Most active subdivision and condominium associations in Missouri are nonprofit corporations. Those associations are created and empowered, under their respective indentures and declarations, to enforce the covenants, terms and conditions applicable to their communities for the betterment of all residents. But just as with politics in general, not all decisions are necessarily viewed as being in the best interests of all residents. Frequently, tempers flare, lines are drawn and heels get dug in.
So what rights does the subdivision or condominium have to withhold information from the residents, or stated another way, what information must be made available? There are two sources that guide subdivisions’ and condominiums’ obligations: the indenture in the case of a subdivision, the declaration and bylaws in the case of a condo association, and state law generally for the nonprofit corporation.
Because each indenture and declaration is different, it is impossible to state just how far the rights of the homeowner in a subdivision or of a unit owner in a condominium go in permitting review of the association’s records. But in each case, the rights will not be less than those rights granted to members of the organization under which the association is organized, usually a nonprofit corporation, very infrequently a for-profit corporation, or occasionally an unincorporated association.
According to Missouri’s Nonprofit Corporation Law, a corporation is required to keep as permanent records the following documents:
- Articles or restated articles of incorporation and all amendments then currently in effect
- Bylaws or restated bylaws and all amendments to them currently in effect
- Minutes of all meetings of members and the Board of Directors
- Records of all actions taken by the members or directors without a meeting
- Records of all actions taken by the committees of the Board of Directors
- Appropriate accounting records, including a balance sheet or statement of account accompanied by either a certified public accountant’s report or, if the accounting records were not prepared by a certified public accountant, a statement of the president or other person responsible for the corporation’s financial accounting records, stating:
- Their responsible belief as to whether the statement was prepared on the basis of generally accepted accounting principles and, if not, describing the basis of preparation
- Any respects in which the statements were not prepared on the basis of accounting consistent with the statements prepared for the preceding year
- Documentation as to the number of votes to which each member is entitled
- Articles or restated articles of incorporation and all amendments to them accurately in effect
While an association that is a nonprofit corporation has to maintain the records specified above, subject to limited exceptions, a member or a member’s agent or attorney is permitted to inspect the corporation’s records only at a reasonable time and location specified by the association, and only:
- Upon written notice or demand
- When delivered at least five business days prior to the date on which the inspection is requested
- With reasonable particularity as to the purpose and the records the member desires to inspect
- The records that are related to that purpose
The association may, in lieu of allowing copying, provide copies at a reasonable charge covering costs or labor and materials in so providing.
An association is not obligated to conduct a resident’s research, but frequently the issue goes to one of assurances—assurances that the Board is being fair in enforcement and assessments.
Disputes are inevitable in subdivision and condo associations, though hopefully not too frequently in yours. Americans believe their home is their castle. If an association enforces or proposes covenants or rules with which the owner disagrees, one of the first recourses is to seek information that purports to justify the association’s actions. Of course, there are other options for recourse by the property owner. Knowing what the members’ and association’s rights are with regard to providing access to or copies of records of the association will hopefully go far in allaying any mistrust among neighbors.