reserves ($28,500, with roofing and waterproofing earmarked) plus a $29,655 operating contingency and a $2,500 audit (By-Laws, Sec. 7(d)-(e), page 24; Sec. 11(e)-(f), pages 28-29; 2020 Approved Budget, Other Expenses, page 1)
Master Deed amendments need 66% of owners by count and by interest plus first mortgagees on 66% of apartments, which makes it very hard for a future board or faction to add rental restrictions to the deed (Master Deed, Art. XXVI, page 13)
The Association must insure all apartments and common elements at full replacement cost with a replacement-cost rider, and the hazard deductible (capped at $25,000 in the 1985 text) is a common expense rather than charged to the affected unit (By-Laws, Sec. 10(a)(i), page 25)
Capital improvements to common elements costing more than 10% of the prior year's budget require approval of 75% of the ownership, limiting surprise improvement assessments (Master Deed, Art. XIX, page 10)
The assessment lien is subordinate to a first mortgage, a foreclosure purchaser is not liable for prior delinquencies, and the Association must issue a binding assessment-status statement to a buyer on request (By-Laws, Sec. 11(l)-(n), pages 30-31)
No structural work, balcony enclosures or exterior changes are allowed without Association consent, which protects the building's uniform appearance and value (Master Deed, Art. XVIII, page 10)
Board- or Manager-made rules cannot conflict with the Master Deed, and the Master Deed controls over the By-Laws, so the deed-level right to lease to tenants and lessees cannot be taken away by a rule or by-law change alone (By-Laws, Sec. 4(j)(iv), page 22; Sec. 13, page 31)
The proposed budget and each member's proposed assessment must be sent out by January 1 every year, and any co-owner may demand copies of the Association's hazard policies with proof of premium payment, so dues and insurance can be verified before buying (By-Laws, Sec. 7(b)(ii), page 24; Sec. 10(b)(i), page 26)
The owner has no personal liability for accidents on the common elements; that risk sits with the Association's $1,000,000 premises liability policy (Master Deed, Art. XXII, page 11; By-Laws, Sec. 10(a)(ii), page 25)

Watch-outs

The 2020 budget relies on a $35,880 special assessment (about $598 per apartment) on top of regular dues, with no stated purpose, and the same budget carries $6,225 of interest expense, which implies the Association was servicing debt; whether the special assessment is still running, what it funds and what the loan is for are unstated (2020 Approved Budget, Revenues and General & Administrative, page 1)
Insurance is the single largest cost at $100,714, 27.4% of the 2020 budget and about $1,679 per apartment, with no split between wind, flood and liability and no deductible stated; this is a 1985 oceanfront 12-story building and the premium trend since 2020 is unknown (2020 Approved Budget, General & Administrative, page 1; By-Laws, Sec. 10, pages 25-27)
Reserve transfers were only $28,500, 7.8% of the 2020 budget, for a 35-year-old oceanfront tower, and $17,000 of that was earmarked for roofing and waterproofing; no reserve balance or reserve study is on file (2020 Approved Budget, Other Expenses, page 1; By-Laws, Sec. 11(e), pages 28-29)
The only budget on file is the 2020 approved budget; dues, insurance and reserve figures are six budget years old and no later budget, financial statement or dues notice was supplied (2020 Approved Budget, page 1)
The Master Deed contemplates a 'rental company employed by the Homeowners Association' sharing the rental office with the Developer, and designates a rental office as a General Common Element; the By-Laws also let the Board acquire, lease and operate apartments and keep income from leasing common elements for the members; an Association-run or contracted rental program could exist today and nothing newer than the 2006 Rules and the 2020 budget is on file to confirm or rule it out (Master Deed, Art. XIII rental-office clause, page 9; Exhibit B, page 20; By-Laws, Sec. 4(j)(v), page 22; Sec. 11(g), page 29)
Hard occupancy cap of 6 people per one-bedroom unit (4 adults and 2 children or a combination) with 'immediate eviction' as the penalty, which limits larger bookings and exposes guests to removal (Rules & Regulations June 2006, Rule 25, page 2)
Guests may not bring pets at all, so pet-friendly listings are off the table; owners are limited to 2 leashed pets (Rules & Regulations June 2006, Rule 26, page 2)
The Manager, while the Management Agreement is in effect, and thereafter the Board may adopt additional binding rules 'without consent of the Association and its members', so rental, parking or guest rules can tighten with no owner vote (Rules & Regulations June 2006, Rule 23, page 2)
Owners are responsible for any common-area clean-up caused by their rentals, and the Board or Manager may clear or refurbish a cluttered balcony at the owner's expense (Rules & Regulations June 2006, Rules 7 and 14, page 1)
The Board may levy additional assessments whenever it decides in its sole discretion that dues are insufficient or in an emergency, with no owner-vote cap, and may raid the replacement reserve for emergencies or shortfalls (By-Laws, Sec. 11(d)-(e), pages 28-29)
Where insurance proceeds are insufficient to rebuild, the shortfall is paid by the co-owners directly affected in proportion to value, and the By-Laws do not expressly mandate a flood policy (By-Laws, Sec. 10(b)(vi), page 27)
A missed quarterly installment triggers a 10% late penalty, possible acceleration of the whole year on 10 days' notice, foreclosure rights after 30 days, a receiver and rent claim, and personal liability for attorney's fees whether or not suit is filed; the 2020 budget already plans for $3,000 of bad debt (By-Laws, Sec. 11(h)-(k), pages 29-30; 2020 Approved Budget, General & Administrative, page 1)
Fee-shifting is one-sided: the Association recovers attorney's fees when it wins an enforcement action, and the owner is expressly denied them (Master Deed, Art. XXVII(C), page 14; Rules & Regulations June 2006, Rule 29, page 2)
The Association may require a unit key on deposit and the Management Company must hold a pass key for monthly pest control and the fire marshal, so smart-lock or keypad setups must accommodate a physical pass key (Master Deed, Art. XVI, page 9; Rules & Regulations June 2006, Rule 30, page 2)
No front desk, housekeeping or linen service: laundry is coin-operated on the ground floor with no change or supplies available, so the owner arranges all check-in, cleaning and linens (Rules & Regulations June 2006, Rule 9, page 1)
Guests arriving with motorcycles, trailers, boats or RVs cannot park them on the property, and private grills are banned (Rules & Regulations June 2006, Rules 12-13, page 1)
No sign, advertisement or notice may be placed on the property without written Association permission (Rules & Regulations June 2006, Rule 18, page 2)
Quiet hours run 11:00 PM to 8:00 AM and the Board may abate any nuisance, so noisy guest groups put the owner at risk (Rules & Regulations June 2006, Rule 16, page 2)
A buyer in a voluntary sale is jointly and severally liable with the seller for unpaid assessments, and a special assessment levied with a grace period becomes due at closing, so an estoppel/assessment-status letter is essential before closing (By-Laws, Sec. 11(n), page 31)
The owner maintains and replaces the HVAC system wherever located, water heater, appliances, windows, doors and in-unit plumbing and wiring, which the deed treats as the owner's personal property, a real recurring cost in a 40-year-old oceanfront building (Master Deed, Art. V(3), page 5; Art. XX, page 10; Exhibit B, page 20)
The owner is liable for accidents inside the apartment to the same degree as a house owner, and the Association's liability policy need not cover accidents within an apartment, so the owner's own HO6/liability cover is the only protection for guest injuries in the unit (Master Deed, Art. XXII, page 11; By-Laws, Sec. 10(a)(ii), page 25)
The Developer reserved the right to put its unsold units into a timeshare plan and to add a 38-unit Phase II by December 31, 1990; whether either happened is unstated, although the 2020 budget's '60 lots' is consistent with Phase I only (Master Deed, Art. XIII(2), page 9; Art. II, page 4; Exhibit C, pages 28-30; 2020 Approved Budget, page 1)
Master Deed amendments require first-mortgagee approval on 66% of apartments as well as 66% of owners, which also makes it very hard to modernize these 1985 documents (Master Deed, Art. XXVI, page 13)
The governing documents on file are the 1985 originals plus 2006 rules; there is no record of amendments, a current management agreement or the identity of the Management Company, which the 2020 budget pays $13,900 plus contract admin costs (By-Laws, Sec. 1(f), page 18; Rules & Regulations June 2006, Rules 19, 22-23, page 2; 2020 Approved Budget, General & Administrative, page 1)
Every renter is bound by the Master Deed and Rules by the mere act of occupancy and the owner must use best efforts to make lessees comply, so guest violations are the owner's problem under the fee-shifting and damage clauses (Master Deed, Art. XXVIII, page 14; Rules & Regulations June 2006, Preamble, page 1)
The Board may hand all Association powers to a management contractor, and the current Manager already has rule-making power, so day-to-day rental conditions depend on an unnamed company under an unseen Management Agreement (By-Laws, Sec. 4(j)(vi), page 22; Rules & Regulations June 2006, Rules 19 and 23, page 2)
There is no arbitration or mediation clause; any dispute with the Association goes to court, where the owner can never recover attorney's fees (Master Deed, Art. XXVII(C), page 14)
The deed requires every apartment to observe all laws and zoning ordinances, so a City of Myrtle Beach short-term-rental or business-license violation is also an HOA covenant breach (Master Deed, Art. XV, page 9)
The 'IOA Lease' and 'Roof Rent' income lines show the Association has leased out common elements, but what is leased, to whom and for how long is unstated, so a buyer cannot tell whether that $16,560 of income is secure (2020 Approved Budget, Revenues, page 1)

04 The money

What you pay, and where it goes.

An HOA fee is a share of a budget. The budget tells you whether the fee is buying upkeep or catching up on it.

Regular assessments, 2020

Unit type	Per month	Per year
All 60 Phase I apartments (equal 1.6666% interest; derived by dividing the budget line 'Regular Assessments (60 lots) 312,039$' by 60; the budget does not print a per-unit figure)	$433	$5,201
2020 special assessment per apartment (derived: 'Special Assessments 35,880$' divided by 60; purpose and payment schedule unstated)	$50	$598

What the dues cover

Maintenance and operation of common elements, landscaping, streets and walkways, office expense, swimming pool, administration (By-Laws Sec. 7(b)(i)); 2020 budget lines: Maintenance Contract $38,856, Building Repair & Maintenance $16,225, Elevator Maintenance $13,000, Pool Maintenance and Repair $11,000, Generator Program $11,798, Fire Alarm Contract $6,200, Security Contract $3,525, Landscaping Supplies $2,500, Roof Inspection $1,650Bulk Cable TV Service $18,420 (2020 budget, Utilities), so basic cable is covered by dues; internet is not a budget line and its treatment is unstatedWater & Sewer $20,000, Electric $14,000, Gas $7,500, Telephone $6,060 and Trash Removal $4,300 are paid by the Association (2020 budget, Utilities); whether in-unit water, electric or gas is separately metered to owners is unstated (By-Laws Sec. 4(j)(x) covers utility services 'not billed to the owners of the separate Apartments')Casualty (hazard) insurance on all apartments and common elements at full replacement cost, liability insurance and the hazard deductible (By-Laws Sec. 7(b)(i), 10(a)); 2020 budget Insurance $100,714Replacement reserve and general operating reserve (By-Laws Sec. 7(b)(i), 11(e)-(f)); 2020 budget transfers: roofing $5,000, waterproofing $12,000, general reserves $11,500, plus an Operating Contingency line of $29,655Monthly pest control service (Rules 30; 2020 budget Pest Control $2,000)Management Services $13,900 plus contract admin fixed/variable costs $3,491, Audit/Accounting $2,500, Legal $1,000, Annual Meeting $800 (2020 budget, General & Administrative)Annual audit (By-Laws Sec. 7(e)); fidelity bonds only if the Board requires them, then at least the total annual assessment (Sec. 7(f))Not included: in-unit HVAC, water heater, appliances, windows, doors and in-unit plumbing/wiring, which the owner maintains and which are the owner's personal property (Master Deed Art. V(3), XX; Exhibit B); owner contents/HO6 coverage and in-unit liability (Master Deed Art. XXII)

Where the budget goes

Insurance$100,714 · 27%

Maintenance Contract$38,856 · 11%

Operating Contingency$29,655 · 8%

Transfers to Reserves (roofing $5,000 + waterproofing $12,000 + general $11,500)$28,500 · 8%

Water & Sewer$20,000 · 5%

Cable TV Service$18,420 · 5%

Building Repair & Maintenance$16,225 · 4%

Electric$14,000 · 4%

The figures, in the documents' words (31)

“Regular Assessments (60 lots) 312,039$”Ocean Villas 2020 Approved Budget, Revenues, page 1

“IOA Lease 6,000$ Roof Rent 10,560$ Laundry 2,000$ Special Assessments 35,880$ Vending Fees 1,000$ Total Revenues 367,479$”Ocean Villas 2020 Approved Budget, Revenues, page 1 (lines as printed, one per row)

“Insurance 100,714$”Ocean Villas 2020 Approved Budget, General & Administrative, page 1

“Interest Expense 6,225$”Ocean Villas 2020 Approved Budget, General & Administrative, page 1

“Bad Debt Expense 3,000$”Ocean Villas 2020 Approved Budget, General & Administrative, page 1

“Management Services 13,900$ Admin.Services-Contract Fixed Costs 2,065$ Delinquent Asmt-Contract Fixed Costs 826$ Admin.Services-variable costs 600$”Ocean Villas 2020 Approved Budget, General & Administrative, page 1 (lines as printed, one per row)

“Transfer to Reserves-roofing 5,000$ Transfer to Reserves-waterproofing 12,000$ Transfer to Reserves 11,500$ Operating Contingency 29,655$ Total 58,515$”Ocean Villas 2020 Approved Budget, Other Expenses, page 1 (lines as printed, one per row)

“Maintenance Contract 38,856$”Ocean Villas 2020 Approved Budget, Repairs & Maintenance, page 1

“Cable TV Service 18,420$ Electric 14,000$ Gas 7,500$ Telephone 6,060$ Trash Removal 4,300$ Water & Sewer 20,000$ Total 70,280$”Ocean Villas 2020 Approved Budget, Utilities, page 1 (lines as printed, one per row)

“Total Expenses 367,479$ Net Income -$”Ocean Villas 2020 Approved Budget, page 1

“The assessments will initially be on a quarterly basis unless changed by a vote of the majority of the Board of Directors.”By-Laws, Section 7(c), page 24

“All assessments levied against the Co-Owners of Apartments shall, unless specifically otherwise provided for in these By-Laws, be in the same proportion to the total assessment made against all Co-Owners of Apartments and their Apartments as the undivided interest in the Common Elements appurtenant to each Apartment bears to the total undivided interest in the Regime.”By-Laws, Section 11(a), page 28

“Common expense budget, which shall include without limiting the generality of the foregoing, the estimated amounts necessary for maintenance and operation of Common Elements, landscaping, streets and walkways, office expense, swimming pool, utility services, casualty insurance, liability insurance, administration and reserves (operating and replacement);”By-Laws, Section 7(b)(i), page 24

“The portion of the assessments which are designated for reserves and replacement shall be segregated and deposited in a separate account from the general operating funds and to the extent provided by law, shall be placed in an interest bearing account.”By-Laws, Section 7(d), page 24

“An audit of the accounts of the Association shall be made annually and a copy of the report shall be furnished to each member not later than April 1st of the year following the year for which the report is made.”By-Laws, Section 7(e), page 24

“Should the Board of Directors at any time determine, in the sole discretion of said Board of Directors, that the assessments levied are or may prove to be insufficient to pay the costs of operation and management of the Regime, or in the event of emergencies, said Board of Directors shall have the authority to levy such additional assessment or assessments as it shall deem to be necessary.”By-Laws, Section 11(d), page 28

“The amount collected and allocated to the reserve fund for replacements from time to time shall be maintained in separate account by Association, although nothing herein contained shall limit Association from applying any monies in said reserve fund for replacements to meet other needs or requirements of Association in operating or managing the project in the event of emergencies or in the event the sums collected from the Co-Owners of Apartments are insufficient to meet the then fiscal financial requirements of Association, and it shall not be a requirement that these monies be used for such latter purposes, as a separate assessment may be levied therefor if deemed to be preferable by the Board of Directors of the Association in the sole discretion of said Board of Directors.”By-Laws, Section 11(e), pages 28-29

“In the event any assessment installment, or accelerated assessments are not paid within thirty (30) days after their due date, the Association, through its Board of Directors, may proceed to enforce and collect the said assessments against the Apartment Co-Owner owing the same in any manner provided for by the Act, including the right of foreclosures and sale. When in default, the delinquent assessment or delinquent installment thereof due to the Association shall be assessed a late penalty of ten (10%) percent, which amount shall be added to the assessment or installment due and shall be collected as part of the assessment or installment as herein set forth.”By-Laws, Section 11(h), page 29

“In the event that the co-owner or Co-Owners are in default in payment of any assessment or installment thereof owed to the Association, such Co-Owner or Co-Owners of the Apartment shall be personally liable for interest on such delinquent assessment or installment thereof, as above provided, and for all costs of collecting such assessment or installment thereof and interest thereon, including reasonable attorney's fee, whether suit be brought or not.”By-Laws, Section 11(i), page 29

“The claim of lien filed by the Association shall be subordinate to the lien of any mortgage encumbering the Apartment.”By-Laws, Section 11(l), page 30

“In any voluntary conveyance of an Apartment (other than a deed in lieu of foreclosure as set forth above), the Grantee shall be jointly and severally liable with the Grantor for all unpaid assessments against Grantor made prior to the time of such voluntary conveyance, without prejudice to the rights of the Grantee to recover from the Grantor the amounts paid by the Grantee thereof.”By-Laws, Section 11(n), page 31

“All Apartments and all Common Elements shall be insured for the full replacement cost thereof (without deduction or allowances for depreciation), and the policy of insurance shall have a full replacement cost rider.”By-Laws, Section 10(a)(i), page 25

“The hazard insurance obtained by the Association may provide that an amount not to exceed $25,000.00 Dollars shall be deductible from any indemnity payable on account of a single loss, but any such deductible portion shall be borne by the Association as a Common Expense regardless of the number of co-owners or Apartments directly affected by the loss.”By-Laws, Section 10(a)(i), page 25

“The Association shall also obtain premises liability insurance on all Apartments and Common Elements and the Association providing for a single-limit indemnity of not less than one million $1,000,000.00 Dollars and covering bodily and personal injury and property damage.”By-Laws, Section 10(a)(ii), page 25

“The Insurance Trustee shall be a state or federally chartered bank selected by the Board of Directors and having trust powers and capital and surplus of Five Million ($5,000,000.00) Dollars or more.”By-Laws, Section 10(b)(iv), page 27

“Where the insurance proceeds are insufficient to cover the cost of reconstruction, the rebuilding costs shall be paid by all the co-owners directly affected by the damage, in proportion to the value of their respective apartments, or as may be provided in the By-Laws; and if any one or more of those composing the minority shall refuse to make such payments, the majority may proceed with the reconstruction at the expense of all the co-owners benefited thereby, upon proper resolution setting forth the circumstances of the case and the cost of the works, with the intervention of the Association.”By-Laws, Section 10(b)(vi), page 27

“All Unit voting rights, percentage of assessments, monthly or special, and every other Unit right or liability are based on this percentage.”Master Deed, Article VI, page 7

“Payment of HOA dues shall be made to the office of the Manager. Payments made in the form of checks shall be made to the order of Ocean Villas HOA.”Rules & Regulations June 2006, Rule 22, page 2

“Copies of the proposed budget and proposed assessments shall be transmitted to each member on or before January 1st of the year for which the budget is made.”By-Laws, Section 7(b)(ii), page 24

“Duplicate originals or copies of all policies of hazard insurance obtained on the Regime by the Board of Directors, together with proof of payment of the premiums thereon, shall be delivered upon request to any co-owner or any entity holding a lien upon or security interest in any Apartment.”By-Laws, Section 10(b)(i), page 26

“Although all funds and other assets of the Association, and any increments thereto or profits derived therefrom, or from the leasing or use of General Common Elements, shall be held for the benefit of the members of the Association, who shall own a common surplus in the proportions of their percentage of undivided interest in the Regime, no member of the Association shall have the right to assign, hypothecate, pledge or in any manner transfer this membership interest therein, except as an appurtenance to his Apartment.”By-Laws, Section 11(g), page 29

Ocean Villas.

The documents behind this page.

What the documents decide
before your first guest books.

Can you rent it your way?

Will your guests be treated like guests?

How much work lands on you?

Is the money healthy?

Who's really in charge?

For the owner who runs it themselves.

Working for you

Watch-outs

What you pay, and where it goes.

Regular assessments, 2020

What the dues cover

Where the budget goes

What to put in the house manual.

What to ask the association for.

Have the documents read
for the building you are weighing.

Ocean Villas.

The documents behind this page.

What the documents decidebefore your first guest books.

Can you rent it your way?

Will your guests be treated like guests?

How much work lands on you?

Is the money healthy?

Who's really in charge?

For the owner who runs it themselves.

Working for you

Watch-outs

What you pay, and where it goes.

Regular assessments, 2020

What the dues cover

Where the budget goes

What to put in the house manual.

What to ask the association for.

Have the documents readfor the building you are weighing.

What the documents decide
before your first guest books.

Have the documents read
for the building you are weighing.