Every now and then, owners will want to request condo financial statements. When that happens, board members must know how to respond to ensure compliance and avoid liability. This requires an understanding of the laws that govern records access and the requirements boards must follow.
Can Owners Request Condo Financial Statements?
All condo unit owners in Chicago are allowed access to their association’s documents. This is important for transparency and being able to check the financial health of a condo association, but there are frequently formalized procedures in place to gain access to them.
The Illinois Condominium Property Act (ICPA) requires the board of directors to supply the unit owners with an annual itemized accounting of the income and expenditures for the prior budget year. Records for the previous 10 years may also be made available upon written request.
According to 765 ILCS 605/19, any owner has a right to inspect, examine, and make copies of an association’s records at any reasonable time at the association’s principal office. The owner must submit a written request that describes what documents they want to inspect or copy. This includes a request for HOA audited financial statements in Chicago.
How to Respond to Request Condo Financial Statements in Illinois
The ICPA is very clear on what requirements and procedures condo boards must follow (765 ILCS 605/19). Here are the most important guidelines to remember:
- Condo associations must comply with a request to examine records, including financial statements, within 10 business days after receiving the request. If the condo fails to comply with the request, it is considered a denial.
- Unit owners may take enforcement action to compel the association to provide access to the association’s finances. They may also recover reasonable attorney’s fees.
- Condo boards may require the unit owner to certify in writing that they will not use the records for commercial purposes or any purpose unrelated to the association. If the owner falsely certifies this, the COA may collect a fine.
- Condo associations may charge a fee that covers the actual cost of examining and producing copies of the records.
- Board members may withhold certain records from unit owner inspection. These include personnel records, ongoing litigation records, and delinquent accounts of other members. If an owner wishes to view these records, they must secure a court order.
Which Condo Records are Available for Inspection?
There are several records under Illinois law that unit owners may inspect. These include the following:
- The association’s governing documents, including the CC&Rs, bylaws, plats, and any amendments,
- Rules and regulations of the association,
- The association’s articles of incorporation (if incorporated) and any amendments,
- Minutes of all membership meetings and board meetings for the past 7 years,
- All current insurance policies of the association,
- Executed contracts, leases, and other agreements to which the COA is a party,
- The association’s books and records, including detailed receipts, expenditures, and accounts for the current year and the past 10 years, and
- Any reserve study.
The right to examine the association’s records is not without its limitations. There are certain records the association may withhold, including:
- Employment or personnel records,
- Anticipated or pending litigation against the association or to which the association is a party,
- Delinquent account summaries or details of other owners, and
- Documents related to the lease, sale, or transfer of a unit by other owners.
How to Request HOA Financial Statements
Requesting access to financial records isn’t as simple as talking to a board member or manager. There are certain key steps that owners must follow. Here’s how owners can request condo financial reports.
1. Understand Requirements
First, owners must understand what the requirements are under state laws and their governing documents. They must also know which documents are available for examination and which ones aren’t. From there, they must find out who they can contact to make the request.
Either the condo’s board of directors and/or the association’s management company will be able to supply owners with the association’s financial statements. Owners should be able to find their contact information through the association’s website, the management company’s website, or by contacting the management office.
Some COAs maintain a website or owner portal where owners can submit the request. Most governing documents are also available publicly.
2. Submit a Formal Request
Unit owners must make their request in writing. In the letter, owners must clearly state their request for the financial statements or other records. It can be helpful to provide specific details, such as the desired time period or specific statements they are interested in (e.g., balance sheet, income statement, budget).
A written request serves two purposes. First, it formalizes the request, stating the purpose and itemized records in clear terms. Second, it creates a paper trail. This documentation can come in handy for both the condo board and the owner if disagreements arise.
3. Allow Reasonable Time for Response
Unit owners should not expect to receive copies of their requested records overnight. While this is certainly possible, board members are often busy juggling other tasks. Illinois law allows 10 business days for a response.
Owners should give the condo association or management company a reasonable amount of time to process their request and provide the financial statements. The timeframe may vary depending on the size of the association and its internal processes.
If the owner doesn’t receive a response within a reasonable timeframe or if there are any issues or concerns, consider following up. It’s important to maintain open communication and ensure that the association is addressing the request.
This is why planning ahead is important. If an owner knows they need the records by a particular date, they should make the request well in advance.
For Everyone’s Benefit
When owners request condo financial statements, board members must take the proper steps to respond. It is also crucial to know the requirements for such requests to avoid potential liability. While complying with such requests may seem tedious, it is part of the board’s duty and the right of owners.
First Community Management partners closely with associations throughout the greater Chicago area. Call us today at 312.829.8900 to learn more about how we can help.