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TURNOVER OF RECORDS AND MANAGEMENT

Questions about management turnover come up all the time. HOA boards get frustrated with HOA or condo management in various ways.

Sometimes the board of the HOA or condo association created the merciless swirling and scary "eddy" and everyone goes down together.

Sometimes the manager has become a real problem. (Sometimes they do not know what they are doing - imagine that!)

Managers come in different "flavors" when it comes to transitioning:

Some cling with claw like tenacity, even when the blood begins to seep from the wounds.

Some conveniently "lose" records or turn over a disarray of "stuff" relishing the difficulties the board will have in straightening out the bookkeeping and materials.

Some cut out early on the contract termination clauses and do nothing during their "lame duck" (just an analogy) period "in office" (again, just an analogy), leaving the Board in a lurch. Don't get me wrong, some boards pull out early and do not understand that the manager has certain things they need to do to "wrap up".

On the other hand,

Some managers work with boards in a professional and business-like way, even when relations have broken down, just to keep things reasonable and copacetic, and to make the transition more smooth for all (sometimes to "be the better 'person').

It is good to remember that sometimes relations break down over very little and can later be repaired, and sometimes managers are asked back by a new or changed board. And it is always good to strive for a good reputation for being reasonable under any circumstances.

Now, all that said, here is a common question:

"Our condominium?s property management company has been the keeper of all and complete financial and legal documents ... what is the recourse of an HOA when it changes to another property management company to have the previous company turn over all documents to the new company?"

Right off the bat, the manager generally does keep all the records unless the contract with management says otherwise. (A "contract" duh you might say - what a concept!)

So first look to the contract for the termination provisions/requirements, and, hopefully, some guidance and requirements related to turnover of records.

If there are guiding provisions, and either party does not do what is required, there is recourse in the form of a "breach of contract" cause of action, allowing for recovery of commonly anticipated losses for such a "breach".

However, EVEN IF THERE IS NO GUIDANCE IN THE CONTRACT, that is not an excuse to be sloppy, mean, spiteful, lackadaisical (word?) or careless about record turnover. And it does not mean there is no remedy for losses. Managers would be expected, as a general rule, to keep the records of the HOA and most contracts specify what type of records must be kept. Thus, there would be a reasonable expectation that the common HOA records would be turned over at time of transition in some form that is business-like. Managers do not always turn over their reports, confidential or otherwise, believing them to be their work product; however I believe that in most cases a board would be entitled to have them as part of the historical record. There is commonly a lot of "meat" in those reports.

Sometimes people get upset because management wants to turn over electronic files and boards want paper. Sometimes managers refuse to allow boards to utilize the same programs for continuation of the recordkeeping that management used, citing trade secret or lack of "license" for certain use of programs types of arguments which make sense. However, if the information that is turned over in electronic form is incomprehensible because the underlying program access is denied, that could cause losses that a board might recover. In fact, if the records that are turned over are a mess, a board might be able to recover some or all of the costs of paying someone to go through and pull out what the board needs for its financial and other records.

But then, if there is no contract defining what records must be kept and who keeps them, or general confusion arose during the working relationship over who was keeping what records and no one did anything about it for a period of time, and/or there is little to no guidance as to who had what duties, there is little chance of making a good enough argument to recover losses for trying to restore some semblance of records.

There is one common way that this happens. No one is appointed as the "gate keeper" of records or communications, the one that receives and disseminates communications to all proper parties. When there is no "gatekeeper", boards and management tend to send out all kinds of communications and emails that cross, do not reach all pertinent parties, or are lost in the process. When board members email each other or the manager directly for example, but not all emails are sent to all board members or the manager, things start to get out of hand. I have adopted a policy where I will accept only one person from any HOA (manager or board member) as my point of contact with the understanding that that person is responsible to

Transmit what I send to all the board members and the record keeper for the HOA or Condo Association records.

Receive all communications that are for me and digest or piece them together in such a way that I am answer one set of questions or hearing one cogent set of facts and not hearing from 5 different board members what is up.

In essence ... a "gatekeeper".

No matter how ugly it gets, the party (or parties) that remain(s) above-board, business-like and professional in the transition process is/are winner(s) in my book, and quite possibly (in case my opinion does not matter) in the eyes of any hearing officer or court.

Full post as published by California Condo & HOA Law on March 16, 2009 (boomark / email).