Member records requests is a frequent topic of consultation with boards and managers. The law in North Carolina is somewhat nuanced when it comes to what constitutes a record of the association, and who is entitled to review that record and under what circumstances. Here, we look at North Carolina law generally related to records requests and how a community should evaluate and respond to a request for records.
In this state, homeowner, property owner and condominium members have certain document inspection rights under the Nonprofit Corporation Act, Chapter 55A of the North Carolina General Statutes, and the Planned Community and Condominium Acts (Chapters 47F and 47C of the North Carolina General Statutes). The inspection rights are generally as follows for all planned communities, including condos, within North Carolina, regardless of when formed:
All members have the right to inspect and copy, with any or no justification, and with five days’ written notice:
- The Articles of Incorporation, Declaration, Bylaws and all amendments;
- All rules and regulations of the Association;
- Any resolutions adopted by its members or board of directors relating to the number or classification of directors or to the characteristics, qualifications, rights, limitations, and obligations of members or any class or category of members;
- The minutes of all memberships meetings and records of all actions taken by the members without a meeting for the last three years;
- All written communications to members generally within the past three years, and the financial statements, if any, that have been furnished or would have been required to be furnished to a member upon demand under G.S. 55A-16-20 (defined as the latest annual financial statements, including a balance sheet as of the end of the fiscal year and statement of operations for that year) during the past three years;
- A list of the names and business or home addresses of its current directors and officers.
Many associations will make all of these records available via a website or online portal. In this case, the member can obtain the records without contacting the association. This practice increases transparency for associations and can eliminate time consuming responses to records requests on the part of boards or managers.
Members may also be able to request and receive additional financial records and a list of the membership in certain circumstances. The member must reasonably allege that their request is made in good faith and for a proper purpose; they must describe with reasonable particularity the purpose and the records the member desires to inspect; and there must be a direct connection between the records requested and the stated purpose. If the membership list is turned over, the member may not misuse the information to solicit money or property or for commercial purposes. By way of example only, it would not be appropriate to demand a list of the membership in order to try to sell them Girl Scout cookies (even if they might welcome the purchase).
Sometimes, an association’s governing documents will specifically outline additional records or information that members may review, and in that case those records must also be made available to the membership at a reasonable time and in a reasonable manner. If the governing documents do not specify any additional records or information, the default obligation is for the association to keep accurate records of cash receipts and expenditures and assets and liabilities, and maintain an annual income, expense statement and a balance sheet. Generally these records should be maintained for at least three years, although associations should always defer to their tax advisors or attorneys for specifics related to their particular community.
Records requests can get contentious, but should be handled promptly and in a manner consistent with State law and a particular community’s governing documents. If you have any questions about these issues, please feel free to contact any of our community association attorneys to discuss further.