## Facts

- A property owners association governed by recorded protective covenants and bylaws imposed annual maintenance assessments on Seabrook Island lots.
- The covenants required each lot’s annual charge to be “based upon the assessed valuation” of the lot and improvements as fixed annually by the county tax assessor.
- The bylaws authorized annual maintenance charges and permitted fixed rates for improved and unimproved property, but also tied assessment adjustments to tax-assessed value.
- For years, the association used a flat-fee system: one fixed amount for unimproved lots and another fixed amount for improved lots, without using each lot’s tax-assessed valuation.
- Pelzer owned two lots (one improved and one unimproved), paid assessments from 1976–1983, refused to pay the 1984 assessments, and challenged the assessment method as inconsistent with the governing documents.
- The association sued to collect the unpaid 1984 assessment; Pelzer counterclaimed seeking invalidation of the 1984 assessment and refunds of prior payments.

## Issues

1. Whether the association’s flat-fee assessment method for improved and unimproved lots complied with covenants and bylaws requiring assessments to be based on tax-assessed valuation.
2. If the method was invalid, whether Pelzer was equitably estopped from recovering assessments he voluntarily paid in prior years.

## Decision

- The court held the association’s flat-fee assessment scheme conflicted with the covenants and bylaws requiring valuation-based assessments.
- The association could not justify a method inconsistent with the governing documents by claiming it was a reasonable or administratively preferable alternative.
- The judgment awarding the association the unpaid 1984 assessment was reversed.
- The dismissal of Pelzer’s counterclaim for refunds of assessments paid from 1976–1983 was affirmed on equitable estoppel grounds.
- Disposition: affirmed in part and reversed in part.

## Legal Principles

- Recorded covenants and bylaws governing HOA assessments are enforced according to their terms; an association must follow the prescribed assessment formula.
- Board discretion and “business judgment” do not permit an assessment method that contradicts express covenant/bylaw requirements.
- Equitable estoppel may bar a refund claim where an owner knowingly pays improper assessments over time and the association, acting in good faith, relies on and expends the funds for proper common purposes.
- A timely objection may prevent enforcement of a nonconforming assessment prospectively, even if past payments are not recoverable.

## Conclusion

The court required the association to calculate maintenance assessments using the valuation-based method mandated by its covenants and bylaws, invalidating the attempted collection of the 1984 flat-fee charge, but it denied the owner’s request for refunds of prior voluntary payments because his long acquiescence and the association’s good-faith reliance supported equitable estoppel.


Seabrook Island Prop. Owners Ass’n v. Pelzer, 292 S.C. 343, 356 S.E.2d 411 (Ct. App. 1987)