What Requirements and Limitations Apply to a Maryland Homeowner’s Request For Copies of HOA Records?
This article provides a general overview of Maryland Homeowners Association law governing records requests by homeowners. The article summarizes requirements and limitations that apply to a homeowner’s request to examine the books and records of a Homeowners Association (“HOA”).
In Maryland, a member of a Homeowners Association (sometimes referred to as a “lot owner” or “homeowner”) has a right to examine and copy the “books and records” of an HOA. This right is created by Section 11B-112 of the Maryland Homeowners Association Act (“MD HOA Act”) and may also be affected by procedures in the HOA’s governing documents.
Examples of records that a lot owner might requested include:
- financial records, such as budgets, financial statements, audits, tax returns.
- meeting minutes of the board of directors and its committees.
- correspondence of the association regarding a specific topic or incident.
- contracts of the association, such insurance policies and community management agreements.
- governing documents, such as the HOA’s declaration, bylaws, rules, and regulations.
- other records related to the operation and management of the HOA.
In-Person Examination and Copying vs. Delivery to Lot Owner
A lot owner seeking to examine or copy records in person may be required to do so “during normal business hours, and after reasonable notice.” MD HOA Act § 11-112(a)(1)(i). The place for inspection is typically the community manager’s office.
Most lot owners, however, make a written request to the board of directors or its community manager representative, to deliver the documents to them, at which point the records are simply copied and supplied to the requesting lot owner by email or other electronic transmission. Regular mail or personal delivery is also permitted under Maryland HOA law. See MD HOA Act § 11-112(a)(1)(iii).
Deadline for Producing Financial Statements & Meeting Minutes
Maryland HOA law gives an HOA 21 days or 45 days to provide lot owners with “financial statements” or “minutes of a meeting.” The deadline depends on when the records were prepared. Specifically, once a homeowner makes a written request that financial statements or meeting minutes be delivered to them, the HOA “shall compile and send the requested information by mail, electronic transmission, or personal delivery … [w]ithin 21 days after receipt of the written request….” MD HOA Act § 11B-112(a)(1)(iii). However, if the financial statements or minutes were prepared more than 3 years before receipt of the request, then may be more difficult to track down the documents so the statute allows 45 days for documents, prepared more than three years before the lot owner’s written request. MD HOA Act § 11B-112(a)(1)(iii).
Maryland HOA law does not provide specific deadlines for delivering documents other than “financial statements” or “minutes of a meeting.”
Charges for Examination, Copying and Delivery of Records
An HOA may impose a “reasonable charge” upon a lot owner desiring to review or copy the association’s books and records or who requests delivery information. MD HOA Act § 11-112(b)(1). If a charge is imposed, it typically covers the costs associated with the HOA’s reproduction and administrative expenses. The cost and time commitment can be substantial, depending on how many records are requested, and over what tome period, so it is wise to adopt a uniform fee schedule. However, under Maryland HOA law, a charge imposed for copying may not exceed the fee charged by the circuit courts in Maryland. MD HOA Act § 11B-112(b)(2).
Confidential or Privileged Documents Which the HOA may Withhold
“Access to the books and records is of vital importance to … home owners who wish to participate in the democratic process of their associations…. However, some of the records maintained by the HOA as part of its governance of the homeowners association community contain sensitive information, such as private information about individual [homeowners], employees, or legal proceedings or advice.” Baltimore City Circuit Court Memorandum (Clark v. Zalco Realty, Inc.) at p. 8 (quoting Office of the Maryland Attorney General in support of amendments that created the current versions of MD HOA Act § 11B-112 and MD Condo Act § 11-116 which govern an owner’s request for records of a homeowners association and condominium association, respectively).
Maryland HOA law attempts to balance these competing interests, by allowing an association to withhold certain sensitive or confidential records from inspection by a lot owner to the extent that they concern:
(i) Personnel Records. Records concerning personnel who work for the HOA can be withheld. MD HOA Act § 11B-112(a)(2)(i). However, this does not include information on personnel salaries, wages, bonuses, and other compensation paid to employees of the HOA as these records are part of the association’s financial records.
(ii) Medical Records. The medical records of an individual that are in the possession of the HOA can be withheld. MD HOA Act § 11B-112(a)(2)(ii).
(iii) Personal Financial Records of an Individual. An individual’s personal financial records can be withheld by the condominium association. This includes “assets, income, liabilities, net worth, bank balances, financial history or activities, and creditworthiness.” MD HOA Act § 11B-112(a)(2)(iii). An HOA may come into possession of such records in connection with efforts to collect delinquent condominium assessments.
(iv) Contracts Under Negotiation. Records relating to business transactions that are currently in negotiation be withheld. MD HOA Act § 11B-112(a)(2)(iv). This would include contracts currently under negotiation between the HOA and another person or entity that have not yet been finalized and signed by the parties.
(v) Written Legal Advice. Written advice from the condominium association’s attorney can be withheld. The Maryland Circuit Court for Baltimore City has held that the section of the Maryland Condominium Act allowing an association to withhold “written advice of legal counsel,” (§ 11-116(c)(3)), should be interpreted to cover any records that are protected by the Maryland attorney-client privilege or work product doctrine. See Circuit Court Memorandum (Clark v. Zalco Realty, Inc.) at p. 16. This rationale applies equally to homeowners associations because the language of MD Condo Act § 11-116(c)(3) and MD HOA Act § 11B-112(a)(2) is virtually identical. Both statutes allow an association to withhold “written advice of legal counsel.” This identical language was added to both statutes as part of the same bill enacted for the express purpose of allowing condominium associations and HOAs to withhold certain documents requested by owners. Therefore, communications between an HOA and its attorney that fall within the attorney-client privilege as well as documents protected by the attorney work product doctrine may be withheld. See Note at end of this article for more detail on what types of documents are protected by the “attorney-client privilege” and “work product doctrine.”
(vi) Executive Session /Closed Meeting Minutes. Minutes of closed meetings of the board of directors or other governing body of the condominium association may be withheld. MD HOA Act § 11B-112(a)(2)(vi). Maryland HOA law allows an association board of directors hold private “closed meetings” (also known as a meetings held in “closed session” or “executive session”) in order to allow a board of directors to discuss sensitive or confidential matters that require privacy, such as legal issues, personnel matters, contract negotiations, delinquent assessments, and other such topics that the board determines should not be discussed in a public forum and which fall within the categories set forth closed meeting statute (i.e., Maryland HOA Act §11B-111). By holding a closed meeting or “close session,” the HOA board can address these matters without public scrutiny and maintain confidentiality. Specific procedures regarding close sessions may vary depending on the condominium association’s governing documents.
Exception for Records Concerning the Lot Owner Making the Request
Even if the requested records fall within one of the six sensitive or privileged categories listed above that may be withheld, Maryland HOA law provides that the records must nonetheless be turned over if they concern the lot owner making the request. Specifically, the statue statutes that that a condominium association may withhold those records “from public inspection, except for inspection by the person who is the subject of the record [emphasis added] ….” MD HOA Act § 11B-112(a)(2). This makes sense as there is no concern in this circumstance about disclosure of sensitive material about an individual lot owner for public consumption. The only person who will see the sensitive records is the homeowner who is the subject of the records. Moreover, by requesting a record pertaining to themselves, a homeowner is, in effect, giving the HOA permission to disclose the otherwise sensitive information.
However, there is an exception to this exception, discussed below, for written communications with attorneys concerning the requesting lot owner.
Records Concerning the Lot Owner Making the Records Request that also Constitute Written Advice of Legal Counsel
What happens if the records being requested by homeowner constitute written legal advice from the association’s attorney concerning the homeowner making the request? For example, if the requesting homeowner filed a lawsuit against the HOA and the HOA’s board is communicating with its attorney in writing about its strategy for dealing with the lawsuit, does the HOA have to turn over these attorney communications? Likewise, if the HOA is bringing a legal claim against a homeowner for failure to pay condominium assessments, can the homeowner obtain the internal notes of the association’s attorney pertaining to the attorney’s preparation for trial regarding the delinquent payment of assessments?
The Maryland Circuit Court for Baltimore City has answered these questions in the context of records requested from a condominium association. The court held that written legal advice from the association’s attorney maybe withheld even though the advice concerns to the requesting owner so long as the record falls within the laws of Maryland which protect documents from disclosure under the attorney-client privilege or work product doctrine:
“Accordingly, Section 11-116 is read as being in harmony with the common law privilege and doctrine: it allows a unit owner who is the subject of the written advice of the condominium’s legal counsel to inspect that information, provided that it is not protected by the common law attorney-client privilege or the work product doctrine. Lutz, 167 Md. at 12; MD. CODE ANN., REAL PROP. § 11-116(c).”
Circuit Court Memorandum (Clark v. Zalco Realty, Inc.) at p. 16. This rationale applies equally to homeowners associations, since MD Condo Act § 11-116(c)(3) and MD HOA Act § 11B-112(a)(2) contain virtually identical language added to these respective statutes at the same time for the same purpose.
In short, if the HOA’s attorney is providing written legal advice to the association that concerns the requesting a lot owner, such as regarding an assessment collection matter, or preparing a legal strategy to defend against a lawsuit filed by the requesting unit owner, those documents are privileged under the attorney- client privilege or work product document doctrine, and do not need to be disclosed. The Circuit court for Baltimore city reasoned that by enacting the Maryland Condominium and HOA laws on records disclosure to unit owners that allows unit owner to see documents that concern the requesting unit owner (i.e., MD Condo Act § 11-116(c)(3) and MD HOA Act § 11B-112(a)(2)), the legislature did not mean to nullify these long-standing privileges in agonized under Maryland law. Circuit Court Memorandum (Clark v. Zalco Realty, Inc.) at p. 16.
See Note below for more detail on what types of documents are protected by the “attorney-client privilege” and “work product doctrine.”
Additional Requirements in Governing Documents
It is important to note that specific requirements and procedures for accessing records may be outlined in the HOA’s governing documents, such as the bylaws or rules and regulations. These additional requirements may include procedures that do not conflict with the Maryland HOA law on records disclosure to unit owners (i.e., Maryland HOA Act § 11B-112).
Conclusion
Whenever a request to examine records is made by a unit owner, it is advisable for the community manager and board members to review applicable law and governing documents, and also consult with a Maryland HOA law attorney if there are any questions or disputes regarding access to books and records.
Note on Attorney-Client Privilege and Work Product Doctrine
The court for Baltimore city succinctly defined the attorney client privilege and work product doctrine as follows:
The attorney-client privilege, the oldest privilege protecting confidential communications, is a rule of evidence “that forever bars disclosure, without the consent of the client, of all communications that pass in confidence between the client and his attorney during the course of professional employment or as an incident of professional intercourse between them.” State v. Pratt, 284 Md. 516, 521 (1979); Harrison v. State, 276 Md. 122, 133-34 (1975). The privilege is not only “deeply rooted in common law,” but also statutorily memorialized in Maryland. Pratt, 284 Md. at 519; MD. CODE ANN., CTS. & JUD. PROC. § 9-108 (“A person may not be compelled to testify in violation of the attorney-client privilege.”). The privilege is designed to encourage individuals needing legal advice to disclose information freely without fear that such facts will be made public. Levitsky v. Prince George’s Cnty., 50 Md. App. 484, 491 (1982).
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Given that the attorney-client privilege has the effect of concealing relevant information from the fact-finder, “it is applied only when necessary to achieve its limited purpose of encouraging full and frank disclosure by the client to his or her attorney.” [Maxima Corp. v. 6933 Arlington Dev. Ltd. P’ship, 100 Md. App.] at 455-56. The privilege does not extend so far as to protect information that does not disclose the nature of the legal advice or services sought; for example, a client’s payment of his attorney’s fees is generally unprivileged. Id. at 455.
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Furthermore, communications not shielded by the attorney-client privilege may nonetheless find shelter in the work product doctrine. See E.I. du Pont de Nemours & Co. v. Forma-Pack, Inc., 351 Md. 396 (1998). The work product doctrine protects from discovery the work of an attorney done in anticipation of litigation or in readiness for trial. Id. at 407. A party generally may not obtain such work without demonstrating a substantial need for it and an inability to obtain its substantial equivalent by other means without undue hardship. Md. Rule 2- 402(d)….The attorney-client privilege is held by the client while the work product doctrine is “historically and traditionally a privilege of the attorney and not that of the client.” E.I. du Pont, 351 Md. at 406.
Baltimore City Circuit Court Memorandum (Clark v. Zalco Realty, Inc.) at pp. 12-13. Contact an HOA law attorney at Cowie Law Group should your association need advice on what constitutes a document protected by the attorney-client privilege and/or work product doctrine under a Maryland HOA law.
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