Financials refuse to disclose

DorrinndaF (Michigan)
Posts: 17

Posted:

I have asked my HOA twice now to see the ledger for the current year. The reason being is that there were a lot of irregularities in the 2015 ledger and I want to see this years to compare. Examples are income not disclosed - Not entered on the ledger sheet - income I know they received because I paid it. Deductions that were not voted on by the members. We had a increase of 35% in our dues this year considering that we have carried over to the next year in excess of $25000 for tha past 3 years which does not include 5000 in a capital improvement fund and money into a contingency fund. The President hired himself for printing work even though we use a printing firm for monthly newsletters. Non of it makes any sense anymore and people are oblivious to what is going on. I requested the first time and was told I don't have a reason and that I can see the ledger at the end of the year. I requested again with the reason that I was an HOA member in good standing and would like to see the ledger at their convenience - again denied. What do I do now?

TimB4 (Tennessee)
Posts: 21,062

Posted:

Dorrinnda,

It sounds like the Association simply doesn't know how to display the information.

Typically, if there is a 25K carry over its due to advanced payments or failure to separate the Reserve funds from the Operating funds.

Michigan doesn't have an HOA statute (they do have a Condominium Act). Therefore, unless your Association is incorporated (and most are but check to be sure) only your governing documents would apply.

However, if you are incorporated, then the Michigan Nonprofit Corporation Act likely applies.

Per Section 450.2487 of that act, the Association is only required to provide the end of year balance sheet. This is likely what your Board is basing their decision on. You are likely relying on that same section to review the other books.

Please note that the statute is vague on what a "proper purpose" is, even though they define it as: "proper purpose" means a purpose that is reasonably related to a person's interest as a shareholder or member.

Now, did you follow the proper procedure outlined in the statute when requesting said info (i.e. requested in writing delivered to their registered agent)? If not, you need to do this. I would send the request via certified mail and cite this statute (if applicable) and any sections of your governing documents. Then, if the Association refuses, per the statute you may take the issue to the courts:

"If a corporation does not permit an inspection required under subsection (2) within 5 business days after a demand is received under subsection (2), or imposes unreasonable conditions on the inspection, the shareholder or member may apply to the circuit court for the county in which the principal place of business or registered office of the corporation is located for an order to compel the inspection."

You may want to spend $200-$300 for an attorney to write the letter for you. This will demonstrate that you are serious in wanting to see the records.

Keep in mind that you would likely not be allowed, for privacy concerns, ledgers of any individual lot other then your own.

Hope this helps,

Tim