Article Courtesy of JD SUPRA
By Andrew McBride
Published August 23, 2024
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A Florida homeowners association was found liable in a records requests
lawsuit that emphasizes the need for timely response and proper
recordkeeping among community associations.
The Fifth District Court of Appeal in Florida emphasized that an
association’s failure to promptly and fully respond to a homeowner's request
can result in fines and other liabilities against the association and in
favor of the homeowner. This was illustrated in the case, Pecchia v. Wayside
Estates Home Owners Association, Inc., No. 5D23-0963 (June 7, 2024).
The statutory right to inspect official records is an important tool
available to homeowners. A frequent source of disputes among homeowners
associations, condominium associations, cooperative associations, and their
constituent members, is the timeliness and adequacy of responses to requests
for record inspections.
Failure to fully abide by these requests can lead to serious repercussions
for associations.
Breaking Down the Appellate Court Opinion
In the small Wayside community in Seminole County, homeowners Pecchia and
Porter were dissatisfied with HOA activities. As a result, they made
official written requests for association records which they felt might help
support them in their disputes with the association.
As is common, the association responded past the statutory deadline (ten
working/business days) and without producing all the required records for
inspection. Only some records were given. Due to this failure, the
homeowners filed suit for injunctive relief and other damages, alleging that
they were entitled to numerous records which had been withheld (including
financial statements, bank statements, and insurance policies), that the
association should be compelled to produce the records, and for an award of
statutory damages and attorneys’ fees.
Following a bench trial, the trial court denied the request for an
injunction, finding that the association “provided sufficient documents in
response to the plaintiffs’ request.” The trial court not only found that
certain types of records, such as cancelled checks and bank statements did
not need to be provided under the statute, but also that the ten-day
statutory time limit would be excused because “sufficient” documents were
ultimately provided.
The Fifth District Court of Appeal reversed this ruling. The appellate court
found that the plain language of the operative statute requires that
associations maintain their official records and provide those records to
homeowners within ten business days of receipt of a records request.
Pursuant to the statute, the failure of an association to provide access
within ten business days creates a rebuttable presumption of a willful
failure to comply and entitles the homeowner to their actual damages or
statutory damages of $50 per day for up to ten days. The appellate court
concluded that the use of the statutory term “shall” in the operative
statute “signifies that there is no statutory flexibility” with respect to
its record maintenance and inspection obligations.
Records Requests Best Practices for Associations
The Florida appellate court opinion illustrates several important lessons
and practice pointers for community associations and their board members:
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Association boards and their members should review the
pertinent official records which they are required to maintain and make
available for inspection and ensure that the required records are properly
maintained [see F.S. Sections 719.104(2) (cooperatives); 718.111(12)
(condominiums); 720.303(4) (homeowner associations)]
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Associations should move quickly to respond to official
record inspection requests so that the ten business/working day deadline
does not lapse;
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Legal counsel may need to be engaged to review specific
requests and ensure that records which are not official records — such as
attorney-client privileged information, private medical information,
personnel records, etc. — are not inadvertently produced;
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Counsel can also assist with crafting an association
policy imposing reasonable rules regarding frequency, time, location,
notice, and manner of record inspections and copying of records, to avoid
undue disruption to the operations of the community and to deter
overreaching requests; and In the failure to timely provide records, the
requesting party may file a complaint with the Florida Department of
Business and Professional Regulation. Associations should consider engaging
with counsel to review and respond to any such complaint.
Under newly passed legislation, board members of homeowners and condominium
associations and management can be held criminally liable for a knowing,
willful, and repeated failure to make records available. See F.S. Sections
718.111(12)(c)(2) and 720.303(5)(d).
Although it may be tempting to delay or disregard an owner’s official records
request, a board does so at its peril. Instead, all inspection requests should
be responded to in a timely and thorough manner to ensure that no statutory
violation occurs.
Click here to read
the full opinion of the 5th DCA
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