Does a member of the executive board have the right to show contracts to only certain homeowners without the executive board’s permission?

ANSWERS:

Interesting question. The answer likely depends on what the state law says about association records. In Minnesota, state law requires that records, including contracts to which an association is a party, be made available to unit owners.
Generally, board permission is not necessary. Further, board members should not selectively share records with some owners and not others.

David G. Hellmuth
Attorney at Law
P: (952) 746-2107
F: (952) 941-2337
dhellmuth@hjlawfirm.com
8050 West 78th Street
Edina, MN 55439

I infer that the contracts in question are not made available to the general membership because the information in the contracts is deemed to be of an executive nature. That would likely be the case where bids are in play and the amounts of the different bids are not disclosed during the process. In that case the contract information is not to be shared with the general membership and members of the executive board should not share that information with members who are not part of the executive governance.

Ed Zelmanski
Zelmanski, Danner & Fioritto, PLLC
44670 Ann Arbor Road, Suite 170
Plymouth, Michigan 48170
(734) 459-0062
Fax: (734) 459-5313
ezelmanski@zdfattorneys.com

The question raises several important points. Generally a member of the executive board should not be acting without the authority of the of the rest of the board. Your question doesn’t indicate whether certain owners were requesting copies of association records to which this board member responded, or whether this board member simply chose to share copies of association contracts with some of the homeowners. In most states, business records of the association are required to be made available to homeowners when they request to see them. Either the state statute or a regulation will have guidelines for how quickly the documents must be made available and which documents must be made available.

If your state does not have such a law, the executive board should consider adopting a policy resolution that sets forth the manner in which an owner may request a copy of the association’s business records, how quickly they will be made available and whether there will be any cost to the requesting owner. Most associations would provide short contracts or other documents – say 10 pages or less – without cost, but might charge a reasonable cost for longer contracts. If the contract or other business record is available electronically, of course there would be no cost to sharing the document through email.

You don’t say whether your association has a manager, but if it does, typically the manager would be the right person to handle this task. While it is unlikely that your state law prohibits a board member from sharing a contract without a specific request, it is simply bad form for a board member to favor some owners with a copy of a contract for his or her personal reasons. Each board member represents all the owners in an association and should treat the owners similarly. When some owners receive special treatment it can’t help but place the board in a bad light. A board resolution setting forth a policy for obtaining copies of the business records of the association could also indicate that the process set forth in the resolution is the only method by which to obtain the association’s business records.

J. David Ramsey
Becker & Poliakoff
67 Park Place, Suite 702
Morristown, NJ 07960
Tel: 973.898.6502
Fax: 973.898.6506
DRamsey@bplegal.com

A board member should discharge his or her duties as directed by the board of directors and should not act on his own accord. Sometimes a board of directors may task a particular board member with a specific directive pursuant to a properly executed board resolution. In such instance, that board member would have the authority of the board of directors to act. In the case of member review of association records, the covenant provisions and the respective state’s non-profit corporation act, planned unit development act or condominium act will control such issue. My recommendation is for the board of directors to consult an attorney who specializes in community association law to develop a “protocol” that the board of directors could use whenever a member request to review and inspect documents is received.

Patrick O’Dea
Nelson Mullins
BNC Bank Corporate Center, Suite 300
Myrtle Beach SC 29577
(843) 946-5631
patrick.odea@nelsonmullins.com
http://www.nelsonmullins.com

There are actually 2 questions here. First, does a Board member have the authority to prefer some owners over others (in this case by sharing certain information)? No. All members are entitled to the same treatment. Second, does the Board member have the authority to show the contracts to anyone other than Board members (or the management agent)? Maybe. State law provides that owners are entitled to view records, but it is not specific as to what records. The safest approach is to ensure that all records are open to owners. However, an argument could be made that showing specific contracts to owners may hinder the Board’s ability to contract or get favorable terms in contracts if certain knowledge becomes public.

Sara A. Austin
Austin Law Firm LLC
226 E. Market St.
York, PA 17403
717.846.2246 phone
717.846.2248 fax
saustin@austinlawllc.com