When a community association club’s membership documents clearly and unambiguously require members to continue paying their dues until their membership is reissued, they must continue to do so; even after their resignation, the South Carolina Supreme Court ruled in August in Cassawassie Island Members Club, Inc. v. Ronnie D. Dennis and Jeanette Dennis.
In 1999, the Dennises joined the private Callawassie Island Members Club in their community association. They became equity members and agreed their membership would be governed by the club’s membership documents. In 2010, the Dennises decided they no longer wanted to be club members and stopped making payments. The club bylaws state, “Any equity member may resign from the Club by giving written notice to the Secretary. Dues, fees, and charges shall accrue against a resigned equity membership until the signed equity membership is reissued by the club.” In 2011, the club filed a breach of contract against the Dennises, alleging the unambiguous terms of the membership documents required them to continue to pay their membership dues, fees, and other charges until their membership was reissued to a subsequent owner of their lot.
Fast forward to 2018 and several appeals later, the South Carolina Supreme Court ruled in favor of the club, hinging its decision on language in the membership documents that have governed the club since 1994. On behalf of CAI, Thomas Mikell, a fellow in CAI’s College of Community Association Lawyers (CCAL), authored an amicus brief on this topic when this case was being appealed to the Supreme Court. In his brief, Mikell informed the court of the vital importance of membership dues to a community association. He explained that by ruling in favor of the club, the court will be protecting the interests of community associations and their members throughout the state by clarifying a legal and financial concept for associations, which must financially support their operations based upon a known and reliable revenue source.
The financial viability of any community association ultimately depends on its ability to collect assessments and dues to cover expenses. Homeowners agree to pay association assessments and dues as stated in the governing documents. This financial obligation is vital to the community association’s viability and integrity, and boards have a fiduciary obligation to ensure funds are collected in a timely manner.
CAI applauds the hard work of the community association attorneys in this case. To learn more about CAI’s public policies on assessments, check out www.caionline.org/advocacy. To explore CAI’s amicus program, go to www.caionline.org/advocacy/amicus.