SACRAMENTO – Millions of Californians who live in neighborhoods governed by the private rules of homeowners associations will have new rights to inspect their association's financial records, according to a bill Gov. Gray Davis signed into law yesterday.

Davis' action gives about 8 million Californians in more than 36,000 neighborhoods greater access to records showing how their dues money is spent for salaries and services. Supporters called it a consumer victory for California homeowners who pay more than $200 million a year in association dues.

"They have every right to know how their millions of dollars of homeowners fees are being spent," said Marjorie Murray, lobbyist for the Congress of California Seniors. The group sponsored the bill because millions of retirees live in neighborhoods that share and collectively maintain swimming pools, lawns, streets and roofs.

The bill by Assemblyman Alan Lowenthal, D-Long Beach, is part of a movement nationally to relax restrictions that come in neighborhoods with private governments. Two more bills awaiting Davis' signature would overturn association bans on flags, signs and banners in front yards and give homeowners more rights to challenge decisions made by their boards.

All are opposed by organizations representing homeowners associations and many companies that contract with them to run and maintain their facilities.

The law, which goes into effect Jan. 1, requires homeowners associations to let their residents inspect and copy minutes of board meetings and financial records that indicate their costs for employees, vendors and contractors. But it allows associations to withhold salary information for specific employees.

It also gives residents the right to file lawsuits to force release of the information and provides for a $500 fine if associations balk unnecessarily. But the bill also allows associations to sue residents who misuse the information to damage the association.

Paul Whisler, a resident of Roseville's Sun City homeowners association, welcomed the law. But he said it gives associations the edge by requiring residents to file lawsuits to see certain records.

"As an individual homeowner, I am not going to sue them," Whisler said. "Yes, the law is good if we can somehow get enforcement of it."

Bob Browning, a lobbyist with the Community Associations Institute, which advises homeowners associations, said: "We're going to assure that our members comply with the law, and we're hoping this won't be an invasion of privacy for our employees. We'll be monitoring with intentions of possible follow-up, if needed."