Association Directors Have Greater (But Not Unlimited) Inspection Rights Than the Members

The directors of a homeowners association (“Association” ) have greater rights relative to the inspection of the Association’s books, records, and properties then the rights of the Association’s owner/members. The actual scope of inspection rights is contained in state statutes and the Association’s governing documents (typically the bylaws), so dealing with issues relative to the exercise of a director’s inspection rights should begin with getting a clear understanding of what the extent of those rights are by reviewing all relevant provisions contained in the Association’s governing documents and the statutes of the state in which the Association is located.

In general, each director of an Association has an absolute right to inspect and copy all books, records, and documents of every kind and to inspect the physical properties of the Association at any reasonable time. Because an Association’s directors have fiduciary obligations to perform their duties in good faith and in a manner that is believed to be in the best interests of the Association, a director should not be exercising his or her inspection rights for personal gain or other reasons that are not in the best interests of the Association. Thus, a director is not generally required to make a written demand for the inspection and copying of Association records or specify any reason for the inspection the way a member may have to.

Notwithstanding the general rule, various court case decisions have held that the “absolute right [of a director] at any reasonable time to inspect and copy all books, records and documents of every kind is a statutory right that must be balanced against competing constitutional rights. Thus for example, a director’s efforts to inspect a personnel file that is protected by a constitutional right of privacy, may be preempted by the protected right. Additionally, when an attempted inspection of an Association’s records by a director involves conflicts of interest or the likely disclosure of information that would be in violation of the director’s fiduciary duties to the association and its members as a whole, the Association’s board of directors should seek the advice of legal counsel on whether the director should be given access to the records in question. Upon evaluation, it may be appropriate for the Association to deny the director the right to inspect or to condition the right of inspection on the director’s agreement to conditions regarding the site and circumstances of the investigation or a commitment, in writing, to refrain from disclosing the information received. While there may be public policy that favors broad inspection rights for an Association’s directors, those rights can and should be limited under appropriate circumstances by an intervening court’s imposition of appropriate conditions. Thus, failing to reach a satisfactory agreement with a director relative to his or her inspection rights concerning a particular matter, the Association should seek a protective order from an appropriate court.