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Fees for inspecting HOA records: banned, or allowed only if reasonable?

Started by ChrisE8 • 19 replies • 617 views

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ChrisE8
Posts: 454
Posted:
If a member of a HOA wants to review HOA records, it's clear that there are certain records that the member can review, so the property manager and/or board has to grant access to certain records.

Is there a limit on what fees the property manager and/or the board can charge for a records review?

In a recent situation, an owner in a HOA in NY asked to view the HOA's bylaws. The property manager said that they could be reviewed, for a $250 "convenience fee".

I don't see anything in NY law (NYBCL 624) that says whether or not fees can be charged and, if they can be, if there is a reasonableness standard. I can see charging the costs of copying and mailing the bylaws, or even a fee based on time spent to send the bylaws, but $250 just seems like a way to try to block a records request.

State law differs, and HOA governing document requirements differ, but I'd appreciate any insights on what people have seen in practice.

Thanks.
AugustinD
Posts: 5,144
Posted:
-- I reviewed BCL 624 here: https://www.nysenate.gov/legislation/laws/BSC/624

-- This 2013 article has case law that might help: https://www.clearygottlieb.com/professionals/~/media/d266869d3563494b873f0f0bf5e450e6.ashx .

-- Notice that BCL 624 lays out a number of requirements for a member to excercise her or his right to inspect. None of these involve a fee.

-- Rules of statutory construction say to me that the corporation cannot add an additional requirement.

-- From reading a lot of corporate record statute sections, it's clear to me that this statute does not allow the corporation to charge anything for inspection of the records.

-- In my opinion, any fee being charged amounts to the corporation saying, "We will let a member inspect the records, but only if she or he pays a $250 fee" violates the statute. From my reading and knowledge, pursuant to Section 624 (d), the corporation is refusing the member her or his right to inspect the records.

-- A demand letter should state that the corporation's fee for records inspection is the same as denying a member her or his rights to inspect, pursuant to BCL 624. If the corporation feels otherwise, then it can "show cause" in court pursuant to BCL 624 (d).

-- Nationwide, there is a fair amount of case law on corporate records inspection.

-- Keep in mind that, if a member wants to go beyond inspecting to actually having copies of records, then often, fees may be charged.

-- I expect there might be something in the covenants about charging fees for xyz, but in my opinion the corporate statute trumps any such covenant.

-- "covenience fee" my foot.
MichaelS56 (Minnesota)
Posts: 859
Posted:
Why are all records available for any owner for not cost? The only ones that should be off limits would would be any personnel issue documents. All of our documents are on the website available to all with in the Association.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
View/inspect is different than copy. You should be able to view/inspect for free. Wanting copies provided not so much. It cost money in supplies and manpower. So they should have the right to be reimbursed for that expense.
Former HOA President
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Quote:
Posted By MelissaP1 on 02/06/2021 7:14 AM
View/inspect is different than copy. You should be able to view/inspect for free. Wanting copies provided not so much. It cost money in supplies and manpower. So they should have the right to be reimbursed for that expense.

I agree.
KerryL1 (California)
Posts: 14,550
Posted:
Our HOA has electronic versions of our Bylaws and they are online for owners. I think they are in many HOAs. If they weren't, the PM could send them via email in 5 seconds. to the owner. Why charge anyone for that except to be hostile?
SheliaH (Indiana)
Posts: 6,964
Posted:
The homeowner should already have a copy of the bylaws - if they weren't buried in that like of papers presented to him or her at closing, he or she may be able to see what's on file at the county or Secretary of state office. Most secretaries of state maintain articles of incorporation and may have the bylaws and CCRs as well. You may be able to search the records and download a copy for free.

That said charging $250 is excessive - in my community, our property manager charges $20, but that includes printing and postage (I don't think we have them on our website).

So, Chris, have you asked your Board about THIS (they oversee the proper manager, remember?). If so, what was the response?
If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
JohnC77 (California)
Posts: 562
Posted:
Chris,

In a recent post, you stated that you offer your assistance to board every once in while. Do you use this forum to get the answers to the questions these boards might be asking for help with?
JohnC77 (California)
Posts: 562
Posted:
Quote:
Posted By AugustinD on 02/06/2021 6:22 AM
-- I reviewed BCL 624 here: https://www.nysenate.gov/legislation/laws/BSC/624

-- This 2013 article has case law that might help: https://www.clearygottlieb.com/professionals/~/media/d266869d3563494b873f0f0bf5e450e6.ashx .

-- Notice that BCL 624 lays out a number of requirements for a member to excercise her or his right to inspect. None of these involve a fee.

-- Rules of statutory construction say to me that the corporation cannot add an additional requirement.

-- From reading a lot of corporate record statute sections, it's clear to me that this statute does not allow the corporation to charge anything for inspection of the records.

-- In my opinion, any fee being charged amounts to the corporation saying, "We will let a member inspect the records, but only if she or he pays a $250 fee" violates the statute. From my reading and knowledge, pursuant to Section 624 (d), the corporation is refusing the member her or his right to inspect the records.

-- A demand letter should state that the corporation's fee for records inspection is the same as denying a member her or his rights to inspect, pursuant to BCL 624. If the corporation feels otherwise, then it can "show cause" in court pursuant to BCL 624 (d).

-- Nationwide, there is a fair amount of case law on corporate records inspection.

-- Keep in mind that, if a member wants to go beyond inspecting to actually having copies of records, then often, fees may be charged.

-- I expect there might be something in the covenants about charging fees for xyz, but in my opinion the corporate statute trumps any such covenant.

-- "covenience fee" my foot.

There is a difference between what an association cna charge and what a management company can.
AugustinD
Posts: 5,144
Posted:
Quote:
Posted By JohnC77 on 02/06/2021 10:58 AM
There is a difference between what an association cna charge and what a management company can.
Answer the op's post.
JohnC77 (California)
Posts: 562
Posted:
I don't live or do business in New York City. They pretty much do what they please and, to my knowledge, no one stops them.

I'm curious why this person doesn't already have a copy, second why doesn't the HOA doesn't have a website to download and more important, why not just a neighbor for a copy being the PM is asking for $250?

If Chris is helping out boards, why all the questions from owners?
AugustinD
Posts: 5,144
Posted:
Quote:
There is a difference between what an association cna charge and what a management company can.
From where I am sitting:

-- The corporation, not the MC, owns the records.

-- The corporation has a legal obligation in New York to allow shareholder/members to inspect the records, and at no charge.

-- The MC is an agent of the corporation. The MC's contract with the corporation either does or does not include providing records to owners.

-- If the MC's contract does include providing records to members, then the MC, as an agent of the corporation, may not bill an owner for inspection of the corporate records specified in BCL 624.

-- "convenience fee" my foot.
JohnC77 (California)
Posts: 562
Posted:
You live in an "alternate" universe.
AugustinD
Posts: 5,144
Posted:
Quote:
Posted By JohnC77 on 02/06/2021 11:46 AM
You live in an "alternate" universe.
Yup. It's called the Universe of the Law of HOA Records Requests. I believe it's one of the biggest problems newbies come here to report. The newbies are nearly always right that the HOA is on the wrong side of the law. It is a big deal.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Our monthly financial reports from our MC are about 40 pages long. They show every single penny taken in and paid out. All payments are done via check or credit card and they are part of the records and would even show the sub sandwiches we bought for the BOD. The full report is sent to each BOD Member monthly. Any owner can request a copy of it

At our Annual Meeting we give owners a 5 page report. Profit and Loss Statement and a Year To Date Financial Report. Any owner can request the full financial report and we will gladly sent it to them. When we get a request for financial information we sent the 5 page report. This includes banks, mortgage companies, Title Companies, etc. Only one person has ever asked for a more detailed report and they went away after they saw it.

The problem I see on this chat all the time is somebody saying send me every piece of financial information for the last year or so. This is usually a request by someone that has no understanding of financial matters. Typically they cannot even read a Profit or Loss Statement, never mind a Year To Date Financial Report. Forget a full financial report that is 40 pages long. Usually this is the same type person that says, I am going to sue but never does.

Thus when someone fires a scatter gun and says give me a copy of all financial reports, I get defensive. They typically have no clue as to what they are looking for, thus they are on a witch hunt. I see it all the time on this chat.
KerryL1 (California)
Posts: 14,550
Posted:
Is this the Board that the PM is on??
AugustinD
Posts: 5,144
Posted:
Quote:
Posted By JohnC46 on 02/06/2021 12:48 PM
Thus when someone fires a scatter gun and says give me a copy of all financial reports, I get defensive.
Me too pretty much.
Quote:
They typically have no clue as to what they are looking for,
Yup, except I think most of the veterans here know that what they are really seeking, or at least what they really need, is some education. And isn't this the main purpose of this forum, along with teaching basic manners?
Quote:
thus they are on a witch hunt.
Nah. Foul. I say: They are on a hunt to understand why decisions are being made. Instead of going to board meetings and, ya know, yelling at the directors, they want to see the financial records. It's a step in the right direction. At least they landed here, asking how to proceed, rather than bugging their manager or board further with records requests that do not really make sense.
Quote:
I see it all the time on this chat.
Me too.
KellyM3 (North Carolina)
Posts: 2,239
Posted:
Examining by-laws and covenants of an HOA should be free and likely are found at the county courthouse.

Demanding every utility bill since 1999 and every meeting minutes for fifteen years requires manual labor and - NO - that shouldn't be free of charge if your PM is stopping their work to delve into archives.

I disagree with HOAs using fees to "punish" dues payers, however.
ClareL (California)
Posts: 29
Posted:
Quote:
Posted By JohnC46 on 02/06/2021 12:48 PM
Our monthly financial reports from our MC are about 40 pages long. They show every single penny taken in and paid out. All payments are done via check or credit card and they are part of the records and would even show the sub sandwiches we bought for the BOD. The full report is sent to each BOD Member monthly. Any owner can request a copy of it

At our Annual Meeting we give owners a 5 page report. Profit and Loss Statement and a Year To Date Financial Report. Any owner can request the full financial report and we will gladly sent it to them. When we get a request for financial information we sent the 5 page report. This includes banks, mortgage companies, Title Companies, etc. Only one person has ever asked for a more detailed report and they went away after they saw it.

The problem I see on this chat all the time is somebody saying send me every piece of financial information for the last year or so. This is usually a request by someone that has no understanding of financial matters. Typically they cannot even read a Profit or Loss Statement, never mind a Year To Date Financial Report. Forget a full financial report that is 40 pages long. Usually this is the same type person that says, I am going to sue but never does.

Thus when someone fires a scatter gun and says give me a copy of all financial reports, I get defensive. They typically have no clue as to what they are looking for, thus they are on a witch hunt. I see it all the time on this chat.

Of course they have no idea what they are looking for, homeowners are not all accountants, and do not know the specific names of these reports. Not all HOA’s divulge the names of the financial reports to members either. That’s why “newbies” are hear seeking advice. Instead of getting defensive, educate.
GeorgeS21 (Florida)
Posts: 3,808
Posted:
Newbies have a responsibility to study - if they don’t know something.

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