Board members refusal to share information

Won't your monthly financial statements available to all directors answer your questions?

From LaskaS's prior posts, the above pertains to a Texas condominium subject to Texas Property Code Ch. 81 (the Texas Condo Act for pre-1994 condos); several specific but important sections of Ch. 82; and the Texas Nonprofit Corporation Act Ch. 22. Only records in the possession of the condominium association are available to condo Owners and condo Directors for inspection and copying. The records request should be made to the condominium's custodian of records. Specifically, ask for the invoices for the attorney's billed hours.

When other board members push back, ask them to quote from the following statutes to support their claim that a board vote must occur for a director to be permitted to view the attorney's invoices. Because they are wrong. Also quote what your covenants/bylaws say about records inspection, and point out that they too do not require a board vote.

From https://statutes.capitol.texas.gov/Docs/PR/htm/PR.81.htm:
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Sec. 81.209. CONDOMINIUM RECORDS. (a) The administrator or board of administration of a condominium regime or a person appointed by the bylaws of the regime shall keep a detailed written account of the receipts and expenditures related to the building and its administration that specifies the expenses incurred by the regime.

(b) The accounts and supporting vouchers of a condominium regime shall be made available to the apartment owners for examination on working days at convenient, established, and publicly announced hours.

(c) The books and records of a condominium regime must comply with good accounting procedures and must be audited at least once each year by an auditor who is not associated with the condominium regime.
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This section of Ch. 82 also applies:
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Sec. 82.114. ASSOCIATION RECORDS. (a) The association shall keep:

(1) detailed financial records that comply with generally accepted accounting principles and that are sufficiently detailed to enable the association to prepare a resale certificate under Section 82.157;

(2) the plans and specifications used to construct the condominium except for buildings originally constructed before January 1, 1994;

(3) the condominium information statement prepared under Section 82.152 and any amendments;

(4) the name and mailing address of each unit owner;

(5) voting records, proxies, and correspondence relating to amendments to the declaration; and

(6) minutes of meetings of the association and board.

(b) All financial and other records of the association shall be reasonably available at its registered office or its principal office in this state for examination by a unit owner and the owner's agents. An attorney's files and records relating to the association are not records of the association and are not subject to inspection by unit owners or production in a legal proceeding.

(c) The association shall, as a common expense, annually obtain an independent audit of the records. Copies of the audit must be made available to the unit owners. An audit required by this subsection shall be performed by a certified public accountant if required by the bylaws or a vote of the board of directors or a majority vote of the members of the association voting at a meeting of the association.

(d) A declarant shall furnish copies to the association of the information required by Subsection (a) on the date the first unit is sold.

(e) Not later than the 30th day after the date of acquiring an interest in a unit, the unit owner shall provide the association with:

(1) the unit owner's mailing address, telephone number, and driver's license number, if any;

(2) the name and address of the holder of any lien against the unit, and any loan number;

(3) the name and telephone number of any person occupying the unit other than the unit owner; and

(4) the name, address, and telephone number of any person managing the unit as agent of the unit owner.

(f) A unit owner shall notify the association not later than the 30th day after the date the owner has notice of a change in any information required by Subsection (e), and shall provide the information on request by the association from time to time.
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From the Texas Nonprofit Corporation Act:
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Sec. 22.351. MEMBER'S RIGHT TO INSPECT BOOKS AND RECORDS. A member of a corporation, on written demand stating the purpose of the demand, is entitled to examine and copy at the member's expense, in person or by agent, accountant, or attorney, at any reasonable time and for a proper purpose, the books and records of the corporation relevant to that purpose.
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Laska

In the financial reports we prepare for clients, we have one, perhaps two, line items which depict legal expenses.

It may be the regular financial reports do not contain the granular detail requested by Director A (AKA ANN).

I do not understand why the property manager is not being asked for the information. I certainly can produce that level of detail for our client board members as an ad hoc report without bothering the staff of the association attorney for information I already have.

I really do not understand the push-back regarding the request of a member of the Board.

I forgot to answer the other question regarding whether we are given attorney invoices.

I have asked repeatedly and sometimes I am sent invoices that are months old.
I want to know how much money we've spent on a particular legal case. This information is important because we are heading into pretrial mediation.
Obviously, before any consideration can be made regarding a settlement, the board should know how much we've already spent on the case.

The information I'm seeking is only available through the attorney. The board member who is designated as the contact person is refusing to get the info. He is absolutely doing this just to spite me. He's obstructing every attempt I make to ask for information. The rest of the board just stays silent.

Augustine. do you know of any other relevant statutes that specify the a board members increased access to records.

So they do exist. This is what you should pursue. If the Board is refusing to turn over the invoices in a timely fashion, then your only option is to hire an attorney.I agree this information is important and it is critical that you be allowed to view the invoices in possession of the association. Your only option is to hire an attorney.I disagree. As I posted above, he's doing this because there is no statute or covenant that requires either him or the attorney to produce anything in the attorney's possession.

You have a right to view the attorney's invoices that are within the possession of the association. The courts will say within a reasonable timeframe.

None of the Texas statutes give the directors' special viewing rights. Your covenants might.

You indicated a few weeks ago that there was a massive change-up in the Board. It appears this is not going well.

Worse, this rogue board is making it impossible for you, as a director, to make informed decisions pertaining to mediation.

I suggest either spending the money on an attorney or moving.

The president of the board should order Tom to provide an itemized statement of year to date costs for the attorney services so far this year. That’s not an unreasonable request or unattainable information to provide to the board.

If Tom refuses to do this then he needs to be removed as the liaison between the board and the lawyer.

Laska, I repeat my previous question: I do not understand why the property manager is not being asked to produce this information? If the PM pays the bills, he or she must have the invoices.

The President certainly has the power to ask the PM to produce the requested data if it comes to that.

Augustin

I have not personally experienced a Board refusing to produce a document; of course it happens.

I understand your hypothetical. The data request for comparative expenditures to date is information the Board should have access to. To me it is not up to the PM to make any decision regarding access to information regarding expenditures for which the Board is responsible and presumably has approved. Engaging in a discussion to reduce the overhead involved in producing the data requested is perfectly acceptable.

I question the need for the level of granular detail requested, to me a summary figure is all that is necessary. Someone will have to explain the need for detail to me.

To be blunt, someone is playing games with the Director who made the request, for what reason I do not know. I do know refusal to provide the information requested raises questions.

Use the word I much? In a HOA it's a "WE". Also you do NOT need to know this information. It will be settled in a court of law when the time comes. All you need to know is your HOA is in litigation and this is the bill. DONE.

Laska

I agree with Augustin's latest post. If your attorney is not providing a detailed breakdown of charges on the invoice, that information should be requested on all invoices or a new attorney found.

I now understand why the information requested by the Board member cannot be obtained from the property manager or whomever pays the bills.

The invoices we receive from the attorney, (or the accountant, or pest control contractor, or whomever) for our clients depict very specifically the allocation of the expense to the 'cost cause'; in the case of the attorney the invoice entry looks like this

Date Hours Subject Amount Billed

In the Subject column there is an entry which states:

Telephone call with So and So to discuss/review issues submitted by email by client regarding installation of (new whatever) by (contractor name).

or

Review by (attorney, paralegal, whomever) of Declaration of the (Named) Association to determine responsibility for maintenance of (named element).

You're joking right?

A member of the HOA board does not have a right or need to know billing information from the association attorney?

HOA board members have a fiduciary duty and that includes monitoring of expenses to ensure that the billing is accurate and warranted. In the case of litigation generally the association attorney will bill the association on a monthly basis for work done, the bills included detailed information concerning the work performed and the amount billed.

The management company will then pay the bill once all of the approvals are made and those bills are subject to oversight and approval by the board or a designated board member.

In your scenario, once an account is turned over to an attorney for collection or legal action the board loses any oversight. You're wrong - the board has an obligation to maintain oversight of the legal process.

Perhaps Melissa was talking about the membership, and not board members?

In some cases, court action by a Board should be shared - in others, like foreclosures, probably not.

To your point, though, Nigel, our board voted to automatically hand over accounts in arrears to our attorney for collection at a date certain. We have one account that is three years in arrears and we recently voted to foreclose on this property. We follow the status of all of these monthly, and announce at Board meetings which properties are in arrears, and the status.

I believe Laska, while a PIA, is a BOD Member and is entitled to see anything her little heart desires to see.