HOA Not Giving Financial Records? Here’s What Homeowners Can Do

Is your HOA not giving financial records? Homeowners shell out association dues and assessment fees to help invest in and enhance the community. With the amount of money they contribute, they may wonder if their pay is put to good use.

Understanding Homeowners’ Rights

Part of managing a community is transparency, and a homeowner in your community has the right to it. The HOAs responsibility to provide its homeowners with transparency is always indicated in an HOA’s governing documents, such as the bylaws and CC&Rs.

This responsibility is also outlined by state legislation. For example, in Nevada, the state’s revised statutes (NRS) 116.31175 say that a homeowner’s association must make financial records available to homeowners within a reasonable time upon request. New Jersey has a similar law, mandating that HOAs must provide homeowners with financial information and that homeowners are entitled to access to copies of these records.

What Financial Records Can Homeowners Access?

The types of records community members can access usually vary by state and per HOA. They are generally mentioned in your HOA’s governing documents. They typically include the following:

• Annual Budgets: Homeowners must always have access to the association’s annual budget, which outlines the HOA’s projected income and expenses for the year. This also usually includes information about upcoming assessments, operating costs, and reserve fund details.
• Reserve Studies: These documents contain information about the HOA’s evaluations of the reserve funds to see if savings are enough to cover future large-scale repairs and replacements.
• Financial Statements: These documents may include profit and loss statements, balance sheets, and cash flow statements. They give homeowners an idea of the associations’ financial activities and overall financial health.
• Audits: There are times when an HOA goes through a financial audit. When that happens, homeowners are entitled to find out the results.
• Expenditures: These financial documents show how the association is spending money. They usually include contract information, maintenance and repairs, and community expenses.

What Can Homeowners Do?

Typically, when a homeowner wants access to financial records, they would do so via a written request. The proper way to request HOA financial statements may vary and should be indicated in your association’s governing documents. This usually involves a letter or a form requesting a copy of the said document being submitted to the HOA.

However, if your HOA is not releasing financial documents and denying their request, they may do the following:

• Seek Mediation: Homeowners may seek mediation between them and the HOA to resolve the dispute without going into legal action.
• Attend Board Meetings: Homeowners may highlight the issue of the HOA not providing financial documents during board meetings.
• Community Pressure: Homeowners who have encountered the same issues may band together to put pressure on the board. They may also gather support from other homeowners in the community.
• Seek Legal Action: If the HOA board remains adamant about withholding financial documents, the homeowner may seek legal action, such as hiring a lawyer or going into small claims court.
• File a Complaint with the State: A homeowner may also consider filing a complete complaint with the state authority that oversees HOAs if the association still refuses to withhold documents.

The Role of the HOA Board

Is the HOA not giving financial records? As part of the board, these members must know they have the fiduciary duty to act in the community’s best interests. Part of this duty is to provide homeowners with transparency about the financial state of the HOA.

If the HOA board prevents access to financial records, it may lead to the loss of trust from homeowners. It will look like the HOA needs to be more transparent to them, which may signify mismanagement or corruption. However, the reasons are sometimes less egregious, such as outdated record keeping and a simple misunderstanding or misinterpretation of the law.

What Can Board Members Do?

Are you a HOA board member who finds that building trust within the community is crucial? If your HOA doesn’t provide these documents, and you want to correct this as an HOA board member, here’s what you can do.

1. Revisit Your HOA’s Governing Documents

The bylaws and CC&Rs of your HOA contain the stipulations about handling financial documents and providing homeowners with access to them. Consult your governing documents so that you have an idea of your limitations and responsibilities.

2. Propose a New System

If there was no system for record access before, you can propose one. This new system may involve receiving and reviewing requests, finding records, and providing copies.

3. Changes in Record Keeping

Your HOA not giving financial records may also be due to disorganization and outdated record keeping. For cases like this, you can propose a change in your record-keeping process, which involves studying more modern ways or looking for solutions to help it become more efficient and convenient.

4. Seek Professional Help

The HOA board may benefit from finding a HOA management company to handle these cases properly. They may provide financial and documentation services, from record-keeping to communications with homeowners.

Frequently Asked Questions

How Long Does an HOA Have to Provide the Requested Financial Records?

This would vary per state and HOA. Some states have different time frames for this. For example, in California, the state law requires 10 days for current-year records and 30 days for the previous two years. On the other hand, Ohio state law requires HOAs to provide access 5-10 business days after they receive the request.

Can the HOA Charge for Accessing Financial Records?

Yes, HOAs may charge a reasonable fee for copying or providing access to financial documents. However, this only applies if the bylaws and CC&Rs mention it is allowed. Additionally, the charges must be reasonable, and homeowners must be notified of possible additional costs.

Can the HOA Refuse to Provide Financial Records Due to Privacy Concerns?

Based on state laws, the HOA can’t outright refuse to withhold copies of financial records for privacy concerns. However, they may redact sensitive and private information, including individual homeowner account information.

Financial Transparency for HOA Health

Good HOA health involves not only budget and spending but also transparency. Communication and trust keep your community running like a well-oiled machine. As a member of the HOA board, you are responsible for acting for the community’s good.

If you need help with record-keeping and homeowner communications, why not have professionals help you? Check out our detailed online directory for your area’s best HOA management companies today!

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