Real Estate & Property Law

Are Board Members Entitled to See HOA Records?

Here is an email from a board member:

"I find myself in a delicate situation, having served on our Assocaition's board for more than twenty some years during my tenure as Association President. Last year, term ending in June 2010, I requested several documents and records from the Management Company who serves as our Custodian of Records ... None of the records and or documents requested are considered 'privileged' so there remains no reason why the management agent and company withheld such from me. I am seriously considering filing a Small claims action to order production of documents and ask for penalties for their refusal. My question to you is this, can I sue the management company for their failure to produce the requested documents without having to drag the Association into the civil matter? I don't want to create issues with fellow former directors but feel that I have no choice other than to pursue legal avenues to get the information that I had a right to, information and documents that were intentially withheld from me and in direct violation of the California Civil Code."

The association records belong to the association, and if records are being withheld from a board member, that is a problem. But the ultimate decision on any request is the responsibility of the Board. The manager would be acting on behalf of the Association in most situations (a look at the contract would disclose this). Thus I believe that the Association would be the proper party to be sued in any action to seek redress for failure to provide the records.

As to rights, Board members have the right to see all corporate (association) records under Corporations Code Section 8334 which says:

"8334. Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the
corporation of which such person is a director."

There is a cavaet. In a case, King v. Oakmore Homes, a director sued to see proxies from an election, and the court said no. There was some discussion in the case that Mr. King might want to see the proxies to see if people who promised to vote for him did, but the court said since he was elected, he did not need to see the proxies. So there are times when a board might be entitled to withhold records, if there is reason to believe there might be an improper purpose in seeing the records. In some cases where a board believes that a director may disclose confidential records inappropriately, it may be okay to withhold records, but it would be important to get legal advice in a situation like that.

The series of Corporation Codes allowing for inspection of records AND Civil Code Section 1365.2 which allows for inspection of many association records by an owner both have provisions for recovery of attorney fees for an unlawful refusal to provide or allow inspection of the records covered. Civil Code Section 1365.2 also allows for a $500 fine for each violation.

So it is important for boards and managers to understand what must be provided. There are specific timelines discussed in the laws.

Full post as published by California Condo & HOA Law on August 21, 2010 (boomark / email).