Common disputes within homeowners associations involve issues regarding the agreements that the association has entered into with a management company or an individual property manager. In dealing with such issues, homeowners will frequently request that the association provide them with a copy of the written management agreement entered into between the association and the management company or individual manager, and quite often the association will refuse to provide the member with a copy of the agreement taking the position that the member is not entitled to review or receive a copy of the management agreement. Whether or not an association member has a right to review and receive a copy of the association’s agreement with a property manager depends on whether the agreement is classified as a “privileged” document or a contract.
Determining whether a management contract is deemed “privileged” requires a review of applicable state statutes and the association’s governing documents. Some state statutes will specifically address the issue, such as in California where the Civil Code defines “association records” to include “executed contracts not otherwise privileged under law.” (Civil Code 5200(a)(4). The Code also provides that for the purpose of member inspections, “contracts for management” are not “privileged contracts.” (Civil Code 5215(a)(5)(D).) These statutes make it clear that management contracts entered into with independent contractors are not “privileged” and are subject to inspection by the members of the association.
When associations employ a manager as an “employee” and not as an independent contractor, there is a split of authority on whether the contract entered into with the employee/manager is privileged and not subject to review by the members. Some states have laws that protect against the disclosure of an employees employment information based on an inalienable constitutional right to privacy. Thus, states that afford employees such protection, such as California, expressly exclude from the permissible scope of association documents that a member is entitled to review and receive copies of, an employees personnel records and information regarding compensation that is paid to the individual employee. (Civil Code 5215(a) and (b).) Such states would not permit association members to obtain copies of the agreement for management services entered into between the association and the employee/manager.
Most contracts that are entered into by a homeowners association and a property manager are not privileged because they are classified as independent contractor agreements under which the property manager performs management services as an agent of the homeowners association and not as an employee. Such management contracts are not privileged contracts and are thus, subject to inspection by the associations members. Accordingly, to obtain a copy of the management agreement between the association and the property manager who is retained as an independent contractor, the association member should submit a formal request to inspect and copy the management agreement in accordance with the rules and procedures for the inspection of association records. This right is enforceable through court proceedings in the event of a refusal by the association to provide the requested document and the prevailing party should be awarded their costs and attorneys fees incurred in connection with the enforcement of their request.
For a form to request copies of documents see: Homeowner request for copies of documents
For a comprehensive guide on how to request documents such as the management agreement see: Inspection and copying of homeowners association documents