What to Do If the HOA Will Not Provide Financial Statements

Your dues and those of your neighbors are what keep your homeowners' association (HOA) operating. The standard financial practice for HOAs is to track 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.

TL;DR (Too Long; Didn't Read)

If your HOA will not provide financial statements, you may need to seek recourse through legal channels.

Exploring 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. Most states have laws on the books about what HOAs must provide.

California, for example, has a law that says that HOA boards must provide homeowners with annual financial statements. The state law gives you the right to inspect the HOA accounts if you provide the board five days written notice. In Nevada, the law says that HOAs must maintain financial records and make them available to homeowners and auditors.

Evaluating HOA 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.

Understanding Legal Action Options

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, you can file a suit in small claims court. To do this successfully, 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.

Looking at Other Important Considerations

Before you sue, confirm the law really is on your side. For example, the law may not protect you if your inquiries come across as threatening or frivolous. Furthermore, some states require you to give "reasonable" time for the HOA to fulfill your request. Much of the language in HOA law is vague, so it's important to get expert legal advice before filing a suit against your HOA.

the nest