8.03 Statutory Powers of Incorporated Associations

• Library: South Carolina Community Association Law: Condominiums and Homeowners Associations (SCBar) (2019 Ed.)

8.03 Statutory Powers of Incorporated Associations

A. General Powers

Most homeowners associations are organized pursuant to the South Carolina Nonprofit Corporation Act. The Act provides that, unless its articles of incorporation provide otherwise, every corporation has perpetual duration and succession in its corporate name and has the same powers as an individual to do all things necessary or convenient to carry out its affairs.¹⁵⁹ The Act lists 18 specific powers of nonprofit corporations. These are:

• To sue and be sued, complain, and defend in its corporate name.¹⁶⁰
• To have a corporate seal, which may be altered at will, and to use it, or a facsimile of it, by impressing or affixing or in any other manner reproducing it.
• To make and amend bylaws not inconsistent with its articles of incorporation or with the laws of South Carolina for regulating and managing the affairs of the corporation.
• To purchase, receive, lease, or otherwise acquire, and own, hold, improve, use, and otherwise deal with, real or personal property or any legal or equitable interest in property, wherever located.
• To sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of all or any part of its property.
• To purchase, receive, subscribe for, or otherwise acquire, own, hold, vote, use, sell, mortgage, lend, pledge, or otherwise dispose of, and deal in and with, shares or other interest in or obligations of any entity.
• To make contracts and guaranties, incur liabilities, borrow money, issue notes, bonds, and other obligations, and secure any of its obligations by mortgage or pledge of any of its property, franchises, or income.
• To lend money, invest and reinvest its funds, and receive and hold real and personal property as security for repayment, except as limited by the Act.¹⁶¹
• To be a promoter, partner, trustee, member, associate, or manager of any partnership, joint venture, trust, or other entity.
• To conduct its activities, locate offices, and exercise the powers granted by the Act within or without South Carolina.
• To elect or appoint directors, officers, employees, and agents of the corporation, define their duties, and fix their compensation.
• To pay pensions and establish pension plans, pension trusts, and other benefit and incentive plans for any or all of its current or former directors, officers, employees, and agents.
• To make donations not inconsistent with law for the public welfare or for charitable, religious, scientific, or educational purposes and for other purposes that further the corporate interest.
• To accept gifts, devises, and bequests subject to any conditions or limitations, contained in the gift, devise, or bequest so long as the conditions or limitations are not contrary to the Act or the purposes for which the corporation is organized.
• To impose dues, assessments, and admission and transfer fees on its members.
• To establish conditions for admission of members, admit members, and issue memberships.
• To carry on a business.
• To do all things necessary or convenient, not inconsistent with law, to further the activities and affairs of the corporation.¹⁶²

As a result of this list, it is not necessary for the articles of incorporation or the bylaws to provide that the association has any particular powers as, if nothing is said in those documents, the association automatically has the powers set forth in Act.¹⁶³ On the other hand, if the articles or bylaws do specify a particular power, there has been considerable debate about the consequential limiting effect.

In Lovering v. Seabrook Island Property Owners Ass'n,¹⁶⁴ a bylaw provided that the association had the power to subject property in the community to an annual maintenance charge. The association levied a special assessment and residents challenged its validity. The court said the bylaws did not empower the association to levy any assessments other than the annual maintenance charge and held that levying the assessment was an ultra vires action. It explained that a corporation may exercise only those powers granted to it by law, by its articles of incorporation, and any bylaws...