Your HOA Is Hiding Something: 7 Financial Records They Must Give You

The Davis-Stirling Common Interest Development Act (Civil Code §§ 4000-6150) is California's comprehensive law governing homeowners associations. It establishes:

• Owner rights - Record inspection, meeting attendance, voting, IDR/ADR access
• Board duties - Fiduciary obligations, disclosure requirements, procedural rules
• Financial transparency - Budget, reserve, and assessment disclosure mandates
• Enforcement mechanisms - Internal dispute resolution, civil remedies, attorney fee recovery

The Act applies to all common interest developments (CIDs) including condominiums, planned developments, stock cooperatives, and community apartment projects.

As an owner, you have the right to inspect and copy association records. Key provisions:

• Written request required - Submit a written request describing the records you want
• 10 business days - HOA must make records available within 10 business days
• Reasonable time/place - Inspection at mutually convenient time during business hours
• Copy costs - HOA may charge actual copying costs (typically $0.10-0.25/page)
• No purpose required - You don't need to explain why you want the records

HOAs may redact or withhold limited categories of records:

• Personnel records - Employee files, salary info (unless aggregate)
• Litigation strategy - Attorney-client privileged communications about pending litigation
• Member discipline - Records relating to specific member violations (privacy)
• Third-party personal info - Social security numbers, bank account numbers of individuals

However: Financial records, contracts, bank statements, loan documents, and board minutes are NOT exempt. HOAs frequently over-claim "privilege" to avoid disclosure - don't accept this without pushback.

If your HOA fails to provide records within the required timeframe, you may be entitled to:

• $500 penalty - Per Civil Code § 5235, the association may be liable for a $500 penalty
• Court order - You can seek a court order compelling production
• Attorney fees - Prevailing party in enforcement action may recover reasonable attorney fees
• Injunctive relief - Court can order ongoing compliance and reporting

SB 326 required HOAs with three or more multifamily units to complete initial inspections of exterior elevated elements (balconies, decks, walkways, stairways) by January 1, 2025. In 2026, enforcement is in full effect:

• Ongoing enforcement - Local building departments are actively citing and fining HOAs that missed the January 1, 2025 deadline
• Penalties for non-compliance - HOAs face fines and potential liability exposure for uninspected structures
• Reserve study impact - Inspection findings must be incorporated into reserve studies, potentially triggering special assessments for repairs
• Board liability - Directors who failed to authorize timely inspections may face personal liability for negligence

HOAs can now impose fines of up to $100 per violation, up from the $50 cap that was common in many CC&Rs. Key details:

• Updated schedule - Boards must adopt and distribute an updated fine schedule reflecting the new caps
• Notice requirements unchanged - HOAs must still provide written notice and a hearing opportunity before imposing fines (Civil Code 5855)
• Continuing violations - Each day a violation continues may be treated as a separate violation, making fine exposure significant
• CC&R limitations - If your CC&Rs specify a lower fine cap, the HOA must amend the CC&Rs before charging the higher amount

AB 1458 addresses the chronic problem of HOAs failing to reach quorum at member meetings. The key changes:

• Reduced quorum thresholds - Associations can now conduct business with lower quorum requirements for certain votes, making it easier to hold valid elections
• Adjourned meeting rules - If quorum is not met at the initial meeting, the adjourned meeting can proceed with a reduced quorum
• Board election implications - Fewer proxies and ballots needed to elect board members, which can shift power dynamics in your HOA
• Owner engagement - While easier quorum helps HOAs function, it also means a smaller group of owners can make binding decisions

Recent amendments to the Davis-Stirling Act strengthen reserve study requirements and disclosure obligations for HOAs:

• Enhanced reserve study standards - Reserve studies must now include more detailed component analysis and funding projections, with clearer methodology disclosure
• SB 326 integration - Balcony and deck inspection findings must be incorporated into reserve studies, potentially increasing reserve funding requirements
• Disclosure timing - Annual budget reports and reserve disclosures must be distributed to owners with enhanced detail about deferred maintenance and underfunding
• Percent funded transparency - HOAs must more prominently disclose their percent-funded status and explain the implications of underfunding to owners

A major red flag occurs when HOAs provide management company spreadsheets instead of actual bank or lender statements. This matters because:

• Internal ledgers can be edited, backdated, or incomplete
• Bank statements show actual money movement with third-party verification
• Lender statements confirm loan balances, draw amounts, and payment applications
• For construction loans, only lender confirmations prove funds were properly applied

Under Civil Code § 5900, owners can request IDR to resolve disputes before litigation. Board obstruction tactics include:

• Ignoring valid requests - Simply not responding to properly submitted IDR requests
• Imposing unlawful conditions - Requiring association counsel presence, excluding other owners, or narrowing scope unilaterally
• Recharacterizing objections - Treating your objection to their conditions as "rejection" of IDR
• Indefinite delays - Scheduling IDR months out to run out the clock

Property management companies frequently exceed their authority by:

• Holding owner funds - Management companies are not licensed escrow holders and generally lack authority to hold or redirect owner-designated payments
• Blocking record access - Management cannot unilaterally deny records the board is required to produce
• Interpreting governing documents - Only the board (or courts) can make binding interpretations of CC&Rs
• Making financial decisions - Large expenditures, contract changes, and loan draws require board approval

When multiple layers (management company, construction manager, HOA counsel) all point fingers at each other, it's often a sign that accountability has been deliberately diffused.

Start with a formal written request citing the specific records and Civil Code sections:

• Be specific about what you want (e.g., "bank statements for operating account for January-December 2025")
• Cite Civil Code § 5200-5210 and the 10-business-day deadline
• Request inspection at a specific date/time, or ask for copies to be provided
• Send via email AND certified mail for documentation

If records are not produced within 10 business days, submit an IDR request under Civil Code § 5900:

• State the dispute (failure to produce records)
• Propose meeting within 45 days
• Document any response (or non-response)
• If they impose unlawful conditions or ignore the request, document this as constructive exhaustion

An attorney demand letter often produces results because:

• It signals you're serious about enforcement
• It puts the board on notice of potential liability
• It triggers D&O insurance notification requirements
• It creates a record for fee recovery if litigation follows

If informal efforts fail, a narrow declaratory relief action can compel compliance without the cost and complexity of full damages litigation:

• Declaratory relief - Court declares your rights and HOA's obligations
• Injunctive relief - Court orders specific compliance (produce records, complete audit, etc.)
• Preservation orders - Restrains further fund disbursement pending verification
• Attorney fees - Prevailing party may recover fees under Davis-Stirling

This approach focuses on transparency and compliance rather than money damages, which can be faster and less expensive.