Beaumont Tashjian Law Blog

Tuesday, October 4, 2016

A Needle in a Haystack: The Top Five Pitfalls in Responding to Homeowner Requests for Association Records

By Brittany A. Ketchum, Esq.
Published in the CAI-Greater Inland Empire Chapter's Connect Magazine

Among the many membership rights and privileges afforded to homeowners under the Davis-Stirling Common Interest Development Act (“Act”) and the association’s governing documents is the right to inspect and copy association records. The records retained by an association are copious, to say the least, and responding to homeowner requests can feel like finding the proverbial needle in a haystack.

Too often, such requests stem from, or become, a source of contention. Imagine (or recall from your own experiences) a scenario where a disgruntled homeowner seeks information from management or the board or makes excessive requests for documents from the association. More often than not, when a homeowner asks for “information” or “documents,” the impetus behind the request is to support his or her position in a dispute (or potential lawsuit) with the association.

Before creating documents or compiling information for a requesting owner, take reasonable steps to avoid these common pitfalls.

Pitfall #1: Failing to Timely Respond to a Request

The first pitfall in accurately responding to request for association records is failing to produce the records on or before the statutory deadline. Once a proper request for specific “association records” or “enhanced association records” is received, the association is required to make the records available to members in the timeframes outlined in the statute. (See, Civil Code § 5210.)  The timeframes for complying with a proper request are as follows: records prepared in the current fiscal year must be provided within ten business days and records from prior fiscal years within thirty calendar days. (Civil Code § 5210.)

Once a proper request is received, the statutory deadlines are triggered. This begs the question, what constitutes a proper request?

A proper request should be made in writing and must specifically identify the requested record, as defined by Civil Code Section 5200. Subparagraph (a) of Section 5200 lists those “association records” members are entitled to inspect and copy while subparagraph (b) outlines “enhanced association records.” Once the request is made, the association must inform the member of any costs associated with the request and the member must agree to bear the costs prior to the production of documents.

In addition, a member requesting the membership list is required to state the purpose for which the list is requested which purpose must be reasonably related to the requester's interest as a member. If the association reasonably believes that the information in the list will be used for another purpose, such as for commercial purposes (e.g., to sell a product or service), it may deny the member access to the list. If a proper request is received, the membership list must be made available within ten business days of the request. (Corporations Code § 8330.)

If the member does not want to inspect and copy the records in person at the association’s on-site business office, or, if no office exists, at a mutually agreeable location, such as the manager’s off-site office, then the member may request specified association records be delivered to the member by mail or by electronic delivery (e.g., email), provided the records are in a format that does not allow the records to be altered.

It is important to document records requests and responses in writing; specifically by written correspondence to the homeowner or, if the homeowner made a verbal request in a meeting, in the minutes of a meeting and follow up with written correspondence from the association.

Pitfall #2: Neglecting to Inform the Owner of any Costs

Pursuant to Civil Code Section 5205, the association may bill the requesting member for the “direct and actual” costs of copying and mailing requested documents. For example, an association may bill per page for copying charges and require reimbursement of any and all mailing costs. Although the Civil Code is clear in that the association may bill the member for “direct and actual” costs of copying and mailing, it is unclear whether the association may charge the member for a management company’s service fee in obtaining the record. Before passing on this cost to the member, seek and rely on legal counsel.

In addition to the direct and actual costs of copying and mailing, the association may bill the requesting member an amount not in excess of ten dollars ($10) per hour, and not to exceed two hundred dollars ($200) total per written request, for the time actually and reasonably involved in redacting an enhanced association record. (Civil Code § 5205(g).)

Prior to making the records available, the association is required to inform the member of the estimated costs and the member must agree, in writing, to the costs associated with copying, mailing and/or redaction of records.

Pitfall #3: Over-Inclusive Response

Unless otherwise addressed in the governing documents, the association is only required to make available those records defined by the Civil Code as “association records” or “enhanced association records;” the Association has no duty to prepare documents or compile information not otherwise an association “record” per an owner’s demand.

Moreover, membership lists are only required to include each member’s name, property address, and mailing address, but must exclude information for members who have opted out and communicated this decision to the association in writing. (Civil Code § 5220.)

Only records for the current fiscal year, and for each of the previous two fiscal years are required to be made available with the exception of meeting minutes (both board and member meetings), which minutes must be made permanently available. Therefore, records dating back ten years (excluding meeting minutes) are not association records required to be made available for inspection and copying under the Act.

Pitfall #4: Under-Inclusive Response

A member may bring legal action (e.g., in small claims court) to enforce that member's right to inspect and copy the association records. If a court finds that the association unreasonably withheld access to the association records, the court is required to award the member reasonable costs and expenses, including reasonable attorney's fees, and may assess a civil penalty of up to five hundred dollars ($500) for the denial of each separate written request. If the association prevails in the proceeding, it can recover its costs only if the court finds the action to be “frivolous, unreasonable, or without foundation.” (Civil Code § 5235.) To minimize exposure to liability, consult with legal counsel to ensure compliance with requests for records.

Pitfall #5: Forgetting to Redact Records

The association can and should redact records if the information is privileged (e.g., attorney-client or litigation privileged) or if release of information is reasonably likely to lead to identity theft, fraud or invasion of privacy. Examples of information that may be withheld or redacted include, without limitation, bank account numbers of members or vendors, check numbers, social security or tax identification numbers, driver's license numbers and bank routing numbers. Privileged information also includes, but is not limited to, records of disciplinary actions, collection activities, or payment plans of members other than the member requesting the records; minutes and other information from executive sessions of the board; personnel records other than the payroll records; and interior architectural plans, including security features, for individual homes.

Rights of members to inspect and copy records should not be thwarted. A savvy board will seek to maintain transparency with homeowners, while protecting sensitive information in its management and operation of the association’s affairs. 

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