Understanding Member Rights re Inspection of HOA Books and Records
Members of a homeowners’ association may typically inspect the association’s accounting books and records and the minutes of association meetings for any purpose that is reasonably related to his or her interests as a member of the association. State statutes may specify exactly what constitutes a proper or an improper purpose. Some statutes may also include provisions that require a member who is requesting certain records to state the purpose of his or her request (i.e. a request for a membership list), and that the stated purpose must be reasonably related to the requesting party’s interest as a member of the association. Other statutes may contain provisions that prohibit the improper use of the association’s books and records (using them for a purpose that is not reasonably related to the member’s interest as a member of the association) and allow for actions to be brought by an association for injunctive relief (a court order preventing certain conduct) and an award of damages against a member who violates the statutory limitations on the use of the books and records.
Member demands for the inspection of association books and records that relate to issues that are based on collective concerns of the members as a whole, or of a substantial group of members as opposed to a single member, are more likely to be upheld as a proper purpose. When an individual member makes broad inspection demands on an association relative to issues that pertain to a personal dispute between the member and the association that affect only that member, the likelihood of the demands being upheld in court becomes more questionable.
A member’s request for documents that are broadly described in a manner such as, “each and every document that refers to” a particular subject is not likely to be deemed a proper request. While such a request may be typically used in connection with formal discovery in connection with a pending court case, it is overly broad for a proper inspection demand directed to a homeowners association. A proper request should specify the particular records that the member is seeking to review and/or copy.
Most state statutes that pertain to member inspection rights contain provisions for the award of reasonable attorney fees and costs to the prevailing party in disputes concerning the enforcement of inspection and/or copy rights. In some instances the statutory language pertaining to an award of the costs and expenses, including attorney fees that are incurred in connection with the enforcement of inspection rights is absolute, but in others there may be limiting or discretionary language such as, “if the court finds that the failure to comply with a proper demand was without justification,” or “if a court determines that the association acted unreasonably” in withholding access to books and records, “the court may award reasonable costs and expenses, including reasonable attorney fees.” Conversely, statutes may provide for the recovery of costs and fees incurred by the association if a court determines that the member’s action concerning the enforcement of inspection rights was “frivolous, unreasonable, or without foundation.”
Members of homeowners’ associations that seek to inspect and/or copy books and records maintained by the association should be familiar with the provisions concerning such inspection rights that are contained in both the associations’ governing documents (typically the bylaws and/or the CC&Rs) and the applicable statutes of the state in which the homeowners’ association is domiciled. Requests for inspection and copying should be limited to items that the members are entitled to inspect and copy and all procedural requirements should be understood and complied with to minimize the possibility of a dispute over the member’s inspection rights. In the event of such a dispute, it is also important to know what the association’s governing documents and the applicable state laws provide relative to the recovery of costs and attorney fees incurred in connection with the dispute.
Given the high cost of litigating disputes and the uncertainty of the end result, parties should engage in every possible effort to resolve disputes over the inspection and copying of an association’s books and records in an amicable manner without becoming embroiled in formal legal proceedings. If each party understands their rights and responsibilities under the association’s governing documents and the applicable state statutes and acts reasonably towards the other, it is likely that disputes over inspection rights can be resolved without the necessity of court intervention.
About Lawrence Szabo
Lawrence Szabo has practiced business and real estate law in California since 1974. In addition to practicing law, he was licensed as a general contractor in 1999, a real estate broker in 2004, and completed a course of study in mediation in 2008. He has served as legal counsel to homeowners associations, association members, and property managers, has mediated disputes, has personally resided in multiple communities that are governed by a homeowners association as both an owner and a tenant, has held positions as both an officer and director of a homeowners’ association, and has served on and chaired HOA committees.
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