In PA, the answer is “maybe”. The Association’s governing documents may permit access to that information by members. If not, members must rely on applicable state law which permits reasonable access to financial records. The law does not define it further, such that courts may be left to decide what members are entitled to see.
As to the specific question here, if it is asking how the budget number was arrived at, I would suggest that the management company should respond. If, however, the question is really asking if the members should have access to proposals from vendors that have been built into the budget, the answer is not as clear.
Austin Law Firm, LLC
226 E. Market Street
York, PA 17403
If the writer is asking whether residents have the right to review the income and expense statements of the management company itself, as opposed to the Association, the answer is No. The management company runs its own business and has the same rights of privacy as any other independent vendor or service provider. However, if the resident is asking whether they can review the books and records of the Association that are maintained by the management company, the answer is yes, with some restrictions, including the following: The resident must sign an “Affidavit of Proper Purpose,” intended mostly to bar commercial use of any information they obtain; arrears records of other residents, and certain other records, are generally considered confidential and not subject to review; if the resident is in litigation with the Association, they have to go through formal discovery procedures to review documents; and the resident is not free to publish information that it obtains to the general public.
Spolzino Smith Buss & Jacobs LLP
733 Yonkers Ave
Yonkers, NY 10704-2635
(212) 688-2400 ext 4102
The answer to the question depends on the governing documents and state law of state in which the Association is located. In Minnesota, both the Minnesota Non Profit Corporations Act (Minn. Stat. Chapter 317A) and the Minnesota Common Interest Ownership Act (Minn. Stat. Chapter 515B) have provisions allowing owners to have access to Association financial records. Both statutes allow the Association to charge the owner the reasonable cost of producing records.
Hellmuth & Johnson, PLLC
8050 West 78th Street
Minneapolis, MN 55439
Unless there is a provision in the agreement between the association and the management company, there is no right to view the financial statements of the management company. However, if the inquirer seeks review of the association’s financial statements, books and records, there may very well be such a right under statutory or common law.
Levine & Montana
PO Box 668
Peekskill, NY 10566-0668
I did note that the way the question was worded, it referred to “the management companies financials.” The association’s financial records, even though they might be prepared by the management company, are not “the management company’s financials.” There is an important distinction between the two. The member has a right under the South Carolina Code to receive copies of the association’s accounting records and financial statements, regardless of who may have prepared them. The members have no right to the accounting or financial records of the management company.
SECTION 33-31-1602. Inspection of records by members.
(a) Subject to subsection (e) and Section 33-31-1603(c), a member is entitled to inspect and copy, at a reasonable time and location specified by the corporation, any of the records of the corporation described in Section 33-31-1601(e) if the member gives the corporation written notice or a written demand at least five business days before the date on which the member wishes to inspect and copy.
(b) Subject to subsection (e), a member is entitled to inspect and copy, at a reasonable time and reasonable location specified by the corporation, any of the following records of the corporation if the member meets the requirements of subsection (c) and gives the corporation written notice at least five business days before the date on which the member wishes to inspect and copy:
(1) excerpts from any records required to be maintained under Section 33-31-1601(a), to the extent not subject to inspection under Section 33-31-1602(a);
(2) accounting records of the corporation; and
(3) subject to Section 33-31-1605, the membership list.
(c) A member may inspect and copy the records identified in subsection (b) only if:
(1) the member’s demand is made in good faith and for a proper purpose;
(2) the member describes with reasonable particularity the purpose and the records the member desires to inspect; and
(3) the records are directly connected with this purpose.
(d) This section does not affect:
(1) the right of a member to inspect records under Section 33-31-720 or, if the member is in litigation with the corporation, to the same extent as any other litigant; or
(2) the power of a court, independently of this chapter, to compel the production of corporate records for examination.
(e) The articles or bylaws of a religious corporation may limit or abolish the right of a member under this section to inspect and copy any corporate record.
HISTORY: 1994 Act No. 384, Section 1.
SECTION 33-31-1620. Financial statements for members.
(a) Except as provided in the articles or bylaws of a religious corporation, a corporation upon written demand from a member or the Attorney General shall furnish the demanding party its latest annual financial statements, which may be consolidated or combined statements of the corporation and one or more of its subsidiaries or affiliates, as appropriate, that include a balance sheet as of the end of the fiscal year and statement of operations for that year. If financial statements are prepared for the corporation on the basis of generally accepted accounting principles, the annual financial statements also must be prepared on that basis.
(b) If annual financial statements are reported upon by a public accountant, the accountant’s report must accompany them. If not, the statements must be accompanied by the statement of the president or the person responsible for the corporation’s financial accounting records:
(1) stating the president’s or other person’s reasonable belief as to whether the statements were prepared on the basis of generally accepted accounting principles and, if not, describing the basis of preparation; and
(2) describing any respects in which the statements were not prepared on a basis of accounting consistent with the statements prepared for the preceding year.
HISTORY: 1994 Act No. 384, Section 1.
Finkel Law Firm, LLC
PO Box 41489
Charleston, SC 29423-1489