Maryland Court Clarifies Extent of HOA Books & Records a Homeowner is Entitled To

Maryland Court of Special Appeals decision (July 30, 2015)

This case involved a dispute between a homeowners’ association (“Association”) and the owner of a condominium unit (“Owner”) that was part of the Association over water damage caused to the Owner’s unit from roof leaks that had not been repaired by the Association. Included in the dispute were issues concerning the extent of documents pertaining to the Association that Owner was entitled to review and copy.

The Owner purchased a condominium unit in 2009, and experienced multiple incidents of water leaking into his unit allegedly as a result of the homeowners’ association’s (“Association”) failure to maintain proper reserves and breach of its duty to remediate damage to his unit from water infiltration and mold contamination. In November and December of 2012, Owner requested that the Association permit the examination and copying of books and records relating to the financial welfare of the Association including legal bills from October 2009 to the time the written request was sent, and all records that contained any written advice of the Association’s legal counsel that related to or concerned Owner, his spouse, or unit. In a response to Owner’s request, Association stated that it would allow inspection of legal invoices, but not detailed billing reports from legal counsel because they were considered privileged documents that were not maintained as part of Association’s regular financial books and records. The Association further informed Owner that legal documents that constituted a “financial book or record” of the Association would only be produced to the extent that they pertained to the Owner. When the inspection took place, the Association refused access to the detailed billing reports or written advice of its legal counsel. Owner filed a lawsuit against the Association in which he sought the production of the documents that were refused by the Association.

The trial court ruled that the Owner was entitled to the Association’s legal counsel’s billing reports and supporting documentation for legal services, but not documentation that included the written advice of legal counsel. The Association and its management company then appealed the trial court decision and Owner filed a cross-appeal in which he argued that both the Association’s governing documents and applicable state laws allow a unit owner to inspect and copy both the Association’s legal counsel’s detailed billing reports and the advice of counsel without regard to whether any of the requested material is considered privileged.

The appellate court stated that existing law mandates that if there is a conflict between an Association’s governing documents and state statutes, the statute controls. Thus, the appellate court focused its attention on what the state statutes provided relative to the extent of documents that are available to homeowners for inspection and copying. After considering legislative history relative to the applicable statutes, the court found that existing law does not abrogate either the common law work product doctrine or the attorney-client privilege. Recognizing the public interest in promoting condor in communications between attorneys and their clients, the appellate court affirmed the lower court’s determination that written advice of legal counsel that is protected by the attorney-client privilege is not discoverable absent a waiver by the affected party.

The appellate court also found that: (i) because the Association and the management company did not meet their burden of proving that either the attorney-client privilege, or the work product doctrine, applied to all or portions of the detailed billing reports that were requested by the Owner, the protections did not apply in this case and the Owner was entitled to the requested documents as part of the Association’s financial records; and (ii) because the infringement of Owner’s rights could not be readily, adequately, and completely compensated for with money, Owner was entitled to injunctive relief to effectively protect his rights and enforce the production of the documents that he was entitled to receive.

See case decision: 100_Harborview_Drive_Condo._