Monthly Financials

AnitaT (Arizona)
Posts: 18

Posted:

We are self-managed. We have requested to have a copy of the financials, however, we have been told that the By-Laws state that they are sent out to homeowners every quarter and end of year. They do not need to do a monthly financial. We followed AZ State Statutes and gave them the 10 days to reply. When we followed up with a telephone call, we were told we did not trust them and they hung up on us. What can we do? Can we ask for a copy of the bank statements?

GlenL (Ohio)
Posts: 5,491

Posted:

Anita, you don't say whether you are a HOA or Condo but here is the relevant section of the Planed Communities Section and there are very few things they can withhold but they can charge for copies. You may end up having to take them to Small Claims Court or its AZ equivalent, to force compliance.

33-1805. Association financial and other records

A. Except as provided in subsection B of this section, all financial and other records of the association shall be made reasonably available for examination by any member or any person designated by the member in writing as the member's representative. The association shall not charge a member or any person designated by the member in writing for making material available for review. The association shall have ten business days to fulfill a request for examination. On request for purchase of copies of records by any member or any person designated by the member in writing as the member's representative, the association shall have ten business days to provide copies of the requested records. An association may charge a fee for making copies of not more than fifteen cents per page.

B. Books and records kept by or on behalf of the association and the board may be withheld from disclosure to the extent that the portion withheld relates to any of the following:

1. Privileged communication between an attorney for the association and the association.

2. Pending litigation.

3. Meeting minutes or other records of a session of a board meeting that is not required to be open to all members pursuant to section 33-1804.

4. Personal, health or financial records of an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association, including records of the association directly related to the personal, health or financial information about an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association.

5. Records relating to the job performance of, compensation of, health records of or specific complaints against an individual employee of the association or an individual employee of a contractor of the association who works under the direction of the association.

C. The association shall not be required to disclose financial and other records of the association if disclosure would violate any state or federal law.

Studies show that 5 out of 4 people have problems with fractions

TimB4 (Tennessee)
Posts: 21,062

Posted:

Anita,

Welcome to the forum. Obviously, the Association isn't required to make reports they don't normally make. If the Treasurer only makes quarterly reports, then that is what they can provide.

Per AZ 33-1805, applicable if you are not in a condominium development, members have a right to examine the books and records of the Association. You can, for a fee, request copies of said records.

It's best if you specify what records you desire to have copies of, vs. just saying financials.

What is it that you are concerned about? Perhaps the regular members of this site can help you identify what specific records you should ask for.

LarryB13 (Arizona)
Posts: 4,099

Posted:

First, the relevant statute:

33-1805. Association financial and other records
A. Except as provided in subsection B of this section, all financial and other records of the association shall be made reasonably available for examination by any member or any person designated by the member in writing as the member's representative. The association shall not charge a member or any person designated by the member in writing for making material available for review. The association shall have ten business days to fulfill a request for examination. On request for purchase of copies of records by any member or any person designated by the member in writing as the member's representative, the association shall have ten business days to provide copies of the requested records. An association may charge a fee for making copies of not more than fifteen cents per page.
B. Books and records kept by or on behalf of the association and the board may be withheld from disclosure to the extent that the portion withheld relates to any of the following:
1. Privileged communication between an attorney for the association and the association.
2. Pending litigation.
3. Meeting minutes or other records of a session of a board meeting that is not required to be open to all members pursuant to section 33-1804.
4. Personal, health or financial records of an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association, including records of the association directly related to the personal, health or financial information about an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association.
5. Records relating to the job performance of, compensation of, health records of or specific complaints against an individual employee of the association or an individual employee of a contractor of the association who works under the direction of the association.
C. The association shall not be required to disclose financial and other records of the association if disclosure would violate any state or federal law.

Now, the bad news: Enforcement of this statute is up to the homeowner. In most cases this means hiring an attorney and possibly going to court to seek an injunction. The question is how badly do you want this information because from what I have seen the minimum cost of getting an injunction is about $20,000. You could have an attorney make a demand for the records on your behalf for far less money but you should be prepared for the fact that you may get no results.

I see nothing in the statute that would put the bank statements off limits.

NpS (Pennsylvania)
Posts: 4,216

Posted:

It appears from Larry's and other posts, that you aren't likely to get satisfaction through the legal system.

If you are concerned about misuse of funds, you may want to shift your attention to having your HOA's quarterly and annual financials reviewed or audited by a CPA.

Sikubali jukumu. Read all posts at your own risk.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Anita

Why do you want such?

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By NpS on 09/25/2014 9:43 AM
It appears from Larry's and other posts, that you aren't likely to get satisfaction through the legal system.

Not what I am saying. She may get satisfaction but it will be entirely at her own expense as there is no state agency to enforce HOA statutes.

I know of a couple of recent HOA cases in AZ where homeowners sued and won. One spent over $20,000 to enjoin his HOA from removing the For Sale sign his realtor put up despite a statute expressly forbidding an HOA from doing so. Another homeowner spent over $90,000 to obtain an injunction against her HOA, requiring that the association separate certain funds per the declaration. In each case, the homeowner prevailed but at a very high cost. In the case of the for sale sign, the court ordered the association to pay all the homeowner's attorney fees. I believe that the other case had the same results.

Satisfaction can be had but at a very high cost.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By LarryB13 on 09/25/2014 8:07 PM

Posted By NpS on 09/25/2014 9:43 AM
It appears from Larry's and other posts, that you aren't likely to get satisfaction through the legal system.

Not what I am saying. She may get satisfaction but it will be entirely at her own expense as there is no state agency to enforce HOA statutes.

I know of a couple of recent HOA cases in AZ where homeowners sued and won. One spent over $20,000 to enjoin his HOA from removing the For Sale sign his realtor put up despite a statute expressly forbidding an HOA from doing so. Another homeowner spent over $90,000 to obtain an injunction against her HOA, requiring that the association separate certain funds per the declaration. In each case, the homeowner prevailed but at a very high cost. In the case of the for sale sign, the court ordered the association to pay all the homeowner's attorney fees. I believe that the other case had the same results.

Satisfaction can be had but at a very high cost.

I was comparing the potential cost of litigation to the cost of getting a CPA involved. If I somehow gave the impression you were saying that relief couldn't be achieved at any cost, that was not my intent. I thought I was agreeing with you that most people would consider the $20,000 expenditure to be prohibitively expensive.

Sikubali jukumu. Read all posts at your own risk.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By NpS on 09/26/2014 1:13 AM

I was comparing the potential cost of litigation to the cost of getting a CPA involved. If I somehow gave the impression you were saying that relief couldn't be achieved at any cost, that was not my intent. I thought I was agreeing with you that most people would consider the $20,000 expenditure to be prohibitively expensive.

The problem is that the OP has no way to force an audit except through an injunction. There is no reason to expect an uncooperative and secretive board and MC to open its books to an outside auditor who will need even more access than the OP seeks. She has a statutory right to inspect the records. I am unaware of any right to compel an audit.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By LarryB13 on 09/26/2014 8:04 AM

The problem is that the OP has no way to force an audit except through an injunction. There is no reason to expect an uncooperative and secretive board and MC to open its books to an outside auditor who will need even more access than the OP seeks. She has a statutory right to inspect the records. I am unaware of any right to compel an audit.

In my HOA, any owner could call a special meeting and get a resolution passed that would require a formal audit/review by an independent CPA. Of course, if there isn't enough support from the HOA membership, then the resolution will fail. But compared to the costs and risks of seeking relief from the courts, I think it would be the better way to go. IMO, more homeowners are likely to support an independent review of the books than a lawsuit against the HOA.

Sikubali jukumu. Read all posts at your own risk.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By NpS on 09/26/2014 9:58 AM

In my HOA, any owner could call a special meeting and get a resolution passed that would require a formal audit/review by an independent CPA. Of course, if there isn't enough support from the HOA membership, then the resolution will fail. But compared to the costs and risks of seeking relief from the courts, I think it would be the better way to go. IMO, more homeowners are likely to support an independent review of the books than a lawsuit against the HOA.

The problem with this is that OP wants to see records that she has a right to see. To carry out the scenario you propose, she has to find sufficient other members who care enough to attend a meeting and vote to spend their money on an audit. So what do think will happen when the same unresponsive BOD forwards the resolution to the uncooperative MC? My hunch is that nothing is going to change and the OP (and those who support the audit) will now have to head off to Superior Court to apply for an injunction to force the audit.

BTW, an audit of the records would still not fill the OP's lawful request to view the financial records.

FredS7 (Arizona)
Posts: 927

Posted:

Well the reason for wanting the monthly records hasn't been stated. It might be a good reason or it might be a not so good reason.

Now there may be a right to see these records. But remember what the OP said- the association is self-managed. So the people presently doing the management also have the right to stop doing it, which means the OP needs to step up or the cost of a paid management needs to be budgeted for. I think one should cut unpaid volunteers a bit of slack when it comes to rights.

So it would be worth understanding what the real issue is. Maybe a more effective solution is just to replace the board, which has the advantage of not costing quite as much as a lawsuit.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By LarryB13 on 09/26/2014 12:23 PM
The problem with this is that OP wants to see records that she has a right to see. To carry out the scenario you propose, she has to find sufficient other members who care enough to attend a meeting and vote to spend their money on an audit. So what do think will happen when the same unresponsive BOD forwards the resolution to the uncooperative MC? My hunch is that nothing is going to change and the OP (and those who support the audit) will now have to head off to Superior Court to apply for an injunction to force the audit.

BTW, an audit of the records would still not fill the OP's lawful request to view the financial records.

Perhaps I misread the OP, but I thought she was saying that the MC does provide annual and quarterly statements, but not monthly statements.

Instead, maybe she is saying that the MC promises annual and quarterly statements but doesn't provide them. If as you suggest, the MC and BOD are totally non-responsive, then the choices are still the courts (injunction) or the homeowners (board removals). Neither option is appealing.

Sikubali jukumu. Read all posts at your own risk.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By NpS on 09/26/2014 1:05 PM

Posted By LarryB13 on 09/26/2014 12:23 PM
The problem with this is that OP wants to see records that she has a right to see. To carry out the scenario you propose, she has to find sufficient other members who care enough to attend a meeting and vote to spend their money on an audit. So what do think will happen when the same unresponsive BOD forwards the resolution to the uncooperative MC? My hunch is that nothing is going to change and the OP (and those who support the audit) will now have to head off to Superior Court to apply for an injunction to force the audit.

BTW, an audit of the records would still not fill the OP's lawful request to view the financial records.

Perhaps I misread the OP, but I thought she was saying that the MC does provide annual and quarterly statements, but not monthly statements.

Instead, maybe she is saying that the MC promises annual and quarterly statements but doesn't provide them. If as you suggest, the MC and BOD are totally non-responsive, then the choices are still the courts (injunction) or the homeowners (board removals). Neither option is appealing.

Don't know where I got the MC from, but issue is still confusing.

Sikubali jukumu. Read all posts at your own risk.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Our entire monthly meetings were based on nothing but discussing the monthly financials. Granite they were the month before. We then based our decisions then for the current month on those results or trends. Attend a meeting and any homeowner could have a copy of the financials. Only Board got collection reports. We did discuss collections actions in open but referred to members by lot #.

I say attend a meeting for best information. Also realize that financial information is crying over spilt milk for most part. Meeting notes are not even accepted until NEXT meeting. Financials have already been budgeted for the year with incidentals or issues being the only changes.

Viewing records without context or perspective is not a good thing. I always was open. Told people if they had an issue then have a SOLUTION in mind. We were NOT in the business of solutions YOU want. We make solutions for ALL.

Former HOA President

KerryL1 (California)
Posts: 14,550

Posted:

Others have asked you good questions, Anita.

It looks like in your state your have the right to review the "financials." But what do you mean by that? Ours are about 120 pages long every month.

See your state statutes about whether you can review check registers. H/Os can in CA.

Note that your request must be in writing.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By NpS on 09/26/2014 1:11 PM

Don't know where I got the MC from, but issue is still confusing.

The confusion was mine. I thought there was a management company involved but the OP clearly states they are self-managed. Since there is no MC to deal with the most expeditious way of resolving this might be to organize a recall of the board or just wait until the next board election.