Records Inspection Requests by Members: An Overview
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A reader recently asked us to comment on members' rights to inspect their property owners’ association’s books and records, such as financial information and meeting minutes, pursuant to the Property Owners’ Association Act.
A member’s right to inspect records is not only governed by the provisions of the Property Owners’ Association Act, but also by the provisions contained within the Virginia Nonstock Corporation Act. The provisions of the two acts must be read in conjunction with each other, and therefore the interested member should review not only § 55-510 of the Property Owners’ Association Act in order to understand his rights, but also §§ 13.1-932 – 934 of the Virginia Nonstock Corporation Act as well.
This blog post is limited to a discussion of the provisions contained within the Property Owners’ Association Act, and at some future time we will likely make a post regarding the inspection provisions contained in the Virginia Nonstock Corporation Act.
Members’ Right to Review Association Records Pursuant to the Property Owners’ Association Act
The first step for a member or association to take, in determining whether § 55-510 requires the production of an item, is to determine whether the item requested constitutes “books and records kept by or on behalf of the association.” Occasionally a member will request an item that falls outside the definition of a “book and record,” and therefore the legal analysis will immediately end, as the member is not entitled to such items.
If the item does in fact constitute a “book and record” under Virginia law, then, subject to the exceptions listed below, it must be available for review and copying by any member in good standing (or his agent) who wishes to exercise such right for a proper purpose related to his membership in the association. Included among the types of records a member may review are the association’s membership list and addresses (which may not be used for monetary gain or solicitation) and the aggregate total of all association employees’ salaries. The right can be exercised during reasonable business hours, or at a time mutually agreeable to the parties involved. The member must give the association five days’ prior written notice, reasonably identifying the purpose for the request and the specific books and records requested for examination and/or copying.
Excluded Records
The association is not required to provide for examination and copying books and records concerning the following categories of information:
1. Personnel matters relating to specific, identified persons or a person's medical records;
2. Contracts, leases, and other commercial transactions to purchase or provide goods or services, currently under negotiation;
3. Pending litigation or probable litigation (i.e. where there has been a specific threat);
4. Matters involving certain administrative proceedings before a government tribunal for enforcement of association documents;
5. Communications with legal counsel relating to categories 1-4 or that are otherwise protected by the attorney-client privilege or attorney work product doctrine;
6. Information that is unlawful to disclose;
7. Minutes of, or confidential records relating to, any executive session of the association's board of directors (or any committee or subcommittee thereof);
8. Documentation compiled for consideration in executive session; and
9. Individual owner's files (other than those of the requesting owner).
Best Practice Tip: Minutes of the board’s executive session should be segregated from the minutes of the regular session in order to prevent any confusion on the part of the association or its manager as to whether they should be produced. Additionally, such minutes should only contain a notation of the board’s vote to go into executive session, the permissible reason(s) under Virginia law for entering into executive session, and the board’s vote to go out of executive session.
Charges
Prior to providing the books or records to the requesting party, the association may impose and collect a charge, to be no more than the actual cost of the materials and labor involved in complying with the request.
Timing for Availability of Minutes
Except as to exclusion # 7 listed above (concerning minutes of executive session), draft minutes of each board of directors' meetings must be available for review and copying within 60 days from the conclusion of the meeting or at such time as they are distributed to the board members for its next meeting, whichever occurs first.
Best Practice Tip: Draft minutes should always be stamped or marked as “draft” so as to prevent any confusion on the part of the members, or other parties, as to whether they constitute the approved minutes.
Condominium Associations
Va. Code Sec. 55-79.74:1 provides similar requirements regarding a unit owner’s right to inspect the books and records of condominium associations.
Policy Pointer: We recommend that your board adopt a policy or rule, consistent with the requirements of the relevant statutes and association bylaws, for members’ inspection and copying of association books and records. The policy should include (a) set days and times when books and records will be available for review and copying; (b) the fees the association will charge for copying; (c) a limit on the number of times a member may make inspection requests in a given month; and (d) any other relevant information, such as office location, contact information for the person in charge of producing the documents, and whether the requestor should call ahead.
