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Subject: Inspection of Accounting records of the corporation
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JanineR
(Tennessee)

Posts:98


04/23/2021 1:17 PM  
“Accounting records of the corporation”.
What is and is not subject to inspection?

I know this is asked a lot. But I still can’t pin it down. The definition seems so loose.

What is and is not considered accounting records that are subject to be inspected by members?



(Condos. Tennessee. Management Company.)





-----------------------------
2016 Tennessee Code
Title 48 - Corporations and Associations
Nonprofit Corporations
Chapter 66 - Records and Reports
Part 1 - Records
-----------------------------
§ 48-66-102. Inspection of records by members.
Universal Citation: TN Code § 48-66-102 (2016)
(a) Subject to § 48-66-103(c), a member is entitled to inspect and copy, during regular business hours and at a reasonable location specified by the corporation, any of the records of the corporation described in § 48-66-101(e) if the member gives the corporation a written demand at least five (5) business days before the date on which the member wishes to inspect and copy.
(b) A member is entitled to inspect and copy, during regular business hours and at a reasonable location specified by the corporation, any of the following records of the corporation if the member meets the requirements of subsection (c) and gives the corporation written notice at least five (5) business days before the date on which the member wishes to inspect and copy:
(1) Excerpts from any records required to be maintained under § 48-66-101(a), to the extent not subject to inspection under subsection (a);
(2) Accounting records of the corporation; and
(3) Subject to § 48-66-105, the membership list.
(c) A member may inspect and copy the records identified in subsection (b) only if:
(1) The member's demand is made in good faith and for a proper purpose;
(2) The member describes with reasonable particularity the purpose and the records the member desires to inspect; and
(3) The records are directly connected with the purpose for which the demand is made.
(d) The right of inspection granted by this section may not be abolished or limited by a corporation's charter or bylaws.
(e) This section does not affect:
(1) The right of a member to inspect records under § 48-57-201 or, if the member is in litigation with the corporation, to the same extent as any other litigant; or
(2) The power of a court, independently of chapters 51-68 of this title, to compel the production of corporate records for examination.
Disclaimer: These codes may not be the most recent version. Tennessee may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please ch

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2010 Tennessee Code
Title 48 - Corporations And Associations
Chapter 66 - Records and Reports
Part 1 - Records
48-66-101 - Corporate records.
48-66-101. Corporate records.
-----------------------------

(a) A corporation shall keep as permanent records minutes of all meetings of its members and board of directors, a record of all actions taken by the members or directors without a meeting, and a record of all actions taken by committees of the board of directors in place of the board of directors as authorized by § 48-58-206(d).
(b) A corporation shall maintain appropriate accounting records.
(c) A corporation or its agent shall maintain a record of its members in a form that permits preparation of a list of the names and addresses of all members, in alphabetical order by class showing the number of votes each member is entitled to vote.
(d) A corporation shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time.
(e) A corporation shall keep a copy of the following records at its principal office:
(1) Its charter or restated charter and all amendments to it currently in effect;
(2) Its bylaws or restated bylaws and all amendments to them currently in effect;
(3) Resolutions adopted by its board of directors relating to the characteristics, qualifications, rights, limitations and obligations of members or any class or category of members;
(4) The minutes of all meetings of members and records of all actions approved by the members for the past three (3) years;
(5) All written communications to members generally within the past three (3) years, including the financial statements furnished for the past three (3) years under § 48-66-201;
(6) A list of the names and business or home addresses of its current directors and officers; and
(7) Its most recent annual report delivered to the secretary of state under § 48-66-203.


-----------------------------
Master Deed
-----------------------------

b) Books and Records. The Association shall maintain current copies of this Master Deed, the Charter, the Bylaws, and all rules and regulations concerning the Condominium, as well as its own books, records, and financial statements, all of which shall be available for inspection by Unit Owners or by holders, insurers, and guarantors of first mortgages that are secured by one or more Units. Each of these documents shall be available for inspection during normal business hours at the address of the Association for its manager.


-----------------------------
Bylaws:
-----------------------------

Assessments:
h)The Board of Directors shall cause to be kept detailed and accurate records in chronological order of its receipts and expenditures affecting the Common Elements, specifying and itemizing the Common Expenses incurred. Payment vouchers may be approved in such manner as the Board of Directors may determine..

Officers:
e) The Treasurer shall have custody of all property of the Association, including funds, securities, and evidences of indebtedness. He or she shall keep the books of the Association in accordance with sound accounting practices and shall perform all other duties incident to the office of treasurer of an association.
JanineR
(Tennessee)

Posts:98


04/23/2021 1:56 PM  
Forgot to add. Nothing will be taken as legal advice.
Just looking for opinions from past people's experience of what is open for inspection from members and what is only to be viewed by Board
MelissaP1
(Alabama)

Posts:10126


04/23/2021 2:02 PM  
Good question to ask. I find that many times people have "fantasy" request for records that don't exist in reality. Sounds crazy but people ASSUME associations have records that don't exist.

Our HOA we always released our expense report before a meeting to any member that showed up. Plus you could request a copy. It just had that previous month's expenses on it. Nothing fancy just what checks we wrote. The meeting was just to go over the details.

The collections report on the other hand were for Board member's only. That is because it's kind of a privacy issue on who owes money to the HOA. There are many privacy issues involved. We freely discussed YOUR specific lot/account with you but not all. We ONLY referenced people by Lot #'s and never names/addresses. During the meeting let everyone know what steps we were taking to collect. Which is the BOD's job. Plus we had a 6 month we lien 1 year CONSIDER foreclosure policy. So just let people know the timeline.

Now that is not to say we could deny regular members from seeing the Collections list. We would announce in general terms the overall collection numbers and percentages. We just did not like giving out individual's personal information.

Most likely won't get a copy of cancelled checks or anything with PII in a records review. Most likely it will be a copy of the accounting record. Without going to a meeting it's not got alot of context to it.

Former HOA President
TimB4
(Virginia)

Posts:17599


04/23/2021 9:03 PM  
You should be able to have access to all association financial records except for the following:

Individual lot ledgers (who paid their assessment and when) - of course you can see your own
JohnC46
(South Carolina)

Posts:10944


04/24/2021 8:16 AM  
Janine

What specifically do you want to see and for what purpose?
KellyM3
(North Carolina)

Posts:1695


04/24/2021 8:19 AM  
Posted By TimB4 on 04/23/2021 9:03 PM
You should be able to have access to all association financial records except for the following:

Individual lot ledgers (who paid their assessment and when) - of course you can see your own




This is the correct answer. period.
JanineR
(Tennessee)

Posts:98


04/24/2021 8:22 AM  
In particular, there are 6 invoices that total to over $9 mil to one vendor that owners would like to see, so that they can compare that the work is complete, which is highly questionable.

(We usually only have about $600k a year in income. But had insurance money last year.)
AugustinD


Posts:300


04/24/2021 8:42 AM  
Posted By JanineR on 04/24/2021 8:22 AM
In particular, there are 6 invoices that total to over $9 mil to one vendor that owners would like to see, so that they can compare that the work is complete, which is highly questionable.
Sounds reasonable to me. Here's how I would phrase the records request:


Dear Board of Directors,

Pursuant to the Master Deed at Section ____ [see JanineR's first post] the Bylaws at Section ____ [see JanineR's first post], Tennessee Code Sections 48-66-101 and 48-66-102, please provide the invoices for vendor _____ for the period ____, for my inspection on [specify a date at least five days after the date of the letter herein, per 48-66-102]. Please provide the location where I may perform this inspection.

The purpose of my request is to review, to the extent possible with the records requested, the reasonableness of these invoices. I believe this purpose is proper under the law.

Thank you,

Name
address
email
phone


JanineR
(Tennessee)

Posts:98


04/24/2021 11:23 AM  
Thank you, I will word it like that and probably add in that they can alternatively email the documents electronically, if their offices are closed due to Covid. Send it certified mail.    

I am 100% sure they are going to say no. But at least for the record it was requested officially certified mail.

-----
I emailed the PM this last week:
What is [MC's] current policy for members to inspect books and records during Covid?

Response:
Our office is not open to the public however all financials that homeowners are entitled to are posted on our portal for owner review.
-----

Other members have asked to review documents, and are told that only the income/expense statement is open for review by members. Nothing else is in members' "scope" to review according to the treasurer. With no explanation other than that. (Sometimes it is not written from the PM or the treasurer as politely as I just wrote it).

On the portal, there are often several versions of the monthly income/expense statement, and they don't reference the additional $9mil creeping up to $12mil. However, PM insists that is all we are entitled to review. The Board also voted to not do an annual audit, as posted on another thread, despite it being mandatory in the Master Deed and Bylaws.

With the original question in mind,  flipping it over to the opposite point of view.
Is there any reason why a request from members to review select invoices would be denied by the PM or the Board?


TN, condos
TimB4
(Virginia)

Posts:17599


04/24/2021 11:32 AM  
Posted By AugustinD on 04/24/2021 8:42 AM
Sounds reasonable to me. Here's how I would phrase the records request:

... please provide the invoices for vendor _____ for the period ____, for my inspection




I would word it differently.

It could be interpreted that you want the Association to provide copies.
They are not required to provide copies. They are required to allow you to review (look) at the invoices.

If copies are provided, you could be charged the cost of locating the file, coping it, sending it to you and refiling the paperwork.


I would simply say that you desire to review those invoices.

AugustinD


Posts:300


04/24/2021 12:07 PM  
TimB4, thank you for setting the record straight. You're right of course.

JanineR,

I agree about sending the request certified mail, return receipt requested. If the HOA does not respond, post back. From what you posted, it does look like you need to be prepared for a non-response.

In my experience, and barring a reason like those given in the two statutes, there is no good reason for the HOA to deny you an inspection of these invoices. The law and covenants on records are there for a good reason. From my reading of the case law, the courts are happy to enforce these statutes and covenants, with the caveat that sometimes some fool who is bringing litigation (or who has repeatedly brought litigation) against the HOA has asked for a record and then been told by the HOA and then the courts, "No."

Owners being able to access records like the ones you want is so important that some state legislatures have enacted specific punishments for denying those records. E.g. California and Florida.

Granted, going to court to enforce the records statutes and covenants can be expensive and time-consuming.

You seem competent (where so few are) with the statutes and your governing docs. Do start reviewing both for anything they say about enforcing the statutes' and covenants' sections on records.
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