Association attorney and BOD rejected my record request - please review their responses

Started by JoeS26 • 17 replies • 2942 views

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JoeS26 (Illinois)
Posts: 34

Posted:

Hello trusted advisors. I feel the BOD/Attorney are screwing with me. I submitted a POA for my partner, and it went through a number of association attorney reviews with the fees charged to the association. First I wanted to see the fee for the POA review, but then asked to see receipts for the past 12 years. Did I write a proper record request, and if not, please provide suggestions for my next steps (to correct)?

HOME OWNER REQUEST (JOE):

Dec 10, 2014
Hello MGMT Company in Illinois,

During the board meeting last night there was a request for a breakdown of legal expenditures over the last year. This person stated he was frustrated because he has asked for this information several times and it has not been provided. You responded that you will provide him a breakdown of the legal fees. I noticed he did not make a proper financial records request, however you agreed to fulfill the request.

I would like to request a copy of the information that you agreed to provide this owner.

Additionally, I previously asked for the legal fees for the review of the first power of attorney that I submitted in July. I have not yet been provided those fees. My rationale for wanting to see the fees is that I have observed the board and management applying the rules inconsistently. I have observed non owners, and one individual who holds a power of attorney for the actual owner, attend board meetings. In addition, I suspect that the board is mismanaging our funds and spending it in unnecessary ways. For example, when I moved into the building we had over $1 million in reserve funds, and we now have $300 thousand all earmarked for special projects. We also are currently paying back a special assessment. I would like to review the legal fees requested below (back in July 2014) and any documentation that you will provide the owner who requested a breakdown of legal fees last night. I am happy to review the documents in your office and during normal business hours.

Please note that my POA has been cc'd to the discussion. I appreciate a response at your earliest convenience.

Thank you,

Home Owner (Joe)

RESPONSE FROM MANAGEMENT COMPANY:

Home Owner (Joe),

Board member XXXXXXX also requested this information last night and we will report it in open session at the next board meeting. We are responding to Mr. Board Presiden’s request.

The owner who made the verbal request will need to commit it to writing and cite a “proper purpose”.

Thank you.

Vice President of Management Company

RESPONSE FROM HOME OWNER (JOE):

Thank you for your response Ms. XXXXXXX,

Please be advised that I have not withdrawn my record request, and that it was made in writing and in accordance with the ICPA. My understanding is that a proper financial request must be fulfilled within 10 business days.

Warm regards,

Home Owner (Joe),

RESPONSE FROM MANAGEMENT COMPANY:

Actually, the Illinois Condominium Property Act gives the board 30 days to respond and a failure to respond means that the request has been denied.

I don’t believe that the board has made a decision one way or the other.

Vice President of Management Company

RESPONSE FROM HOME OWNER (JOE)

In early 2013, the Illinois Supreme Court addressed a unit owner’s request for the financial records of a Chicago high-rise condominium association in Palm v. 2800 Lake Shore Drive Condominium Association. The unit owner demanded to examine financial records pursuant to Section 13-72-080 of the City of Chicago Municipal Code, which requires that all of a condominium association’s financial records be made available to a requesting owner. (At the time, the Chicago Ordinance required that financial records be provided within just 3 days; the Ordinance currently allows 10 business days.) The association refused and insisted that all requests for condominium records are governed by Section 19 of the ICPA, which, among other things, requires that the unit owner state a proper purpose for the requested records and gives the association 30 days to respond. After 13 years of litigation, the Illinois Supreme Court ruled that the Chicago Ordinance takes precedence over the ICPA, and that requests for the financial records of associations located in Chicago are governed by the Ordinance, and not by the ICPA.

Source: http://www.arnstein.com/documents/2014-Condo-Book_Content+Cover_Final_web.pdf

(Please note the source is from our association attorney's website)

RESPONSE FROM MANAGEMENT COMPANY:

I am aware of this.

Vice President of Management Company

(NO MORE HOME OWNER RESPONSE)

RESPONSE FROM MANAGEMENT COMPANY:

Also, ASSOCIATION ATTORNEY did not bill us for the original POA that was supplied….an oversight on their part, but not billed.

PROPERTY MANAGER

HOME OWNER RESPONSE:

Dec 12, 2014

Thanks for the reply PM,

Regarding the legal fees, I want to respectfully re-emphasize my December 10th request. Specifically, I would like to review the last 12-months of legal fees with a line-item breakdown for each expense. My rationale for wanting to see these fees is that I suspect that the board is mismanaging the Association's funds and spending it in unnecessary ways. For example, when I moved into the building in 2012 we had over $1 million in reserve funds, and two years later we have only $300 thousand; all which is earmarked for special projects. Additionally, we are currently paying a special assessment to account for a lack of funds. I am happy to review the documents in your office and during normal business hours.

I am making this request to examine financial records pursuant to Section 13-72-080 of the City of Chicago Municipal Code, which allows for a 10 day turnaround from the December 10, 2014th request.

Thank you,

Home Owner Joe

ASSOCIATION ATTORNEY RESPONSE:

Home Owner Joe:

I have reviewed our billing records for July, August and September of 2014 and have confirmed that we did not charge the Association anything in connection with our review of your medical power of attorney and Mr. ATTORNEY's July 31st letter in connection therewith. Accordingly, there are no invoices or billing statements that I can provide to you in connection with that matter. In the event that you believe charges for such services were charged back to your assessment account, please let me know the date and amount of the charges so that I may investigate further.

I will confirm with PM whether a breakdown of legal fees was provided to any other owners in response to the oral request made by a unit owner during the December 9, 2014 meeting. I can confirm that our office has not received such a request from PM nor has such information been provided. To the extent that the Board intends to provide such information to this unit owner, I will make certain that you also receive the same information.

Please note that there is no legal requirement for the Association to provide any unit owner with statements regarding general legal fees billed to the Association. Therefore, the Board may determine that such information will not be provided at all. If the Board makes such a determination, I will let you know. Finally, in the event that our office is asked to provide such information to the Board, with the intent that it may be passed on to unit owners, any attorney-client privileged information contained in the statements will be redacted to preserve the attorney-client privilege.

Of course, you are always welcome to submit a formal written request to inspect the Association’s Book and Records of Account in accordance with the provisions of the Illinois Condominium Property Act. In the event that a proper request is received by the Board, the Association will comply as required by law. Should you submit any further correspondence to the Board or PM, please copy me on such correspondence so that I may ensure that your requests are responded to in a timely manner.

If you have any other questions, please feel free to contact me.

Sincerely,

ASSOCIATION ATTORNEY

JoeS26 (Illinois)
Posts: 34

Posted:

I'd like to add, the attorney's website goes on to say about fulfilling a record request with:

"This ruling is of importance to associations located in Chicago because of the many major differences between the Chicago Ordinance and ICPA Section 19: the Ordinance does not require that the unit owner specify a proper purpose for requesting the records; the Ordinance currently allows just 10 business days for production, instead of the 30 days allowed by the ICPA; the Ordinance does not allow for any records to be withheld, even when the requested records include information that would be exempt from inspection under ICPA Section 19; while the ICPA allows examination of up to 10 years of financial records, the Ordinance requires production of an unlimited number of years of financial records; the Ordinance does not allow the association to recover document retrieval costs; and, unlike the ICPA, the Ordinance allows the requesting unit owner to recover attorneys’ fee for an alleged violation of the Ordinance without a finding that the association’s board acted in bad faith."

How can they be turning me down, while stating this clearly on their own website?

GlenL (Ohio)
Posts: 5,491

Posted:

Joe what exactly are you looking for? If it is Jan legal expenses were $1,200.99 Feb legal expenses were...etc. Then IMHO (non legal)you are entitled to them, if you are asking for something along the lines of in Jan we billed the HOA $123.00 re the matter of {BLANK} then you are possibly treading on the attorney client privilege and you might not be entitled to that specific info.

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

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By JoeS26 on 12/20/2014 10:01 AM
First I wanted to see the fee for the POA review, but then asked to see receipts for the past 12 years.

Your first error was expanding your request from the POA fees to 12 years of receipts. The former was specifically related to you personally and could not have been ignored legally. The latter looks like a fishing expedition, which courts reject time and again.

I would suggest writing one letter per issue. Make the letter as concise as you can.

I think you got off on a tangent when you tried to compare the oral request from the floor with your written request. All this does is create an opportunity for them to send you some mumbo jumbo response that doesn't deal with what you want anyway.

I also think you got off on a tangent when you started discussing whether a 10 day or a 30 day rule applied. You can wait 30 days, so who cares?

Quote:

Posted By JoeS26 on 12/20/2014 10:01 AM
RESPONSE FROM MANAGEMENT COMPANY:

Also, ASSOCIATION ATTORNEY did not bill us for the original POA that was supplied….an oversight on their part, but not billed.

If I remember correctly, you said you were billed. But if the attorney didn't bill the HOA for the POA review, you shouldn't be charged. Was this ever resolved?

Quote:

Posted By JoeS26 on 12/20/2014 10:01 AM

I have reviewed our billing records for July, August and September of 2014 and have confirmed that we did not charge the Association anything in connection with our review of your medical power of attorney and Mr. ATTORNEY's July 31st letter in connection therewith. Accordingly, there are no invoices or billing statements that I can provide to you in connection with that matter. In the event that you believe charges for such services were charged back to your assessment account, please let me know the date and amount of the charges so that I may investigate further.

The attorney is specifically talking about a medical POA. Didn't you submit another one? What exactly did that one say? Did you ever get an answer on that other POA? Here's another example of where you got lost by mixing different issues together.

Quote:

Posted By JoeS26 on 12/20/2014 10:01 AM
I can confirm that our office has not received such a request from PM nor has such information been provided. To the extent that the Board intends to provide such information to this unit owner, I will make certain that you also receive the same information.

Please note that there is no legal requirement for the Association to provide any unit owner with statements regarding general legal fees billed to the Association. Therefore, the Board may determine that such information will not be provided at all. If the Board makes such a determination, I will let you know. Finally, in the event that our office is asked to provide such information to the Board, with the intent that it may be passed on to unit owners, any attorney-client privileged information contained in the statements will be redacted to preserve the attorney-client privilege.

Your issue is with the board, not the management company or the attorney. The Board has not yet given the ok to release information. That may take some time, but you have a right to expect an answer. But also remember that the issue of mismanagement was raised by another homeowner and the management company and attorney have stated that you will be copied on whatever gets distributed. If I were you, I would let the mismanagement issue run its course with the help of other homeowners - and pursue ONLY your POA issue on your own.

Sikubali jukumu. Read all posts at your own risk.

JoeS26 (Illinois)
Posts: 34

Posted:

It is my understanding that I'm authorized to examine financial records, which I asked to look at the legal fees we've paid for the last 12 months. I asked for this information after reading this new legal finding in IL:

In early 2013, the Illinois Supreme Court addressed a unit owner’s request for the financial records of a Chicago high-rise condominium association in Palm v. 2800 Lake Shore Drive Condominium Association. The unit owner demanded to examine financial records pursuant to Section 13-72-080 of the City of Chicago Municipal Code, which requires that all of a condominium association’s financial records be made available to a requesting owner. (At the time, the Chicago Ordinance required that financial records be provided within just 3 days; the Ordinance currently allows 10 business days.) The association refused and insisted that all requests for condominium records are governed by Section 19 of the ICPA, which, among other things, requires that the unit owner state a proper purpose for the requested records and gives the association 30 days to respond. After 13 years of litigation, the Illinois Supreme Court ruled that the Chicago Ordinance takes precedence over the ICPA, and that requests for the financial records of associations located in Chicago are governed by the Ordinance, and not by the ICPA.

This ruling is of importance to associations located in Chicago because of the many major differences between the Chicago Ordinance and ICPA Section 19: the Ordinance does not require that the unit owner specify a proper purpose for requesting the records; the Ordinance currently allows just 10 business days for production, instead of the 30 days allowed by the ICPA; the Ordinance does not allow for any records to be withheld, even when the requested records include information that would be exempt from inspection under ICPA Section 19; while the ICPA allows examination of up to 10 years of financial records, the Ordinance requires production of an unlimited number of years of financial records; the Ordinance does not allow the association to recover document retrieval costs; and, unlike the ICPA, the Ordinance allows the requesting unit owner to recover attorneys’ fee for an alleged violation of the Ordinance without a finding that the association’s board acted in bad faith.

The above would support that I am entitled to this information - and could request for financial information as far back as I like (12 months is certainly reasonable).

Finally, I changed my request from the cost of reviewing the POA after they stated that they did not bill the association for this review.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Joe

I think NPS hit the nail on the head when he said:

Your first error was expanding your request from the POA fees to 12 years of receipts. The former was specifically related to you personally and could not have been ignored legally. The latter looks like a fishing expedition, which courts reject time and again.

Most (if not all) BOD/lawyer correspondences is privileged information so I say any requests for records outside of your own case are basically none of your business.

By requesting 12 years of records you are being petulant.

JoeS26 (Illinois)
Posts: 34

Posted:

Allow me to push back from a legal perspective here. My request for legal fees is for a number of complaints owners have made against the board, and rather than working together to find solutions, the board has engaged the attorney to support their perspective each time. This has wracked up unnecessary legal fees that I'm entitled to review. But regardless of this, I do not need to state a "proper purpose" to inspect 12-months of any financial document. Thus, regardless of assumed petulance or not, I'm entitled to the information:

Here is one source that helps describe how little is needed to access financial documents:

http://www.mkimlaw.com/articles/Complying%20with%20the%20Chicago%20Condominium%20Ordinance%20%2800021215%29.PDF

JoeS26 (Illinois)
Posts: 34

Posted:

One excerpt from the recent ruling in IL:

No “Proper Purpose” Required
To begin with, note that unlike the requirements of the Illinois Condominium Property Act (“Condo Act”) or General Not for Profit Corporation Act (“Not for Profit Act”), the Ordinance does not require that a unit owner state “a proper purpose” for inspection of the financial books and records of the Association. In other words, the requesting unit owner need not state any purpose or reason, but simply that he/she wants to inspect the financial books and records. Clearly, there is a significant prospect for abuse and harassment.

I've submitted a proper request - and had it rejected. I have not abused or harassed anyone...

JoeS26 (Illinois)
Posts: 34

Posted:

Question:

Do I have to state the following word for word:

but simply that he/she "wants to inspect the financial books and records."

My original request was:

Regarding the legal fees, I want to respectfully re-emphasize my December 10th request. Specifically, I would like to review the last 12-months of legal fees with a line-item breakdown for each expense. My rationale for wanting to see these fees is that I suspect that the board is mismanaging the Association's funds and spending it in unnecessary ways. For example, when I moved into the building in 2012 we had over $1 million in reserve funds, and two years later we have only $300 thousand; all which is earmarked for special projects. Additionally, we are currently paying a special assessment to account for a lack of funds. I am happy to review the documents in your office and during normal business hours.

I am making this request to examine financial records pursuant to Section 13-72-080 of the City of Chicago Municipal Code, which allows for a 10 day turnaround from the December 10, 2014th request.

Would a court reject the request because I did not say "financial books and records?"

I have an attorney lined up - and she's ready to move forward, but I want to make sure the request was proper.

GlenL (Ohio)
Posts: 5,491

Posted:

Well it looks like you'll need to get an attorney and make your case to a judge. We - the collective members of this forum can't make them turn it over and since you think your interpretation is correct, I think that is what you will need to do. In the immortal words of David Farragut: "Damn the torpedoes, full speed ahead."

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

NpS (Pennsylvania)
Posts: 4,216

Posted:

Joseph

1. You have totally sidestepped my questions about the current status of your POA requests. Do you intend to respond?

2. You rely on open access laws about financial records to claim rights of inspection to legal expenses. Legal expenses are not your typical financial records.

3. Have you ever seen what a legal bill looks like? Do you realize that when they say the records will be redacted that big chunks of what you want to see will be blacked out? Do you realize that if they say that what you want to see is confidential, the only way you will get to see it is to get a judge to order production? And the only way that many judges would be willing to order production is after briefs are written on the subject and the judge looks at the material herself. Do you have any clue about how long this is likely to take?

4. You say that many people now want the same records. I can just imagine the management company and the lawyer responding to all these different requests. I can also imagine all the extra billings to the HOA for responding to these inquiries. So while you may think that the BOD is driving up the costs, it may be you and your fellow homeowners who drive up the cost as well.

5. It would make sense for you to join forces with other homeowners who think like you do instead of each of you searching for the holy grail on your own. Why aren't you getting together and sharing legal costs rather than duplicating your efforts?

6. "Proper cause." Instead of saying - because I am a member with the right to inspect financial records (which is all you had to say), you said that I think this place is being mismanaged and money is disappearing. What kind of response did you expect? You challenged their integrity and put them on the defensive - They are treating you with caution. You should not be surprised.

7. Do you really think that it is as easy as pointing to a statute and saying "see, these are my rights" and everyone will do what you think they should. These guys understand what they are doing a lot better than you do. I seriously question whether you will have any success without a lawyer.

8. The POA issue is still a separate issue. Do you have a POA approved by the HOA yet? See #1 on this list.

Sikubali jukumu. Read all posts at your own risk.

NpS (Pennsylvania)
Posts: 4,216

Posted:

A quote from the article you provided:

"it is arguable that certain litigation records (such as engagement or retainer agreements) and invoices would be financially relevant and therefore subject to inspection, although it is probable that any 3 attorney/client or attorney work product confidential documents would not be subject to inspection (although this is a presumption not expressed in the Ordinance)."

Legal document production is never as simple as you would like it to be.

Sikubali jukumu. Read all posts at your own risk.

JoeS26 (Illinois)
Posts: 34

Posted:

Hi all, I wanted to provide an update.

The association finally turned over the legal charges today. The board heard that I'm working with an attorney, which is regrettable that it takes that kind of concern to prompt them to grant access to the financial statements.

I'm meeting with neighbors tonight to submit a formal request for additional financial records (including bank statements). We're currently paying a special assessment for a utility charge and we're wanting to make sure the books are accurate.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Joe,

Thank you for the update. Yes, it's a shame when attorneys need to be included in the request in order to get the request filled. Unfortunately, that is what it takes sometimes.

Once you do get the additional records, what will you do if they show that the books are accurate?

What will you do if they show the books are inaccurate?

What are you going to do about the need to have involved attorney's in fulfilling your request?

I suppose that what I'm asking is if the issue is important enough for you to gather support and either serve on the Board yourself or vote off the existing Board members and replace them with others?

JohnB26 (South Carolina)
Posts: 1,001

Posted:

aaaaah, Tim, there you go again ..... common sense and stating the obvious

JonD1
Posts: 2,350

Posted:

I have to wonder whether Joe is hoping to find the books in order or find some "mismanagement" as he has implied?

Seems in rereading through this thread Joe plans to hold steady on a course of conflict with his board at any cost.

Just how do his actions benefit the property? Or does Joe even bother to consider that?

CyrstalB (Maryland)
Posts: 457

Posted:

Quote:

Posted By JonD1 on 01/11/2015 2:39 PM
I have to wonder whether Joe is hoping to find the books in order or find some "mismanagement" as he has implied?

Seems in rereading through this thread Joe plans to hold steady on a course of conflict with his board at any cost.

Just how do his actions benefit the property? Or does Joe even bother to consider that?

I would consider your question to be redundant, and your statement to be 100% correct.

SusanA4 (California)
Posts: 13

Posted:

My HOA in Michigan was formed under the Incorporation of Summer Resort Owners Act, making the HOA a municipality. For that reason, OMA and FOIA apply to my HOA.

Despite this, trustees have consistently and and vigorously tried to resist and deny requests for information.

While I agree that a request for 12 years' worth of records seems too broad, I think it would be easy to keep electronic copies of ledgers and other financial information readily available and viewable by any member.

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