Throughout most of our country, the states have laws requiring community associations like condominiums, HOA’s and cooperatives to keep certain official records of the entity and make them available to stakeholder owners, members or shareholders upon request. Some laws provide a list of the types of official records and others don’t. Some require stakeholders to jump through hoops (like stating a good faith reason for the review) before records will be provided for review and others don’t Some states like Florida have realized that owners own their condominium associations and have a right to review certain records whenever and wherever they want and just passed a law requiring condominiums with 150 or more units to have specific web access for owners that is compliant with the Florida law. Florida even made it a potential crime for condominiums of all sizes not to provide access to official records within a short period of time to inquiring owners. If those official records are not provided in just 10 working days of the request, there is a presumption of willfulness and a right of the owner to recover damages including legal fees incurred, along with a possible criminal charge against the offender. Indeed, Florida provides that “[a] unit owner who is denied access to official records is entitled to the actual damages or minimum damages for the association’s willful failure to comply. Minimum damages are $50 per calendar day for up to 10 days, beginning on the 11th working day after receipt of the written request. The failure to permit inspection entitles any person prevailing in an enforcement action to recover reasonable attorney’s fees from the person in control of the records who, directly or indirectly, knowingly denied access to the records.”
New York has just joined the states amending the Not-For-Profit Corporation law, Section 621, adding a list of official records that HOA’s must let their member owners review. In addition to the existing “annual balance sheet and profit and loss statement or a financial statement performing a similar function for the preceding fiscal year, and, if any interim balance sheet or profit and loss or similar financial statement has been distributed to its members or otherwise made available to the public, the most recent such interim balance sheet or profit and loss or similar financial statement,” there is now a list of official records that must be maintained and available in a “reasonable” time for review.
New York HOA member owners are now entitled to review “invoices, ledgers, bank accounts, reconciliations, contracts, and any documents related to the expenditure of Homeowner Association dues.” The amendment was passed unanimously by the Senate and signed by the Governor. That means the entire State of New York is in favor of this new transparency requirement that is sweeping the nation. When Florida passed its new condo laws, the change was unanimous in the Legislature as well. We will wait to see if New York expands requirements for other community associations like condominiums and cooperatives, defines the “reasonable” time period for responding to the request like Florida and Illinois and others, and imposes a civil or criminal sanction like Florida. Irrespective, New York HOA’s and community associations in states like Florida, Illinois and others, must take steps now to comply with the new legal requirements. Office of the Board is an easy and cost-effective way to start complying instantly (www.officeoftheboard.com).
