Reader Questions - Financial Records

Mr. Richardson,

I was an officer of a small condo association for about 10 years. There were 3 of us officers originally and as they moved away or just quit doing anything to help, I basically ran this association for the last 6 or so years. Then they decided they want to put in 3 new officers. Since this happened, the president will not allow anyone to see any bank records and tells everyone they have to wait until they decide to have a meeting. I do not believe they can legally do any of this, but cannot get any backing from other owners. Is there any California code that would allow me access to these records?

Thank you for any help you may offer,

B.M., El Monte

Dear B.M.,

Common interest development homeowners have the right to review certain association financial records. Civil Code Sections 5200-5215 give members the right to inspect or copy Annual Budget Report items (Civil Code 5300), disclosures sent to prospective purchasers (Civil Code 4525), balance sheets, income and expense statements, budget comparisons, general ledgers, executed contracts, board approvals of proposals or invoices, tax returns, reserve account balances, records of payments from reserves, agendas and minutes of member and open board meetings, membership list, and check register.

If you request a review of your association records, your request should be in writing. The association can require reimbursement of the copy cost. Make your records request reasonably specific – it is not helpful to request a review of “everything”.

HOA boards should not keep financial information from their neighbors, except when it is truly necessary, such as financial matters related to closed session issues or neighbor delinquencies.

Thanks,
Kelly

Dear Kelly,

I requested to inspect the Requests For Proposal and copies of the losing proposals for my association’s major contracts. The association refuses to allow me to inspect these documents and cites Civil Code, saying that homeowners are allowed to view executed contracts only.

Do you agree with the Association’s position?

What can be done to revise the Davis-Stirling Act, so that contractor procurement process is more open and all association members can be assured that contractors hired are based on lowest responsible and responsive bids.

T.H., Pomona

Dear T. H.,

Your association is correct. It is not required by Civil Code Section 5200 to provide access to, or copies of, unsuccessful contract proposals or the Request For Proposal which solicited proposals. While the board is considering proposals, it makes sense not to circulate them because of the concern that the information may get back to the bidding vendors. However, after the association has selected and contracted with a vendor, there is less need for confidentiality. However, some proposals such as from cable or internet providers require that their proposals remain confidential, so the competition cannot find see their pricing.

To truly know if the association chose the most complete, qualified and economical bid, you would need to do what your board did – specifically, sit in on the meetings where the proposals were presented, receive input from the proposers, manager and possibly a consultant, and participate in the discussions comparing the proposals. The best way to do that is to have a seat on the board.

Thanks for your question,
Kelly

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.