Community associations will generate vast amounts of records over the course of their operations. When an association is engaged in a dispute with one of its members, it is common for that member to request copies of the association’s books and records. Upon receipt of such a request, boards and property managers will often have many questions concerning the scope of the request itself and the limitations on the information that must be provided.
What constitutes the “books and records” of the association?
Under the Georgia Nonprofit Corporation Code, members are entitled to request the following records of the association:
Category I:
- Articles or restated articles of incorporation and all amendments to them currently in effect;
- Bylaws or restated bylaws and all amendments to them currently in effect;
- Resolutions adopted by either its members or board of directors increasing or decreasing the number of directors or the classification of directors, or relating to the characteristics, qualifications, rights, limitations, and obligations of members or any class or category of members;
- Resolutions adopted by either its members or board of directors relating to the characteristics, qualifications, rights, limitations, and obligations of members or any class or category of members;
- The minutes of all meetings of members, executed waivers of notice of meetings, and executed consents, delivered in writing or by electronic transmission, evidencing all actions taken or approved by the members without a meeting, for the past three years;
- All communications in writing or by electronic transmission to members generally within the past three years; including the financial statements furnished for the past three years under O.C.G.A. § 14-3- 1620;
- A list of the names and business or home addresses of its current directors and officers;
- Its most recent annual registration delivered to the Secretary of State under O.C.G.A. § 14-3-1622;
Category II:
- Excerpts from minutes of any meeting of the board of directors, records of any action of a committee of the board of directors while acting in place of the board of directors on behalf of the corporation, minutes of any meeting of the members, and records of action taken by the members or the board of directors without a meeting;
- Accounting records of the corporation;
- Subject to O.C.G.A. § 14-3-1605, the membership list; and
- Records of members in a form that permits preparation of a list of the names and addresses of all members, in alphabetical order, showing the number of votes each member is entitled to cast.
In addition to the Georgia Nonprofit Corporation Code, the association’s bylaws may also specify what “books and records” members are entitled to inspect and copy. It is rare for an association’s bylaws to expand the definition of “books and records,” but be aware that members could be entitled to request additional items not listed in the Code. Also, the Georgia Nonprofit Corporation Code will supersede any conflicts between the provisions of the Code and the association’s bylaws.
What is the process for inspecting and requesting copies of the books and records?
Under the Georgia Nonprofit Corporation Code, members are entitled to inspect and copy records in Category I above if the member gives the association at least five (5) business days’ written notice before the date on which the member wishes to inspect and copy. Further, a member can inspect and copy the remaining records in Category II above if the member gives the association at least five (5) business days’ written notice before the date on which the member wishes to inspect and copy and:
- The request is made in good faith and for a proper purpose reasonably related to the member’s legitimate interest as a member;
- The member describes with reasonable particularity the purpose and the specific records he or she wishes to inspect;
- The records are directly connected with this purpose; and
- The records are only to be used for the stated purpose.
Check the association’s bylaws for additional procedures which may apply to a books and records request (the Georgia Nonprofit Corporation Code will prevail to the extent there is any contradictory provision with the association’s bylaws).
What items are not considered association “books and records” subject to inspection and copy?
Any other association record that is not specifically listed above is arguably outside the scope of what can be inspected and copied by a member. This may include, but not be limited to, vendor contracts with the association, emails between board members, or violation letters sent to other owners. The general rule of thumb is that if the record will compromise the privacy of another member, or the record is privileged under law (e.g., records of disciplinary actions or collection activities), the Association can withhold this information from a books and records inspection. However, there may be another item (e.g., the management agreement) that is not specifically listed in the Georgia Nonprofit Corporation Code but poses no harm if disclosed. Always consult with your property manager or the association’s attorney before disclosing any records not clearly listed in the Code and/or the association’s bylaws.
What can the board and/or management company charge for a records request and when must it take place?
The procedure for a books and records inspection will also be governed by O.C.G.A. § 14-3-1603. Under this provision, the association may impose a reasonable charge, covering the costs of labor and material, for copies of any books and records provided to a member. The charge cannot exceed the estimated cost of production or reflect an unreasonably high cost for labor. Presuming the member gave proper notice, the inspection can occur at a “reasonable time and location specified by the corporation.” For many associations, this means during regular business hours at the office of its professional management company (Monday through Friday, excluding holidays).
Members will also frequently ask for the copies of the books and records to be mailed directly to the member’s home address. Compliance with this request is ultimately up to the association and the individual management company, but there is no legal obligation for a management company to provide copies of the association’s books and records through the mail. The association’s only requirement is that it make available the enumerated items in the Code (and bylaws, if applicable) and it will then be up to the individual member to coordinate the remaining logistics.
How should the board and/or management company prepare the records for inspection?
This is another commonly asked question after a member requests to inspect and copy the association’s books and records. Chances are, the board and/or the management company already has a filing/storage procedure in place for association records. If the member is only requesting a specific set of association documents, these can be pulled out to make the process as efficient and painless as possible. If the request is general and the member is seeking all of the allowable items under the Code and/or bylaws, then the entire box (or boxes) of records can be pulled for the member to sort through themselves. This is often done in a conference room where the member and the association’s representatives will have plenty of room to work. Associations should not purposely cause the inspection to be more difficult for the member (e.g., reshuffling the records out of chronological order), but at the same time, they do not need to go out of their way to change the day-to-day normal procedures for their own recordkeeping (e.g., organizing by date, subject matter, etc.). Lastly, the association should always make sure to have someone present during the inspection.
What if there is ongoing litigation with the requesting member?
The rules of discovery will control over O.C.G.A. §§ 14-3-1602 and 14-3-1603 in the event there is already ongoing litigation with the requesting member. In other words, if the records request is through a proper discovery request, the member may be able to obtain books and records of the association that are not covered in the Georgia Nonprofit Corporation Code or the association’s bylaws.