Can The Association Deny You Access To The Association's Financial Records?

Facts

You receive information that association board members and representatives of the community management firm are having lavish dinners at some of the most expensive restaurants in Orange County, all at association expense. You request the association to provide you with records in order to substantiate the information that you received. The association declines to provide you with the records. Can the association be forced to provide you with these records?

Legal Analysis

This issue is governed by Civil Code section 1365.2.

The short answer is “yes.” The association must produce to the owner, on the request of the owner, all financial records, which would include records relating to association restaurant expenses. The scope of records that a member is entitled to receive is very broad. It includes contracts with vendors, state and federal tax returns, reserve account balances, agendas, minutes of meetings of the board of directors, members and any committees, excluding executive session meetings, and membership lists. As to membership lists, the owner must state the purpose of the request which must be reasonably related to the requestor’s interest as a member. A member may opt out of the list so that that member’s name is not disclosed. A member is also entitled to look at the check register of the association. The records must be made available for inspection at the business office of the association. The records also must be available for copying. The member may be charged a reasonable fee for the copying costs. However, the member cannot be charged an inspection fee, except that the association may charge $10 per hour, but not to exceed $200, for the time spent in redacting enhanced association records. This means that if certain association records have to be redacted, there can be a statutory charge for this service. The issue of whether any such information is entitled to be redacted is addressed in the statute. The statute says that the association may redact information where it is likely to lead to identity theft or fraud or where the information is privileged under law, such as attorney-client information, or where it would constitute an invasion of privacy of the members, or constitutes a record of disciplinary action against a member or discloses personal identifying information or discloses personnel records other than payroll records. Further, interior architectural plans for member’s homes may not be disclosed.

The association must produce information regarding compensation to its employees and vendors. Further, if the association is redacting or withholding documents, the association must explain the legal basis for this action. The association records may not be sold or used for commercial purposes not reasonably related to a member’s interest.

In the event of litigation between the association and a member regarding access to records, the prevailing party may recover reasonable attorney’s fees. In addition, the member may recover a penalty of $500 for each separate denial of records which was unjustified. In an action by a member against the association in which the association prevails, the association may recover its costs only if the court finds the member’s action to be “frivolous, unreasonable or without foundation.”

Electronically stored information may be compelled to be produced. The records to be produced include the current year and two previous years.

There is a time period for the association to produce the records. The records from the current year must be produced within 10 business days. The records from the two previous years must be produced within 30 calendar days.

The association does not have any liability for failure to retain records prior to January 1, 2006. If the association does have records prior to January 1, 2006, the statute is unclear as to whether these records have to be produced.