How often do HOAs need to provide financial reports that include a balance sheet, receipts for work contacted and bank statements to the contributing members?
IC 32-25.5-3(g) provides that an association must provide the following to its members, upon request:
(g) Subject to subsection (k):
(1) the financial records, including all contracts, invoices, bills, receipts, and bank records, of a homeowners association must be available for inspection by each member of the homeowners association upon written request; and
(2) the minutes of meetings of the homeowners association board, including the annual meeting, must be available to a member of the homeowners association for inspection upon the homeowners association member’s request, which may be submitted:
(A) in person;
(B) in writing; or
(C) by electronic mail.
In addition to the right to inspect the meeting minutes of the homeowners association board, a member of a homeowners association has the right to attend any meeting of the homeowners association board, including an annual meeting of the board. However, the board of directors may meet in private to discuss delinquent assessments. The board of directors may also meet in private with legal counsel to discuss the initiation of litigation, or to discuss litigation that either is pending or has been threatened specifically in writing. As used in this subsection, “litigation” includes any judicial action or administrative law proceeding under state or federal law.
A written request for inspection must identify with reasonable particularity the information being requested. A member’s ability to inspect records under this section shall not be unreasonably denied or conditioned upon provision of an appropriate purpose for the request. The homeowners association may charge a reasonable fee for the copying of a record requested under this subsection if the homeowners association member requests a written copy of the record.
Subsection (k), which provides the exceptions, states:
(k) A homeowners association is not required to make available to a member for inspection any of the following:
(1) Unexecuted contracts.
(2) Records regarding contract negotiations.
(3) Information regarding an individual member’s association account to a person who is not a named party on the account.
(4) Any information that is prohibited from release under state or federal law.
(5) Any records that were created more than two (2) years before the request.
(6) Information that:
(A) is provided by a member of the homeowners association about another member of the homeowners association; and
(B) concerns suspected criminal activity involving the other member.
Except as otherwise provided in this article (including subsection (j) and this subsection), other applicable law, or the governing documents of the homeowners association, a homeowners association is not required to retain a record of a written or electronic communication for any specific period of time. However, a homeowners association or a member of the board of a homeowners association shall retain for at least two (2) years after receipt, and during that period shall make available to a member of the homeowners association at the member’s request, any written or electronic communication received by the homeowners association or board member that relates to a financial transaction of the homeowners association and that is not otherwise excepted from disclosure under this article or other applicable law.
Thrasher Buschmann & Voelkel PC
151 N. Delaware St.
Indianapolis IN 46204-2505
Most often, HOAs provide annual audits to their members, and monthly financials only to their Boards. The reason for not reporting more often to the membership is that the monthly financials are not audited documents and the annual audit may reveal that changes or adjustments need to be made. For that reason, the release of unaudited records may not be accurate, and may even be misleading.Robert Griffin, Esq.Griffin Alexander PC415 Route 102nd FloorRandolph NJ firstname.lastname@example.orgTel:973- 366-1188Fax:973-366-4848The only requirement in Pennsylvania law is to provide certain financial information with the Public Offering Statement and for the Association’s Annual Meeting. Normally the latter is limited to a summary income and expense statement along with the proposed budget for the next year. There is also no Pennsylvania statutory requirement that receipts or bank statements be provided, only that financial information (which is not defined) be open for inspection to members upon request. The foregoing might change if there is something to the contrary in the Association’s Governing Documents.
Sara A. Austin
Austin Law Firm LLC
226 E. Market St.
York, PA 17403
It is not readily apparent from the question whether the reader is asking on behalf of a condominium association, or a homeowner’s association, as many use the term “HOA” interchangeably. Here, however, the answer is the same for both.
The New Jersey Condominium Act (“Condominium Act”) requires condominium associations to maintain accounting records, “in accordance with generally accepted accounting principles [GAAP], open to inspection at reasonable times by unit owners.” According to the Condominium Act, such records include “(i) a record of all receipts and expenditures and (ii) an account for each unit setting forth any shares of common expenses or other charges due, the due dates thereof, the present balance due, and any interest in common surplus.” Thus, all those records required to be kept in accordance with GAAP, should be made available for inspection by any member upon request. New Jersey case law has also found that the right of access set forth in the Condominium Act applies to other types of associations, such as cooperative and homeowners associations.
Importantly, the Condominium Act only requires that documents kept in accordance with GAAP be open to inspection upon reasonable notice. Thus, there is no requirement under the law to provide financial reports to members of an association, unless your governing documents specifically require that you do so. For example, many Bylaws require community associations to conduct an annual audit and distribute same to its members. If your Bylaws do not have such a requirement, then documents such as balance sheets, receipts for work and bank statements need only be open to inspection.
Finally, while the Condominium Act is silent as to whether owners have a right to make copies, and New Jersey case law has not resolved this precise issue, the New Jersey Department of Community Affairs takes the position that the right of inspection includes the right to copies of those documents. Thus, we recommend that you allow members to make copies of financial records that are required to be open to inspection. And, unless your Bylaws provide otherwise, the association may charge the cost for the copying.
Martin C. Cabalar
Becker & Poliakoff
1776 on the Green
67 Park Place, Suite 702
Morristown, NJ 07960