Records Laws
December 15, 2008 • By Kelly G. Richardson
Dear Kelly:
I have a question that's been troubling me for about 2 years now. Are HOA's subject to the California Public Records Act? If they are not subject to this act, is there an equivalent one they are subject to?
A second question I have is regarding associations providing earthquake insurance coverage. The CCR's make this optional in my association. It has been provided in previous years, but in 2008, an announcement in the January newsletter said earthquake insurance is no longer provided by the Association.
Am I worrying over nothing with no association earthquake coverage? Without this association coverage, would we all lose our homes because the association "loss assessment" would be so high the homeowners could not manage it in addition to paying for mortgages and living expenses while rebuilding?
Thanks for your input,
A.R.,
Anaheim Hills
Dear A.R.:
Common Interest Developments are private entities, and not subject to the Public Records laws. However, there are three statutes in the Common Interest Development Act that provide for documents to be provided to members. Civil Code Section 1365 describes a number of financial documents to be provided to all members each year. Civil Code Section 1368 describes documents that an association must provide to members so they can pass them along to prospective purchasers. Civil Code Section 1365.2 describes the rights of inspection of most (not all) association records. All of these laws can be accessed on line through http://leginfo.ca.gov, the Legislature's official web site.
If you request documents under this latter statute, try to avoid overbroad or excessive requests. Try to make your requests specific -- and don't ask for more than you really need to answer your question.
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Regarding earthquake insurance coverage, some associations are required by their governing documents to have it. If not so required, the decision is the board's.
Many associations have in recent years decided to forego earthquake insurance, due to its cost. This decision has both pros and cons. Attorneys will usually suggest associations have the insurance, because of the financial calamity that would otherwise occur if the buildings are heavily damaged. After the 1994 Northridge quake, there were loans available to associations from the federal Small Business Administration for repairs, but they were not enough to pay for anything but minor damage.
Without the insurance, large repair assessments will be needed if a moderate to major earthquake damages the buildings. The lack of such insurance should be disclosed to the members with the annual financial disclosures.
Thanks for your questions,
Kelly G. Richardson
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