What to Do If the HOA Will Not Provide Financial Statements

by Fraser Sherman, Demand Media Google

    Your dues and those of your neighbors are what keep your homeowners' association (HOA) operating. The standard financial practice for HOAs is to keep records of all assets, liabilities, receipts and expenditures, report them on a regular basis, and keep records at the HOA main office. In many cases, you're entitled to review the HOA finances, but sometimes the association board may not allow you to do so. If that happens, you may have recourse.

    State Laws

    If your HOA board ignores you or claims it doesn't have to provide financial statements, research your state's laws on HOAs. North Carolina and California, for example, both say HOA boards must provide you with an annual financial statement. Both states give you the right to inspect the HOA accounts if you give the board five days written notice. In Nevada, the association has 14 days after you make a request to provide you with electronic copies of whatever records you ask for.

    Bylaws

    If state law doesn't provide you with the rights you need, ask the board for a copy of the association bylaws. You can also find a copy at your local county offices, recorded with the Clerk of Courts or the Registry of Deeds. Go over the bylaws and find out if the HOA has committed itself to making annual or monthly statements available. If you find an applicable clause, present your request for records to the board in writing, pointing out the written rule that justifies your request.

    Legal Action

    Even after you present the HOA with the legal facts, the board may tell you to get lost. If you can't reason with the directors, file a suit in small claims court. Keep copies of your letters to the board requesting the statements, the boards' responses and how long it's been since you made the request. If you don't have the letters, subpoena them from the HOA. You can sue the HOA for violating state law or for breaking its own bylaws, whichever is more effective.

    Considerations

    Before you sue, confirm the law really is on your side. North Carolina state law, for example, lets you request specific records for a specific purpose, such as finding out how a special assessment has been spent. If you just want to pore over the books in hopes of finding something suspicious, the HOA can say no. In California, the board doesn't have to show you some information, such as efforts to collect fees from nonpaying homeowners.

    About the Author

    Fraser Sherman is a former reporter with the "Destin Log" newspaper and now freelances full-time. His work has been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life," and he's the author of three film reference books, including "Screen Enemies of the American Way." He specializes in finance and tech articles.