Records Request – Must Owners Be Given Everything?

In light of recent national corporate and accounting scandals, some owners think their board has something to hide and they therefore request copies of each and every document related to the association’s finances. Upon learning of a maintenance fee increase some disgruntled owners demand immediate access to all contracts and personnel files. Meanwhile, volunteer board members, whose time is already taxed, are getting fed-up and believe that some requests are nothing more than fishing expeditions, or worse yet, harassment.

A board must carefully balance an owner’s legitimate interest in community affairs versus the time and cost of fulfilling requests for records. A REQUEST FOR RECORDS MUST NEVER BE SUMMARILY REJECTED. Recently, a South Carolina community association had to pay $35,518.00 in damages to unit owners who were denied access to association records. The association president refused to permit a couple to inspect or copy insurance information they needed to secure a construction loan. The Appeals court found the association’s Bylaws gave the owners the right to inspect the books and records at any reasonable time, and that the association was liable for breach of contract because of the president’s refusal.
This decision does not mean that an association has to submit to cumbersome, costly, time-consuming inspection requests that are motivated by harassment. Rather, the decision serves as a wake-up call to boards to review regulations and to create a written records inspection policy. This way, if limits are placed on an owner’s inspections, or an inspection request is refused, the board’s decision will rest on solid ground and help prevent the possibility of a successful lawsuit. Remember, however, the policy still must conform to Ohio law.

Guidelines for boards to follow when drafting a records inspection policy include:

Even if an association has not had problems with inspection requests, it is still wise to adopt a policy before a problem arises. A written policy sets ground rules for everyone to follow; owners, board members and managers alike. A sound policy will protect and likely prevent harassing requests from occurring. In addition, a policy will protect the association from legal liability because it protects owner’s rights to open the association’s books while, at the same time, it also protects the integrity of the association’s records.