Records Request Homeowners Association by vdx37571


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									                         Inspection Of
                      Association Records

                             HindmanSanchez           P.C. Attorneys at Law • Denver & Fort Collins
  5610 Ward Road., Suite 300, Arvada, Colorado 80002-1310 Tel 303.432.9999 F ree 800.809.5242 F ax 303.432.0999 w

Inspection Of Association Records

        A member of your association comes to you requesting to see the minutes from the last twelve
board meetings. Another member asks for copies of all contracts the association has entered into, plus all
checks written to those contractors. Yet another asks for a copy of an opinion letter from the association
attorney. How should you respond to these requests for association documents? Are you obligated to hand
over the information? Can you charge the member for copying the documents?

         Colorado law and the association’s governing documents govern the availability of association
records for inspection by homeowners. There are several Colorado statutes that address access to records.
The Colorado Common Interest Ownership Act (“CCIOA”) applies in its entirety to all community
associations established after July 1, 1992, and partially to those created prior to that date. The
Condominium Ownership Act (“Condominium Act”) applies only to condominium associations, as
distinguished from single family or townhome associations. The Colorado Revised Nonprofit Corporation
Act (“Nonprofit Act”) controls nonprofit corporations in general and is applicable in the context of
homeowners associations because most associations are incorporated as nonprofit corporations. Each of
these statutes will be discussed separately because each is unique in its application.

Colorado Statutes
         Section 317 of CCIOA states “All financial and other records shall be made reasonably available for
examination and copying by any unit owner and such owner’s authorized agents.” CRS §38-33.3-317. The
section defines “reasonably available” to mean available during normal business hours after five days
notice. An association may charge a fee for copying records, but this fee may not exceed the association’s
actual cost of copying. This section applies to all common interest communities regardless of when they
came into existence.

Section 317 of CCIOA mandates that Associations keep the following as a permanent record:

        1.      Minutes of all unit owner and board meetings;
        2.      A record of all actions taken by the unit owners or board by written consent instead of
        holding a meeting;
        3.      A record of all actions taken by a committee of the board and
        4.      A record of all waivers of meeting notices of unit owners, board members, or any
        committee members.

        In addition to the permanent records an association is required to keep, an association must keep a
copy of each of the following records at its principal office:

        1.         Its articles of incorporation or other applicable organizational documents;
        2.         The declaration;
        3.         The covenants;
        4.         Its bylaws;
        5.         Resolutions adopted by the board that affect unit owners;
        6.         The minutes of all unit owners’ meetings and records of actions taken by unit owners
                   without a meeting for the past three years;
        7.         All written communications within the past three years to unit owners;
        8.         A list of the names and business or home addresses of its current directors and officers;
        9.         Its most recent annual report, if any; and
        10.        All financial audits or reviews conducted pursuant to section 38-33.3-303(4)(b) during the
                   immediately preceding three years.

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                  According to CCIOA, an association must make all financial and other records available during
         normal business hours, on notice of five business days, for examination and copying by any unit owner if
         the following conditions are met:

                 1.         The request was made in good faith and for a proper purpose;
                 2.         The request describes with reasonable detail the records sought and why; and
                 3.         The records are relevant to the purpose of the request. CRS §38-33.3-317.

                  The association must maintain a record of unit owners that allows preparation of a list of the names
         and addresses of all unit owners that shows the number of votes each unit owner is entitled to vote.
         Association records must be maintained in written form or in another form that can be converted into
         written form.

                 Section 107 of the Condominium Act requires condominium associations to keep “detailed,
         accurate records of the receipts and expenditures affecting the general and limited common elements.” CRS
         §38-33.3-107. Further, the statute requires that such records authorizing the payments shall be available for
         examination by the unit owners at convenient weekday business hours.

                  Another source of guidance is the Nonprofit Act. The Nonprofit Act requires a nonprofit
         corporation to make certain documents available to its members during regular business hours upon a
         written demand, regardless of the purpose of the request. CRS §7-136-102. CRS §7-136-101(5) provides
         that these records include:

                 1.         The articles of incorporation;
                 2.         The bylaws;
                 3.         Resolutions adopted by the board of directors relating to the characteristics, qualifications,
                            rights, limitations, and obligations of members or any class or category of members;
                 4.         The minutes of all members’ meetings, and records of all action taken by members without
                            a meeting, for the past three years;
                 5.         All written communications within the past three years to members generally as members;
                 6.         A list of the names and business or home addresses of its current directors and officers;
                 7.         A copy of its most recent periodic report delivered to the secretary of state; and
                 8.         All financial statements prepared for periods ending during the last three years.

                  The Nonprofit Act also provides that the association shall keep records of minutes of board of
         director and member meetings, records of all actions taken by the members or the board without a meeting,
         records of all actions taken by any committee acting in place of the board of directors, and records of all
         waivers of notices of meetings of members, the board or directors or any committees of the board of
         directors. CRS §7-136-101(1). Further, the Nonprofit Act requires associations maintain appropriate
         accounting records.

                 Pursuant to CRS§7-136-102(3), in order to inspect the records referred to in this paragraph, the
         following criteria must be met:

                 (a)        The member has been a member for at least three months;
                 (b)        The demand is in good faith and for a proper purpose;
                 (c)        The member describes with reasonable particularity the purpose and the records the
                            member wishes to inspect; and
                 (d)        The records are directly connected to the described proper purpose.

         Proper Purpose

                 “Proper purpose” is defined as “a purpose reasonably related to the demanding member’s interest
         as a member.” CRS §7-136-102(4)(b). Requesting copies of contracts into which the association has
         entered would be proper, for example, if done to verify the duties of the association’s contractors and to
         confirm that the association is not exceeding its authority in entering into such contracts. Requesting copies

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         of names and addresses of all owners in order to solicit them for personal gain is not a proper purpose and
         is expressly prohibited by CRS §7-136-105.
                  According to the Nonprofit Act, a member is entitled to inspect and copy, during regular business
         hours at the association’s principal office, association records if the member gives the association written
         demand at least five business days before the date on which the member wishes to inspect and copy such
         records. CRS §7-136-102(2). The right to inspect also includes the right to copy per case law and the
         Nonprofit Act. The association is entitled to impose a reasonable charge to cover the costs of labor,
         material, production and reproduction of the records. CRS §7-136-103(3).

         Access to Privileged Information

                  Even though courts tend to interpret a member’s right to inspect association records very broadly,
         an association is not legally obligated to provide members access to privileged information. Privileged
         information includes all communications of any kind between the association and the association’s
         attorney. This includes written correspondence, such as opinion letters, bills and memos, as well as oral
         communications with the attorney. These communications should be maintained in a separate file from
         other books and records so they are not inadvertently released. This privilege does not, however, include
         pleadings and documents filed with a court. Any pleading or document filed with a court becomes a public
         record that may be accessed by any person. The privilege also does not extend to correspondence from the
         association’s legal counsel to individual members or parties other than the association, such as covenant
         enforcement letters or assessment collection demand letters.

         Access to Confidential Information

                   Another sticky situation arises when a homeowner requests documents that contain confidential
         information about others, such as pay stubs of an association employee, which contain that employee’s
         social security number. In a case like that, if possible, the confidential information should be stricken
         before the rest of the document is given out. It is also important to establish a confidentiality policy which
         specifies what information is to be kept confidential. Such a policy gives an association a basis upon which
         to rely in the face of a challenge by a homeowner if the association has denied the homeowner access to
         certain confidential records. If a denied homeowner continues to demand access to private information, an
         association can seek a court order protecting that information.

         Access to Membership Lists

                   Another problem area is the request for the association’s membership list. The Nonprofit Act
         requires an association to keep an alphabetized list of the names and addresses of its members. CRS §7-
         136-101(3). According to the Nonprofit Act, “Without the consent of the board of directors, a membership
         list or any part thereof may not be obtained or used by any person for any purpose unrelated to a member’s
         interest as a member.” CRS §7-136-105(1). For example, the list should not be given out if it is going to be
         used to solicit money or property, except in connection with obtaining votes of the members in an election
         to be held by the association. Further, such a membership list should not be given to anyone to use for any
         commercial purpose or to be sold or purchased by anyone. CRS §7-136-105(2). For example, the
         association cannot sell the membership list to a telemarketing company or to any individual who wants the
         list to solicit business or to sell goods or services. It would not be proper for a homeowner, who is a real
         estate agent, to request the membership list to solicit new clients for his business. The same would apply if
         the homeowner was a Tupperware representative and wanted the list to expand her customer base. On the
         other hand, it would be proper for a homeowner to request the membership list to send association-related
         correspondence to all members.

         Written Policy

                 Pursuant to CCIOA, associations are required to adopt a written records policy concerning the
         inspection and copying of records to standardize and facilitate the processing of requests by members and
         to protect sensitive records. A written policy sets uniform ground rules for everyone to follow and avoids

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         confusion about what can and cannot be inspected. It also protects the board of directors and the manager
         from unfounded or harassing requests or allegations of discriminatory or arbitrary conduct.

                   The policy should define what documents can be inspected, as well as what documents are
         privileged and confidential, and thus, not available to the members. The policy should also specify who is
         permitted to inspect and copy records and set reasonable hours for inspection and rates for copying
         documents. The written policy should also contain a provision for imposing consequences for non-
         compliance, (for example, if a member makes an oral request rather than a written request). Not fighting
         members every time they request information may foster a better relationship between the board of
         directors and the homeowners. If homeowners feel they have reasonable access to association records, the
         less likely they will think that the board of directors has anything to hide.

         Failure to Allow Access to Records

                  Under Section 123 of CCIOA, if the association does not comply with CCIOA’s provisions
         regarding members’ rights to inspect records, the association may be liable for the other party’s attorney
         fees. CRS §38-33.3-123. Associations should be aware that not allowing members access to the
         association’s records pursuant to the provisions of CCIOA could expose the association to financial liability
         if the member incurs any attorney fees in attempting to inspect the records. Under the Nonprofit Act, if a
         member has to get a court order to access to association records, the association could be responsible not
         only for costs and attorney fees, but could also be liable for any damages the member may have incurred as
         a result of the association’s initial refusal to allow proper inspection of records. CRS §7-136-104(3).

         Helpful Suggestions

         The following are some helpful suggestions for handling access to association records:

                 1.         Encourage openness – being secretive will just result in more requests for information.

                 2.         Review state statutes and make sure any policy complies.

                 3.         Develop a policy to determine which records are confidential and should not be given out.

                 4.         Communicate the document inspection policy to all homeowners.

                 5.         Establish a reasonable fee schedule, especially for document requests that will entail a
                            considerable amount of staff time or copying.

                 6.         Require that requests for information be submitted to the association in writing.

                 7.         Do not let originals of any documents leave the association or management office.

                 8.         Have a representative from the board of directors or the management company present
                            when anyone is inspecting records, especially when the records are the original documents.
                            This will keep the documents from being altered in any way or removed from the premises.

                 9.         The association is not required to organize or locate specific documents for a member. For
                            example, if the homeowner requests copies of minutes from specific board meetings, all is
                            required is to allow the member to look through the minutes file or book and find the
                            specific document for himself.

                 10.        Be proactive – publish association news in the newsletter and head off requests for


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