Board director has ‘absolute’ right to view association files
Question: In my capacity as board director, I sent a certified letter to the association manager asking where our homeowners association files are kept. The letter notified him I intend to inspect the files and the premises because the address given to our association as management’s “corporate” address is nothing more than a mail drop.
He quoted California Corporations Code section 8334, stating “a director may inspect the physical properties of the corporation of which that person is a director,” and then said I wasn’t a director of his management corporation so I can’t look at the association’s files that are at his house. He said, “I know what the law is,” then warned if I wrote him another letter he’d go back to the association’s lawyers, who would bill the association for his call.
Does section 8334 apply to my request? Don’t I have the right to see where our homeowners association files are physically located no matter if our HOA owns the building or not?
Answer: Your manager is confused, misquotes and misinterprets the law. Nothing supports this vendor’s statements and actions preventing a board director from performing his or her duties.
A management company is a third-party vendor with a vested interest in the contractual agreement with the association and in getting a paycheck. The “corporation” referenced in the manager’s quote refers to your homeowners association — not the management company. Corporations Code section 8334 applies to your request as a director in the sense that you have an “absolute” right to view the association’s files, as opposed to the limited titleholders’ rights of access described in part throughout Civil Code sections 1350 to 1378.
Corporations Code section 8334 states: “Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director.” Under Evidence Code section 11, the term “shall” is mandatory.
If your association manager claims to know the “law,” then he knows the law is not limited to merely one statute. Pursuant to Evidence Code section 160, “law” includes constitutional, statutory and decisional law.
The building’s ownership is irrelevant. As a director you not only have the right to inspect the premises of those who have custody, possession and control of your association’s files, documents and records, you also have a duty to see firsthand where they are located and how they are stored, and to obtain an accounting of every such item in the vendor’s possession.
This manager probably has raised the issue of the association lawyer’s billing to deter you from scrutinizing his actions.
Make no mistake, your performance as a board director is not dependent or contingent upon the opinions of third-party management company personnel to define or approve your actions. Your duty as a director requires you to protect the association’s assets. You are a duly elected representative of the titleholders, who rely on you to act in good faith to represent their interests.
Acting in good faith does not include capitulating to association vendors or being afraid to incur necessary legal fees. Although such costs and resulting fees might initially be a concern, you should never be afraid of seeking the advice of qualified experts when needed, even if you must do so independent of the board.
When carrying out your director duties, always remember that vendors work for the association and report to you, and that the board works for the association and reports to the titleholders.
Zachary Levine, managing partner of Wolk & Levine, a business and intellectual property law firm, co-wrote this column. Vanitzian is an arbitrator and mediator. Send questions to P.O. Box 10490, Marina del Rey, CA 90295 or noexit@mindspring.com.
