Request for Financial Information

Started by AM3 • 20 replies • 1423 views

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AM3 (Georgia)
Posts: 29

Posted:

I have requested financial information from the financial management company for our HOA and board and have not received the information.

Why would the Board and the financial management company refuse this request when it is outlined in the by-laws?

The request was for an updated statement for my account this year, complete and full insurance certificate, and the last quarter months for 2016 and first quarter months 2017 actual numbers against the budgeted numbers which is not showing on the budget and to date there has been no response to the several written requests that I have made including a certified letter/signature required letter the office. The by-laws state that homeowners are entitled to this information either by a meeting in their office or mailings of this information.

Because I have made no less than 5 requests in almost two months, I have retained an attorney to prepare a letter to them to secure this information. I have asked my attorney to inform them that I will take the expense that I have incurred to do this against the next few HOA fees as a credit.

DouglasK1 (Florida)
Posts: 2,046

Posted:

Florida law specifically provides for financial penalties against an association for failing to provide access to association records within a specified time frame. I have no idea if GA has similar. Assuming they don't and your governing docs don't provide for penalties either, I'm not sure that you have any legal ground to withhold dues.

I realize that it's frustrating when the association ignores you and won't provide reasonable access to records, but if you want them to pay for your lawyer, it will probably require suing them.

Escaped former treasurer and director of a self managed association.

SheliaH (Indiana)
Posts: 6,964

Posted:

Have you attended a board meeting and asked them in person why you haven't received a response? It's one thing to blow off a letter, but a different story in person - especially if the property manager is present. If they promise (again) to send you the information, make them give you a specific date (at this point within 3 business days is more than enough time).

As for crediting your account, I'm not sure you have a right to withhold expenses for not receiving this type of information - sending a certified letter isn't that expensive. If it gets to the point a letter from your attorney has to pry out the information and they agree to credit your account, it shouldn't take more than 1 month's assessment (if that) to take care of it (not "the next few") Personally, I'd go after the property manager for that, because it may be someone has misplaced your request - if this has happened more than once, they need to investigation and make sure it doesn't happen again.

If, however, they go along with crediting your account, give them a copy of your certified mail receipt and attorney bills - they can send a check along with the information you asked for.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

KerryL1 (California)
Posts: 14,550

Posted:

Imo, it's always a mistake to withhold dues, or to ask for a credit towards them. Reimbursement for your expenses is a different story.

If GA does have open board meetings, go ahead and attend and ask to them why you can't have these materials.

TimB4 (Tennessee)
Posts: 21,059

Posted:

AM3,

Good idea getting the attorney involved.
It's a shame when it has to happen, but sometimes it does.

DO NOT WITHHOLD ANY PAYMENTS.

Unless the issue goes to court AND the court awards you attorney fees/court costs, the Association will owe you zero money. Withholding agreed upon payments (your assessments) without such a court order and arbitration on how those funds will be provided, will likely cost you more in the long run. This is because the Association will likely take action against you for non-payment which may include foreclosing on your property.

DouglasM6 (Arizona)
Posts: 724

Posted:

Quote:

Posted By AM3 on 06/27/2017 7:21 AM
. I have asked my attorney to inform them that I will take the expense that I have incurred to do this against the next few HOA fees as a credit.[b/]

If your attorney does this without warning you against it, you need a new attorney. This will do nothing but cause you problems in the future. You need to be/look like a perfect resident.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By DouglasM6 on 06/27/2017 5:28 PM
Posted By AM3 on 06/27/2017 7:21 AM
. I have asked my attorney to inform them that I will take the expense that I have incurred to do this against the next few HOA fees as a credit.[b/]

If your attorney does this without warning you against it, you need a new attorney. This will do nothing but cause you problems in the future. You need to be/look like a perfect resident.

I agree.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By AM3 on 06/27/2017 7:21 AM
Why would the Board and the financial management company refuse this request when it is outlined in the by-laws?

A better question is why would they do it when it is required by state law for them to provide you with the information?

Don't withhold anything from your assessment payments. That's the worst thing you could possibly do. "They owe me for this other thing," is not a defense when they come after you for past due assessments, late fees, interest, and whatever an attorney charged for sending you a letter that kicks off their collection procedure. Even if board members are literally stealing money from the association's bank account and caught on video doing it, withholding assessments is a losing proposition.

The law is changing on July 1 with regard to an association's obligation to respond to requests for official records. Your attorney can tell you about that. Essentially, a repeated "pattern" of failing to provide properly requested records is now a criminal offense. You may also be able to collect statutory damages for every day beyond the 10 days they have to grant you access to the records.

KerryL1 (California)
Posts: 14,550

Posted:

Does this change in the law apply to GA, Geno?

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By KerryL1 on 06/28/2017 1:27 PM
Does this change in the law apply to GA, Geno?

Ah LOL no. For some reason DouglasK1's location stuck in my brain. Georgia is not subject to the Florida Statutes

GwenG (Florida)
Posts: 669

Posted:

The law is changing on July 1 with regard to an association's obligation to respond to requests for official records. Your attorney can tell you about that. Essentially, a repeated "pattern" of failing to provide properly requested records is now a criminal offense. You may also be able to collect statutory damages for every day beyond the 10 days they have to grant you access to the records.

@Geno: I wish! The change you are referencing was the intent of the original bill but there was too much objection (surprise!) and the provision was quickly eliminated so the bill could progress.

The only change to official records inspection is the one in the Condo statute 718 which provides access to Tenants of Owners for inspection and copying of Rules and Bylaws. All the law changes to 718 are in HB1237 which is effective July 1, 2017. There were many significant reforms enacted to protect condo owners against criminal abuse by their associations.

The requirement of all condos over 150 parcels to post ALL official records of the association on a community website is effective July 1, 2018. There should be no more monkey business with records after that. ALL of them--and they are all exhaustively named and identified in the statute to eliminate "misunderstanding"-- are required to be in digital form on the website.

My guess is the mood is such that if Associations continue to obstruct owner access to their own business records, the Legislature WILL make this behavior a criminal act. This kind of thing has gone on way too long in Florida and the legislature has, in the past, amended the inspection law in some way almost every year to try to close loop holes that Associations use to withhold information.

The only change made to HOA's was a relatively minor change in accounting reporting and a cap on estoppel fees. As usual, HOA's in Florida are ignored by the Legislature.

AugustinD
Posts: 5,144

Posted:

Hi AM3, this is sadly pretty common and of course, unlawful. Refusal to share corporate records with shareholder/members has arisen many times in appeals courts nationwide. The corporation almost always loses. I advise always sending your own letter of demand prior to retaining an attorney. You can google for good examples of letters of demand. They are short and sweet. In your own letter of demand, you can say that you will take this to court and seek attorney's fees for the failure of the HOA contractor to provide the records, pursuant to this extremely important Bylaw. Whatever small claims courts you have is also a place where you might be able to seek enforcement of this very important Bylaw concerning financial record review. I concur with others that you may not lawfully withhold your assessment. I hope you post an update. On the positive side, your actions now will likely help other HOA owners where you live in the future. Good luck, Aug

AugustinD
Posts: 5,144

Posted:

The condominium statute where I live states that a court "may award attorney's fees" when a condominium HOA fails to comply with either its Bylaws or Declaration and a member seeks enforcement of same. Maybe google like the following or similar and see if the statutes for HOAs in your state says similar.

https://www.google.com/search?q=georgia+condominium+statutes&oq=georgia+condominium+statutes&aqs=chrome..69i57j0l5.5301j0j4&sourceid=chrome&ie=UTF-8

GwenG (Florida)
Posts: 669

Posted:

Judges can do anything they want. Their powers are virtually unlimited. Our HOA Developer had written into the Dec that any attorney fees spent by the HOA on enforcing against an owner must be paid by the owner. Our HOA found out otherwise. The Law trumps the Declaration and the Judge trumps the Law!

AugustinD
Posts: 5,144

Posted:

Hi Gwen, respectfully, I do not think the example you cited supports a generalization that "judges can do anything they want." From my study and specific experience, judges will happily throw out parts of Declarations that go against case law. Sometimes it takes a layperson's study of case law to understand.

Over the last 50 years or so, plenty of HOA cases have reached the appeals level. Many HOA cases are also resolved via property and contractual case law. Lower court judges want their decision-making to pass the scrutiny and standard of the much more demanding appeals courts. If a lower court's judge ruling is overturned, it makes them look bad. I agree it's not always black and white, but if a legal claim reaches the court, then from all I have seen, the judge's effort to 'get things right' is genuine.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By GwenG on 06/29/2017 7:24 AM

Judges can do anything they want. Their powers are virtually unlimited. . . . The Law trumps the Declaration and the Judge trumps the Law!

Not really. This is why there are appeal processes for a judges ruling.

GwenG (Florida)
Posts: 669

Posted:

You are right; it was an over-generalization. The more accurate statement is that judges have a very broad discretion in how to apply the law and award attorney fees, regardless of what is stated in the Declaration. Judges with professional integrity and pride do not want to be overruled by their peers. Unless it is in Florida, in which case common sense may not apply.

Our HOA just had an example of this handed to them on a platter when the Plaintiff (presumed proxy for HOA) actually won the technical case and argued for return of attorneys fees/costs based on the Declaration. The judge declined to do this and ordered both parties to pay their own fees. Though it was a "technical" win for the Plaintiff, the outcome was that nothing was ordered for remedy in favor or Plaintiff.

In the bigger picture, I believe that this case may have been viewed as an exercise in flexing muscle and the Judge would not reward the Plaintiff for bringing the case into court.

The real Loser? The homeowners who now know that the Declaration is powerless in terms of the broader judicial environment and the Defendant who was the hapless subject of the complaint. The Plaintiff (presumed proxy for HOA) lost money and credibility.

The point being that Associations should NOT rely on their Declarations as the last word on recouping attorney fees and that Judges have the discretion to decide the penalties.

AugustinD
Posts: 5,144

Posted:

GwenG, nice elaboration. At my former HOA (not in Florida), the HOA served a small lawsuit on a member who had taken a computer belonging to the Association. (The member had previously been on the board and had been using the computer.) A new HOA President said, 'We can't let people get away with things like this,' and persuaded the new board to have the HOA attorney make formal demand and ultimately, file suit. During this, the HOA attorney said he did not want to seek award of attorney's fees. The HOA attorney said judges do not like this and it was unlikely that the HOA would recoup its attorney's fees for the lawsuit. The new President insisted that the HOA attorney seek an award of the HOA's legal costs. The HOA ultimately won a judgment against the member, but not the attorney's fees.

Perhaps this is so nationwide in general. Maybe maintaining uncertainty about whether attorney's fees may be recovered compels parties to settle rather than tie up the courts?

GwenG (Florida)
Posts: 669

Posted:

Augustin: You could certainly be right. It is very likely that the Judge intended to discourage stupid lawsuits with the ruling.

In the referenced example, the Plaintiff aka "Mr. Grouchy" was a homeowner with a grudge against his neighbor over the "ownership" of a bush (not even a tree!). Mr. Grouchy hired a surveyor to prove the bush was on HIS property. He was wrong. The bush belonged to the neighbor who the Mr. Grouchy, along with his board cronies, seemed to be targeting.

During the lot survey, the surveyor informed Mr. Grouchy incidentally that part of his neighbor's porch roof fascia was 3" encroaching over Mr. Grouchy's lot line. The surveyor handed Mr. Grouchy an attorney business card.

Remember--this is FloriDUH!

By the way, the County had no vehicle to cure a non-impact aerial "intrusion" and told Mr. Grouchy to take his complaint elsewhere.

Mr. Grouchy filed a lawsuit against the neighbor for the 3" encroachment which Mr. Grouchy had lived peaceably (and unknowingly) with for 7 years.

It is theorized by many who know the players that Mr. Grouchy was "egged on" by his crony board friends to file a lawsuit and teach the neighbor a lesson about who "wears the pants". It was, quite simply, a p***ing contest.

The Plan backfired. The judge ruled for the Plaintiff in upholding his complaint about the 3" roof encroachment but soundly denied any remedy for the Plaintiff in terms of curing the encroachment--ever. The Judge refused to award attorney fees to the prevailing party.

Thinking he would get his money back based on the authority in the CCR's, Mr. Grouchy spent triple the amount spent by the defending neighbor trying to "teach a lesson" but, in the end, was even grouchier and put both his houses up for sale (the childish equivalent of picking up your marbles and going home.)

The board was flabbergasted at the outcome, which stated very specifically that the HOA governing docs gave no authority to the Plaintiff to bring the case into the courtroom based on its Rules and Regulations or collect attorney fees based on its Declaration. A resounding smackdown to the HOA.

AugustinD
Posts: 5,144

Posted:

Gwen, great story. Thank you for sharing.

JanetB2 (Colorado)
Posts: 4,219

Posted:

A prime example of picking your battles wisely.

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