COPING WITH AB 1098 - RECORDS INSPECTION IN HOAs
Coping with the New Records Inspection Requirements for HOAs is not going to be easy. I have written plenty of FYIs on the subject so check other articles on the website for more information.
Records Inspection Policy: Why Have One?
(1) It helps a Board to have a road map.
(2) It is hard for an owner who might prefer to storm the management office and demand to see
all the Association records to argue with a piece of paper.
Is the Board required to have a policy? No, not by the statute itself.
Some Boards will adopt policies containing all provisions in the statute and others will probably simply adopt a policy stating that a written request is required to ask to review or copy records. A Board could even attach the form that is required. There could be many machinations in between. That will be a choice for each board.
Below, I provide you with what I believe is the structure for adopting a reasonable Records Inspection Policy. It is comprehensive, simply to provide Associations with all of the information in the statute on records review. As you can see though, it needs some blanks filled in and some of the information depends on what your association documents say, and whatever policy is adopted deserves the review and blessing of a knowledgeable attorney. This information does not constitute legal advice, and your legal counsel may want suggest something different. It is meant to offer a helpful tool..
©Beth A. Grimm, Esq.
[SAMPLE] RECORDS INSPECTION RULES/POLICY FOR HOAs
[Please note that this policy may require some adjustments if your governing documents have more requirements than the Civil Code has, or is in conflict with the Civil Code - consult with your association legal counsel for advice as this sample policy does not constitute legal advice. A review of your governing documents would be required. All areas shown in brackets and bold print need to be finalized per your needs.]
RECORDS INSPECTIONS RULES/POLICY
To become operative on July 1, 2006.
WHEREAS, the Board is proposing new rules relating to inspection of HOA records and is considering adoption of a policy herein, for the Association; and
WHEREAS, the governing documents for the Association address the subject matter at [Document Name, Article ___, Section______]; and
WHEREAS, California law provides guiding regulations in this areas in Civil Code Sections 1363(f) and 1365.2, and Corporations Code Section 8330, and
[OPTIONAL] WHEREAS, the Board has sought legal advice with regard to the extent and limitations of Board authority in imposing and enforcing said this policy;
Pursuant to California law, we hereby adopt the following Records Inspection Policy:
REQUEST MUST BE IN WRITING: All requests to inspect and/or copy records of the Association must be made in writing [on the attached form/in the format click here for form]. The Owner requesting the list shall state the purpose for which the list is requested which purpose shall be reasonably related to the requester's interest as an Owner. If the Board reasonably believes that the information in the list will be used for another purpose, it may deny the Owner access to the list. If the request is denied, in any subsequent action brought by the Owner to enforce the right to receive records, the association shall have the burden to prove that the Owner would have allowed use of the information for purposes unrelated to his or her interest as an Owner.
WHAT MAY BE INSPECTED/COPIED/PROVIDED: The following records shall either be made available for inspection or copied pursuant to an Owner request (on the terms, requirements and timelines stated below):
"Association Records" which include:
Financial and Accounting Records
Membership lists, including only the name, property address, and mailing address of Owners. An Owner of the association may opt out of the sharing of his or her name, property address, and mailing address by notifying the association in writing that he or she prefers to be contacted via the alternative process in subdivision (c) of Section 8330 of the Corporations Code. To do so, an Owner must send his or her written request to "opt out" the Association. What this means is that if any Owner requests a copy of the Association Membership list to send out any communication, that Owner will not receive the names and addresses of those Owners who have "opted out". However, the "alternative" is that Owner may request that the Association send out the communication to all Owners or those who opted out, at the expense of the Owner requesting the service. This opt-out shall remain in effect until changed by the Owner.
- Any financial document required to be provided to an Owner in Section 1365 (which relate to Association financial disclosures to Owners).
- Any financial document or statement required to be provided in Section 1368 (which relate to documents provided by seller at time of sale).
- Interim unaudited financial statements, periodic or as compiled, containing any of the following: balance sheet, income and expense statement, budget comparison, general ledger (a report that shows all transactions that occurred in the association account over a specified period of time), all of which are prepared in accordance with an accrual or modified accrual basis of accounting.
- Executed contracts not otherwise privileged under law.
- Written board approval of vendor or contractor proposals or invoices.State and federal tax returns.
- Reserve account balances and records of payments made from reserve accounts.
- Agendas and minutes of meetings of the Owners, the board and any committees appointed by the board of directors; excluding, however, agendas, minutes, and other information from executive sessions of the board of directors as described in Section 1363.05.
- Check registers.
"Enhanced Association Records" which include invoices, receipts and canceled checks for payments made by the association, purchase orders approved by the association, credit card statements for credit cards issued in the name of the association, statements for services rendered, and reimbursement requests submitted to the association, provided that the person submitting the reimbursement request shall be solely responsible for removing all personal identification information from the request.
The timeline for records available for inspection and for providing said records is:
||TIME TO PROVIDE|
Association records/enhanced records for the current fiscal year||
within 10 bus. days of written request|
Association records/enhanced records for prior two fiscal years||
within 30 bus. days of written request|
Minutes of Board/Association Meetings - all years available||
per timeline above|
Minutes of meetings of committees with decision-making authority for meetings commencing on or after January 1, 2007||
within 15 calendar days following approval|
WHO MAY INSPECT/VIEW/COPY: The inspection and/or copying may be done by an Owner of the association, or the Owner's designated representative, subject to payment of certain costs by the Owner, as specified below. The Owner shall make this designation in writing.
WHERE/HOW DOES ONE INSPECT? The records shall be made available for inspection and copying [these are the options: in the association's business office within the common interest development - note that if the association does not have a business office within the development, the association must make the specified association records available for inspection and copying at a place that the requesting Owner and the association agree upon. If the association and the requesting Owner cannot agree upon a place for inspection and copying pursuant to paragraph (2), or if the requesting Owner submits a written request directly to the association for copies of specifically identified records, the association may satisfy the requirement to make the association records available for inspection and copying by mailing copies of the specifically identified records to the Owner by first-class mail within the timeframes set forth above. So here, you need to complete this pursuant to what you have available/prefer, in the way of providing the records. Discuss this with your attorney.]
ELECTRONIC DELIVERY: A requesting Owner may make a request for specifically identified records by electronic transmission or machine-readable storage media. To the extent the Association can produce the requested records by electronic means and they can be transmitted in a redacted format that does not allow the records to be altered, the Board may satisfy the request via electronic records.
WHAT ARE THE COSTS/WHO PAYS? The requesting Owner will be billed for the direct and actual cost of copying and mailing requested documents if copies are required. If the association (or manager) is going to make the copies, the Board/management shall inform the Owner of the amount of the copying and mailing costs, and the Owner must agree to pay those costs, before the copying and mailing of the requested documents will occur.
The Board/management may as an alternative, require that Owner provide a copy service to copy any documents desired, in which case the Association and Owner have to agree upon a location for the copying to take place.
For electronic records production, the cost of duplication shall be the direct cost of producing the copy of a record in that electronic format.
REDACTION/COSTS - The association may withhold or redact information from the association records for any of the following reasons:
|The release of the information is reasonably likely to lead to identity theft. For the purposes of this section, "identity theft" means the unauthorized use of another person's personal identifying information to obtain credit, goods, services, money, or property.|
||Examples of information that may be withheld or redacted pursuant to this paragraph include bank account numbers of Owners or vendors, social security or tax identification numbers, and check, stock, and credit card numbers|
||The release of the information is reasonably likely to lead to fraud in connection with the association.|
|| The information is privileged under law. Examples include documents subject to attorney-client privilege or relating to litigation in which the association is or may become involved, and confidential settlement agreements.|
||The release of the information is reasonably likely to compromise the privacy of an individual Owner of the association.|
||Personnel records other than the payroll records required to be provided as clarified below.|
||Interior architectural plans, including security features, for individual homes.|
||Agendas, minutes, and other information from executive sessions of the board of directors as described in Section 1363.05|
||The information contains any of the following:|
- Records of a-la-carte goods or services provided to individual Owners of the association for which the association received monetary consideration other than assessments.
- Records of disciplinary actions, collection activities, or payment plans of Owners other than the Owner requesting the records.
- Any person's personal identification information, including, without limitation, social security number, tax identification number, driver's license number, credit card account numbers, bank account number, and bank routing number.