Legal Issues

Residents File Class-Action Lawsuit Against Building HOA, Management

Residents File Class-Action Lawsuit Against Building HOA, Management

In an ongoing South Carolina case, residents of a condominium building have filed a class-action lawsuit against both building management and their homeowners’ association

The situation began on October 7, when the residents of the 322-unit Renaissance Tower in Myrtle Beach were asked to evacuate the premises due to unsafe conditions. Now, a lawsuit filed in the United States District Court for the District of South Carolina, alleges the directors of the condominium property’s HOA association and the management company know there were issues for years but did nothing to address structural damage. 

Specifically, according to an ABC 15 report, Empress Management allegedly "knew for years about steadily worsening damage to structural steel components supporting the building yet failed to undertake further inspections or any repairs and allowed the damage to worsen."

Court documents also accuse the homeowners’ association directors of negligence for failing to have a reserve study for the building and failing to have reasonable reserve funds. 

The case is being overseen by Steinberg Law Firm. 

Can an HOA be held responsible in this case?

While the legal responsibilities that a homeowners’ association has can differ from state to state, and even from one municipality to another, there are specific duties that all HOAs should abide by. 

These include the duty of care, the duty of loyalty, and the duty to act within the scope of authority. The duty of care simply means that all members of an HOA board must make educated, informed decisions when voting on community matters. The duty of loyalty means that board appointees must act in the best interest of the association as a whole instead of voting for their own gain – in other words, they must avoid conflicts of interest and remain impartial.

In the Myrtle Beach situation, the duty to act within the scope of authority is likely to be the biggest player. It could come into play in court. 

The legal counsel representing the residents of Renaissance Tower may argue that the property’s HOA directors were well within their scope of authority to allot funding to pay for some of the repairs the building needed, yet they opted to disregard the severity of the situation, ultimately causing hundreds of people to be displaced for the foreseeable future.

It is worth noting that many of the building’s residents use their units as vacation homes and do have other residences to return to while the legal battle continues. 

What do you think? Should the HOA be held responsible in the Renaissance Tower case?

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Gordon W. McNamee

Gordon W. McNamee

Gordon W. McNamee is a Certified Public Accountant (CPA) based in Rancho Cucamonga, CA. Gordon W. McNamee can assist you with your tax return preparation, payroll, accounting and tax planning needs. <br /> <br /> 2021 is Gordon W. McNamee, CPAs 38th year in the profession. As as a former IRS agent (1984 through 1987), Gordon has been in public accounting since 1987. Gordon specializes in individual, corporate, HOA, trust, estate and payroll taxes. He also prepares financial statements and provides accounting & bookkeeping services. He enjoys making his clients feel at ease while providing a personalized professional service.

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