request HOA financial reports

As a homeowner living in an HOA community, it is only natural for you to want to know that your association is doing well financially. To that end, you might want to request HOA financial reports. But, is that even possible?


Are Homeowners Allowed to Request for HOA Financial Reports?

The short answer is yes. Homeowners do have a right to request and review the records and books of their association. This includes financial reports. In most states, homeowners associations are set up as non-profit corporations. Thus, they are governed by state statutes. Many states also have legislation governing homeowners associations specifically.

For instance, California HOAs are required to make association records available for copying and inspection as stated in Civil Code Section 5205. Associations in Pennsylvania must follow the Nonprofit Corporation Law, which specifies the right of members to copy or examine certain records upon written request and during business hours. It is worth noting that some states have more developed laws on records inspection than others.

Beyond state laws, most associations also outline homeowners’ rights to review financial statements within their governing documents. As a homeowner, it is your responsibility to familiarize yourself with your association’s bylaws and CC&Rs. You can also ask board members or an attorney for guidance on this issue.


What Financial Records Can Homeowners Review?

It is important to understand that not all of the association’s records are open for homeowners to examine. Some records are private by nature or contain confidential information. For example, the minutes of board meetings are available for inspection. However, the minutes of an executive session, which is the closed portion of the board meeting, are generally not. This is because board members discuss confidential and sensitive topics during executive sessions such as delinquencies and ongoing lawsuits.

Given that the average association handles numerous documents and records, it can be confusing which ones are available for homeowners to request. At a minimum, though, homeowners associations should make the current budget, the balance sheet, and the income statement available. Homeowners should also have access to their HOA account statements.

Other documents include:

  • Accounting and financial records for the past three years such as financial reports, reviews, audits, invoices for the association’s purchases, and records of receipts and expenditures.
  • All governing documents (articles of incorporation, bylaws, CC&Rs, rules and regulations, etc.).
  • All documents from the developer such as community plats, maps, permits, and land surveys.
  • Annual and board meeting minutes, notices, and agendas.
  • Election notices, minutes, ballots, and proxies.
  • Membership lists.
  • Association’s insurance policies.
  • Association’s contracts or third-party agreements.


Making a Request for HOA Financial Reports

homeowners rights to review financial statementsThe process for requesting HOA financial reports will depend on state statutes and your association’s governing documents.

Typically, homeowners will need to submit a written request to the HOA board, the body responsible for maintaining these records. Though, some associations will accept a phone call or a simple email. Remember to write your request using a friendly yet professional tone instead of a demanding one.

Sometimes, the records you are looking for can be found in your county recorder’s office. This includes public records such as mortgages, covenants, deeds, and an association’s governing documents.

Of course, with the advancement of technology, many associations have adopted more convenient methods for making records accessible to homeowners. If your HOA has a website, for instance, you might be able to review records from there, thus eliminating the need to go through a formal request process.

You should also be ready to pay any fees related to the preparation or copying of the reports. It is important to keep in mind, though, that some states limit the amount associations can charge for this service.


What If the Board Refuses Your Request?

If your association’s board rejects your request for HOA financial reports, you must first make sure you are in the right. Check your state laws and governing documents to confirm whether you do have the ability to examine the record you are requesting. Make sure you follow the steps for requesting HOA records to the letter. Then, make these facts known to the board.

Should your board still refuse, you can file a lawsuit in small claims court on the basis of breaching state law or violating its own bylaws. You will need evidence to back up your claim, so keep copies of your written requests as well as the board’s replies. Hire an attorney with experience in handling similar cases to boost your chances of success.


Suspecting Something Wrong? Here’s What to Do

As a homeowner, you have an obligation to monitor your association’s financial condition. A good way to do this is to consistently review the financial reports of your HOA. Look at your association’s budget year-over-year as well as any major changes in spending. Has the board made any questionable expenditures? You should also make sure the board is setting aside reasonable and regular reserve contributions.

There is something to be said about nitpicking, though. Homeowners like you should definitely stay vigilant and value the financial health of your association. But, that does not mean you should intentionally find faults in the financial reports. Major changes could be a sign of fraud, but they can also be the result of rising costs. Exercise good judgment instead of jumping to conclusions at the first sight of an abnormality.

If you do suspect something sketchy going on or would simply like to change the current approach to finances, find a way to get more involved. Go to meetings, volunteer for committees, and even consider running for a spot on the board next election. If worse comes to worst, consult an attorney for advice on how to proceed.


Consider Professional Assistance

Homeowners have a right to request HOA financial reports. Reviewing your association’s financials is one way you can ensure the fiscal health of your HOA. The request process itself can vary from one HOA to another, though, with some requiring written requests while others accepting even verbal requests.

Fielding requests for association records is an often tedious and time-consuming task. For this reason, many boards choose to hire an HOA management company like Clark Simson Miller with whom homeowners can directly communicate. Call us today at 865.315.7505 or contact us online to request a free proposal.