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A Homeowner's Journey
Introduction
A homeowner who owns property in a common interest development (also known as a CID, homeowners' association, or HOA)
takes on the responsibility of running the association through his/her elected officials (the Board of Directors) and
the vendors hired by the Board of Directors (e.g., the property manager). As a fellow homeowner in an HOA, I am
jointly liable, along with my fellow homeowners, for the actions of the HOA Board of Director and its vendors. The
California legislature recognized this liability when it recently passed laws allowing, among other rights, the right
of homeowners in an HOA to inspect and scan HOA records for any reason.
This section will chronicle my efforts as a homeowner in a common interest development (whose name will not be
published in this journal) to obtain records under new consumer laws, specifically Section 1365.2 of the California
Civil Code, which authorizes homeowners to inspect association records.
Many California HOAs have vendors and property managers in common. As property owners, I believe we should make contact
with other HOAs in order to obtain some background on the vendors who are being paid by our HOA. I feel that a thorough
investigation of where our assessments are being spent — and by whom — will help us keep common costs (not
to mention our joint liability) under our own control.
In addition, organizations such as the California Center for Homeowner Association Law
(CalHomeLaw.org) provide valuable resoucres and information regarding homeowners'
rights in common interest developments.
Section 1365.2 describes the types of records that can be requested, the time frames in which they can be requested,
and other details. Section 1365.2 specifically lists the following association records that must be made available
for inspection:
(1) "Association records" means all of the following:
(a) For the purposes of this section, the following definitions shall apply:
(A) Any financial document required to be provided to a member in Section 1365.
(B) Any financial document or statement required to be provided in Section 1368.
(C) Interim financial statements, periodic or as compiled, containing any of the following:
(i) Balance sheet.
(ii) Income and expense statement.
(iii) Budget comparison.
(iv) General ledger. A "general ledger" is a report that shows all transactions
that occurred in an association account over a specified period of time. The records described in this subparagraph
shall be prepared in accordance with an accrual or modified accrual basis of accounting.
(D) Executed contracts not otherwise privileged under law.
(E) Written board approval of vendor or contractor proposals or invoices.
(F) State and federal tax returns.
(G) Reserve account balances and records of payments made from reserve accounts.
(H) Agendas and minutes of meetings of the members, the board of directors and any
committees appointed by the board of directors pursuant to Section 7212 of the Corporations Code; excluding,
however, agendas, minutes, and other information from executive sessions of the board of directors as described in
Section 1363.05.
(I)
(i) Membership lists, including name, property address, and mailing address, if
the conditions set forth in clause
(ii) are met and except as otherwise provided in clause (iii).
(ii) The member requesting the list shall state the purpose for which the list
is requested which purpose shall be reasonably related to the requester's interest as a member. If the association
reasonably believes that the information in the list will be used for another purpose, it may deny the member access
to the list. If the request is denied, in any subsequent action brought by the member under subdivision (f), the
association shall have the burden to prove that the member would have allowed use of the information for purposes
unrelated to his or her interest as a member.
(iii) A member of the association may opt out of the sharing of his or her name,
property address, and mailing address by notifying the association in writing that he or she prefers to be contacted
via the alternative process described in subdivision (c) of Section 8330 of the Corporations Code. This opt-out
shall remain in effect until changed by the member.
(J) Check registers.
(2) "Enhanced association records" means invoices, receipts and canceled checks for payments made by the
association, purchase orders approved by the association, credit card statements for credit cards issued in the name
of the association, statements for services rendered, and reimbursement requests submitted to the association,
provided that the person submitting the reimbursement request shall be solely responsible for removing all personal
identification information from the request.
(b)
(1) The association shall make available association records and enhanced association records for the time periods and within the timeframes provided in subdivisions (i) and (j) for inspection and copying by a member of the association, or the member's designated representative. The association may bill the requesting member for the direct and actual cost of copying requested documents. The association shall inform the member of the amount of the copying costs before copying the requested documents.
First Request for Records
On March 15, 2010, I sent a certified letter to the president of our homeowners' association and to the property
manager, making a demand for inspection of documents and records under California Civil code Section 1365.2. The
request stated the following:
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I am a resident and homeowner in the [DELETED] HOA Complex, having bought my condo in 1998. I am writing the
[DELETED] Board of Directors in order to exercise my rights under Civil Code 1365.2. Please be advised that I seek
to inspect the association records listed below. After inspecting the records, I may also want to copy or scan
them. Please be advised that executed contracts are specifically identified as an association record in Civil Code
1365.2 (D). The HOA may not charge me for inspecting records and may charge me only for the actual cost of the
copies if I ask the HOA to make the copies. (Moran v. Oso Valley Greenbelt Assn., supra, 92 Cal.App.4th 156.)
Pursuant to CC §1365.2(f), please have the requested records for the current year available for my inspection
at noon on Friday, April 2, 2010, and the requested records dating from 2006 through 2009 available on Friday, April
23, 2010. Also, please let me know where exactly the records will be available for inspection.
The records of interest are:
- All executed contracts between the [DELETED] Board of Directors and [DELETED] (accountants), from January 1,
2006 to present, including but not limited to employment contracts.
- All executed contracts between [DELETED] Board of Directors and [DELETED] property management company, from
January 1, 2006 to present, including but not limited to employment contracts.
- All account books recording income received by [DELETED] HOA from 2006 to the present. "Income" includes but
is not limited to homeowner assessments.
- [DELETED]
- All executed contracts, invoices, and receipts between [DELETED] property management company and any assessment
collection agencies, from January 1, 2006 to present.
- Any and all formal, written policies of [DELETED] HOA regarding homeowner's requests to inspect/copy records,
specifically records policies drafted and adopted by the [DELETED] HOA board under Civil Code 1357.100 et seq.
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