Members have the right to inspect and copy the association's books and records. The Davis-Stirling Act defines records as the "association's" records, not the members' records. (Civ. Code § 5200.) Members may inspect the association's records but with limitations.
Written Request. Requests to inspect records must be in writing and sufficiently detailed so there is no confusion over what is being requested from the association. Members cannot make a sweeping request for every record ever produced by the association over the past ten years.
Proper Purpose. A member's request to inspect records must be for a proper purpose reasonably related to his or her interests as a member of the association. (Civ. Code § 5230, Corp. Code § 8330, Corp. Code § 8333.) Associations can bring actions for injunctive relief and damages against persons who violate this section (Civ. Code § 5230):
(1) The association records, and any information from them, may not be sold, used for a commercial purpose, or used for any other purpose not reasonably related to a member's interest as a member. An association may bring an action against any person who violates this section for injunctive relief and for actual damages to the association caused by the violation.
(2) This section may not be construed to limit the right of an association to damages for misuse of information obtained from the association records pursuant to this section or to limit the right of an association to injunctive relief to stop the misuse of this information.
(3) An association shall be entitled to recover reasonable costs and expenses, including reasonable attorney's fees, in a successful action to enforce its rights under this section.
Request for Information. Sometimes owners mix requests for information with requests for records. The Davis-Stirling Act provides for an owner's right to inspect books and records but does not create an obligation that associations compile information. For example, if an owner were to request a list of all parking violations for the past three years, the association is not required to comb through its files and create a list. If a list already exists, the association could produce it (minus any personal information that might be in the document), although it is not required to do so since the list is not part of the statutorily authorized "books and records" associations are required to produce.
Current & Two Prior Years. Except for minutes that are permanently available, associations need only produce records for the current fiscal year and two previous fiscal years. (Civ. Code § 5210(a).) Older records may be disposed of in accordance with a duly adopted records disposal policy.
Records Subject to Review. While some records are not subject to review, most can be inspected and copied by members. (Civ. Code § 5200(a).) Following is a list of records subject to membership review:
- architectural plans
- contracts
- election materials
- employee salaries (with limitations)
- financial records (budget, reserves, lien policies, insurance, financial statements) (Civ. Code § 5300), interim financial statements, including (i) balance sheet, (ii) income and expense statement, (iii) budget comparison, and (iv) general ledger; invoices, receipts, canceled checks, purchase orders approved by the association, credit card statements for credit cards issued in the association's name, (Civ. Code § 5200(b)), reserve summary, account balances and payments (Civ. Code § 5565.)
- governing documents (Civ. Code § 5200)
- insurance policies
- membership list
- minutes
- schedule of monetary penalties
- tax returns
Copying and Redacting Costs. Associations may charge for the cost of copying the requested documents and redacting sensitive information. Directors who request copies can also be charged for the cost of copying.
Right to Designate Agent. Members may designate another person, agent, or attorney to inspect records. The member shall make the designation in writing. (Civ. Code § 5205(b), Corp. Code § 8311.)
Timeline for Production. Associations must produce records within the following time frames:
Meeting Minutes. All minutes of board and member meetings (other than executive session) shall be made available to members within 30 days of the meeting and distributed upon request (Civ. Code § 4950). All minutes of previous member and board meetings (other than executive sessions), must be produced within 30 days following the association's receipt of the request (Civ. Code § 5210(b)(4)). Minutes of committees with decisionmaking authority for meetings commencing on or after January 1, 2007, within 15 calendar days following approval. (Civ. Code § 5210(b)(5).)
Fiscal Records & Governing Documents: Any record or statement available under Civil Code § 5300 (budget, reserves, lien policies, insurance, financial statement, etc.) or Civil Code § 4525 (governing documents, assessments, violations, construction defects, etc.), within the following time frames:
- Current Fiscal Year: Records for the current fiscal year, within 10 business days of receipt of the request (Civ. Code § 5210(b)(1));
- Prior Fiscal Years: Records for the previous 2 fiscal years, within 30 calendar days of receipt of the request (Civ. Code § 5210(b)(2));
Membership List: Within the time frame specified in Corporations Code § 8330, i.e., 5 business days. (Civ. Code § 5210(b)(6).)
Inspection Location. Records must be made available at the association's onsite business office or, if there is none, at a mutually agreed upon location. If the parties cannot agree on a location or if the member submits a request for copies of specifically identified records, the association may copy the documents and mail them to the member. (Civ. Code § 5205(c).) During the inspection process, records remain under the association's custody and control. Members do not have a right to remove, alter, or destroy corporate records.
Fees for Providing Association Records.
Civil Code § 5200. With respect to association records required to be provided pursuant to Civil Code § 5200, an association may charge the direct and actual cost of copying and mailing the requested items. (Civ. Code § 5205(f).) An association may also charge an amount not exceeding $10 per hour, and not exceeding $200 total per written request, for the time actually and reasonably involved in redacting an "enhanced association record." (Civ. Code § 5205(g).)
Civil Code § 4530. With respect to association records required to be provided pursuant to Civil Code § 4530, an association may charge a reasonable fee based upon the association's actual cost to procure, prepare, reproduce and deliver the requested items. (Civ. Code § 4530(b).)
Electronic Records. Members who request records have the option of receiving them in electronic form if the records can be transmitted in a redacted format that does not allow the records to be altered. (Civ. Code § 5205(h).)
Format of Files. Compliance with the statute can best be accomplished by burning the files to be produced to a non-rewritable CD or DVD. Although the file, regardless of format, could still be copied and the copy manipulated, the files burned to the disk could not, thus preserving the integrity of the production. Emailing a .pdf or other editable format may not be fully compliant with the statute because the actual file produced could be manipulated. Unsecured .pdf files and files in other formats can be edited by legitimate, commonly available software. Even secured .pdf files can have their security removed by unscrupulous websites. However, a court could find that a good faith attempt at compliance could be met by transmitting either a password-protected secure .pdf, or by producing an image file of the document, such as a .tif format, converted from a .pdf file.
Reasonable Fee. The association may charge a reasonable fee for this service based on the association's actual cost to procure, redact, prepare, and reproduce the requested items. (Civ. Code § 4530(b).)
Limitation on Costs. For items provided electronically, the cost of duplication is limited to the direct cost of producing a copy of a record in the electronic format. The cost of duplication shall be limited to the direct cost of producing a copy of a record in that electronic format. (Civ. Code § 5205(h).)
Enforcement Rights. Members may bring an action in small claims court to enforce their right to inspect and copy the association's records. Making a request for ADR is not required before going into small claims court. If the court finds that the association unreasonably withheld records, the court may assess a penalty of up to $500 for the denial of each separate written request and order the production of records. (Civ. Code § 5235.) If owners bring an action in small claims that the court finds is frivolous, unreasonable, or without foundation, the court can award costs to the association. (Civ. Code § 5235.)
Bylaw Limitations. Inspection rights cannot be limited by contract or by the association's articles or bylaws. (Corp. Code § 8313.)
Non-Davis-Stirling Associations. For deed-restricted associations that do not fall under the Davis-Stirling Act, inspection rights can be found in Corporations Code § 1601 and § 8333. Corporations Code § 1610(a) only requires that the accounting books and records and minutes of proceedings of the shareholders and the board and committees of the board of any domestic corporation be open to inspection at any reasonable time during business hours. Section 1601, subdivision (a) requires only that the identified records ‘shall be open to inspection at any reasonable time during usual business hours. The statute does not specify where the records shall be made open to inspection. It's implied that they may be inspected at the office where the records are kept. (Innes v. Diablo Controls, Inc. (2016) 248 Cal.App.4th 139, 143.)
Going Paperless. Associations can reduce administrative costs and delays by going paperless with their records.
Additional Information.
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.