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Legislative Intent

Analysis CARA comments, “In its study of the state’s 36,000 common interest developments, the California Research Bureau reported that associations either do not disclose to homeowners how their money is being spent or else they report it inaccurately.

The report also states that between 14-20 percent of all lawsuits filed by shareholders against associations are for financial mismanagement. AB 1098 (2005)  corrects this lack of disclosure by association boards and lack of knowledge by homeowners. It assures that association shareholders (i.e., homeowners) have access to the association financial records to find out how boards are spending the billions under their control. It makes good fiscal sense that homeowners, who have the biggest financial stake, should be watching the books.   asm_floor.html

 

ARTICLE 5. Record Inspection [§5200 – 5240]

5200.  For the purposes of this article, the following definitions shall apply:

(a) “Association records” means all of the following:

(1) Any financial document required to be provided to a member in Article 7 (commencing with Section 5300 [annual budget reports] or in Sections 5565 [Reserve Funds]  and 5810 [Insurance Changes].

(2) Any financial document or statement required to be provided in Article 2 (commencing with Section 4525) [Sales Documents] of Chapter 4.

(3) Interim financial statements, periodic or as compiled, containing any of the following:

(A) Balance sheet.

(B) Income and expense statement.

(C) Budget comparison.

(D) General ledger. A “general ledger” is a report that shows all transactions that occurred in an association account over a specified period of time.

The records described in this paragraph shall be prepared in accordance with an accrual or modified accrual basis of accounting.

(4) Executed contracts not otherwise privileged under law.

(5) Written board approval of vendor or contractor proposals or invoices.

(6) State and federal tax returns.

(7) Reserve account balances and records of payments made from reserve accounts.

(8) Agendas and minutes of meetings of the members, the board, and any committees appointed by the board pursuant to Section 7212 of the Corporations Code; excluding, however, minutes and other information from executive sessions of the board as described in Article 2 (commencing with Section 4900).

(9) Membership lists, including name, property address, and mailing address, but not including information for members who have opted out pursuant to Section 5220.

(10) Check registers.

(11) The governing documents.

(12) An accounting prepared pursuant to subdivision (b) of Section 5520.  [Reserve Funds used for litigation]

(13) An “enhanced association record” as defined in subdivision (b).

(b) “Enhanced association records” means invoices, receipts and canceled checks for payments made by the association, purchase orders approved by the association, credit card statements for credit cards issued in the name of the association, statements for services rendered, and reimbursement requests submitted to the association.

 

 

 

 

5220. A member of the association may opt out of the sharing of that member’s name, property address, and mailing address by notifying the association in writing that the member prefers to be contacted via the alternative process described in subdivision (c) of Section 8330 of the Corporations Code. This opt out shall remain in effect until changed by the member.

 

5225. A member requesting the membership list shall state the purpose for which the list is requested which purpose shall be reasonably related to the requester’s interest as a member. If the association reasonably believes that the information in the list will be used for another purpose, it may deny the member access to the list. If the request is denied, in any subsequent action brought by the member under Section 5235, the association shall have the burden to prove that the member would have allowed use of the information for purposes unrelated to the member’s interest as a member.

 

5230. (a) The association records, and any information from them, may not be sold, used for a commercial purpose, or used for any other purpose not reasonably related to a member’s interest as a member. An association may bring an action against any person who violates this article for injunctive relief and for actual damages to the association caused by the violation.

(b) This article may not be construed to limit the right of an association to damages for misuse of information obtained from the association records pursuant to this article or to limit the right of an association to injunctive relief to stop the misuse of this information.

(c) An association shall be entitled to recover reasonable costs and expenses, including reasonable attorney’s fees, in a successful action to enforce its rights under this article.

 

5235 – Court Enforcement 

 

5240.

 

(a) As applied to an association and its members, the provisions of this article are intended to supersede the provisions of Sections 8330 and 8333 of the Corporations Code to the extent those sections are inconsistent.

(b) Except as provided in subdivision (a), members of the association shall have access to association records, including accounting books and records and membership lists, in accordance with Article 3 (commencing with Section 8330) of Chapter 13 of Part 3 of Division 2 of Title 1 of the Corporations Code.

(c) This article applies to any community service organization or similar entity that is related to the association, and to any nonprofit entity that provides services to a common interest development under a declaration of trust. This article shall operate to give a member of the organization or entity a right to inspect and copy the records of that organization or entity equivalent to that granted to association members by this article.

(d) This article shall not apply to any common interest development in which separate interests are being offered for sale by a subdivider under the authority of a public report issued by the Bureau of Real Estate so long as the subdivider or all subdividers offering those separate interests for sale, or any employees of those subdividers or any other person who receives direct or indirect compensation from any of those subdividers, comprise a majority of the directors. Notwithstanding the foregoing, this article shall apply to that common interest development no later than 10 years after the close of escrow for the first sale of a separate interest to a member of the general public pursuant to the public report issued for the first phase of the development.

 

Child Pages

Section 1365.

 Section 1368.

(C) Interim financial statements,

How to Read Financial Statements

 

 Section 7212 of the Corporations Code;  Section 1363.05.


(c) of Section 8330 of the Corporations Code.

 

(1) Except as provided in paragraph (2), the association may withhold or redact information from the association records for any of the following reasons:

e the privacy of an individual member of the association.described in Section 1363.05, except for(e)

(1) The association records,

of Section 1368, The full version of adobe pdf does this.

Click to enlarge

o Section 1365 or 1368,

 of Section 1363.05.

 

Section 8330 of the Corporations Code.

of Sections 8330 [Membership List]  and 8333 [Members Inspection Rights]  of the Corporations Code t

 

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