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Condo | HOA Lawyers

Record Requests – Even if Lengthy and Difficult to Follow, They Need to Be Produced if Sought for a Proper Purpose

Facts

Owner sought records from a Michigan association (the “Association:”).  The Association refused to produce records presumably on the grounds that the requests were long, difficult to follow and failed to state a proper purpose.  The requests, clarified in the complaint, consisted of the following:

  1. Bills or invoices showing the cost of past litigation;
  2. Records relating to orders for wrist bands for access to the pool;
  3. Work orders or invoices for light bulb replacements in Owner’s building;
  4. Board minutes from April 2019 until September 2019;
  5. Records relating to when Owner’s checks from approximately June 2019 through September 2019 were received by the Association and posted to Owner’s account;
  6. Board minutes for 2018; and
  7. Financial statements for 2017 and 2018.

The Association largely ignored the Owner’s requests, which led to the Owner suing the Association.

Trial Court Decision

The trial court held for the Owner stating that although the requests “were difficult to follow” they were ‘clear enough to inform [defendant Association] of what records Plaintiff [Owner] is seeking, and why.’ In a footnote, the court also pointed out that ‘Plaintiff’s [Owner’s] Complaint and response to [defendant Association’s motion for summary disposition were] much clearer’ than his record-inspection requests.”  Regardless of the improved clarity, the trial court found that the requests were for specific categories of documents, and they all had a proper purpose – “perceived mismanagement by the Board or the property manager which has a direct effect, primarily financial, on Plaintiff [Owner].”  The defendant Association appealed.

Appellate Court Decision

The appeals court affirmed the trial court holding that the relevant statute MCL 559.157(1) provides: “The books, records, contracts, and financial statements concerning the administration and operation of the condominium project shall be available for examination by any of the co-owners and their mortgagees at convenient times.”  The court rejected the Association’s position that the record-inspection requests should be denied because “plaintiff [Owner] was difficult to deal with.”  The court found that although the Owner’s requests were numerous and longwinded, nothing suggested they had been made in “bad faith, and to the contrary, the requests all appeared to have been made in good faith.”  The court held that just because Owner exercised his right to records “repeatedly,” the court would not “punish plaintiff [Owner] for trying to actively engage in the governance of his community.”

LESSONS LEARNED
  1. Upon receipt of a valid records request an association should reasonably and promptly produce the requested records;
  2. If the records sought are numerous, it likely makes more sense to spend association money on electronically storing, so that it can electronically produce, its records, as opposed to litigating the right of an owner to have and review records; and
  3. Transparency with 99% of the association’s records (obviously not medical records or records protected by the attorney client privilege) is the best practice. Making records difficult to obtain only results in a lack of trust in the board and management, often for good reason.

Bafna v. Echo Valley Condominium Association, Not Reported in N.W. Rptr. (2021 WL 5021749),

For more on Condominium and HOA Record Retention, download our handout HERE. 

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