Michigan Condo and HOA Records Inspection Rights: What Boards Must Know
In Michigan, condominium associations and homeowners associations are frequently faced with requests from owners to inspect the books and records. While many owners believe they have an unrestricted right to access a community association’s records, Michigan law imposes important limitations on those requests. Boards that fail to properly respond to inspection requests risk litigation, while those that grant overly broad requests may waste a great deal of time and money in responding to overly burdensome requests.
Do Condo Owners Have a Right to Inspect Association Records in Michigan?
Yes, but the right is not unlimited. Under the Michigan Condominium Act, MCL 559.157, the “books, records, contracts, and financial statements concerning the administration and operation of the condominium” must be available for examination by co-owners at convenient times. As a result, most condominium bylaws also include provisions allowing co-owners to inspect association records. However, most condominium bylaws often lack detailed procedures for how inspection requests must be made or handled. As a result, condominium associations must also look to the Michigan Nonprofit Corporation Act, MCL 450.2101 et seq., which governs most community associations in Michigan.
Michigan Law on HOA and Condo Records Inspection Requests
The Michigan Nonprofit Corporation Act, specifically MCL 450.2487, provides the primary framework for handling records inspection requests. Under MCL 450.2487(2), a member may inspect the association’s books and records if:
- A written demand is submitted
- The demand describes the purpose with reasonable particularity
- The request identifies the records sought
- The records are directly connected to the stated purpose
If an attorney or agent makes the request, it must include written authorization, such as a power of attorney. If a condominium association fails to respond within five (5) business days after receiving a proper request, the co-owner may file a lawsuit to compel inspection. A court may also award costs and attorney’s fees unless the association can demonstrate that it had a good faith basis for denying the request, assuming a proper request was made.
What Is a “Proper Purpose” for Inspecting HOA Records?
The concept of a “proper purpose” is central to any records request. Michigan courts have made clear that a co-owner’s right to inspect records is not unlimited. In Vidolich v Saline Northview Condo Ass’n, unpublished per curiam opinion of the Court of Appeals, issued December 5, 2017 (Docket No. 334579), 2017 WL 6028112, the Michigan Court of Appeals held that even though the Condominium Act and bylaws may not explicitly reference a “proper purpose,” it is still an implicit requirement. The Court explained that:
- A proper purpose must be reasonably related to the owner’s interest
- Requests based on idle curiosity are not sufficient
- Mere speculation of mismanagement does not justify inspection
Michigan courts have also relied on North Oakland Co Bd of Realtors v Realcomp, Inc, 226 Mich App 54, 58–59; 572 NW2d 240 (1997), which held that a proper purpose may include investigating potential mismanagement, but does not include requests based on idle curiosity or mere speculation.
What Books and Records Must a Michigan Condo or HOA Produce to an Owner?
When a proper purpose is established, associations may be required to make documents available for inspection, such as:
- Financial statements
- Contracts
- Meeting minutes
- Other corporate books and records
However, the request must be narrowly tailored. The records sought must be directly related to the stated proper purpose. Requests seeking “all records” or vague categories of documents are often improper and may be denied.
When Can a Condo or HOA Deny a Records Request?
A board may deny a records request if it fails to comply with Michigan law. Common grounds for denial include:
- Failure to state a proper purpose
- Failure to submit the request to the proper person
- Requests that are overly broad or vague
- Lack of connection between the request and the stated proper purpose
- Failure to submit a proper written demand
- Requests made by an agent without proper authorization
Michigan law allows community associations to place reasonable restrictions on document inspections. Under the Michigan Nonprofit Corporation Act, a community association may limit inspections where:
- Privacy rights of co-owners would be impaired
- The request would interfere with the association’s lawful purposes
- The request is not in the best interests of the association
How Condo and HOA Boards Should Respond to Records Requests
Boards must act quickly and carefully when responding to inspection requests. Best practices include:
- Contacting the community association’s attorney for assistance when a request is received
- Promptly reviewing the request for statutory compliance
- Determining whether a proper purpose has been stated
- Evaluating whether the scope of the request is appropriate
- Responding in writing within the required timeframe
Delaying a response or placing the request on a “to-do list” can be a costly mistake due to the five (5) business day response requirement, assuming the owner has made a proper request to the community association.
What This Means for Michigan Condo and HOA Boards
Michigan law provides owners with the right to inspect community association records, but that right is limited by statutory requirements and judicial interpretation. Condominium and HOA boards should remember:
- Not all requests must be honored
- A proper purpose is always required
- Requests must be specific and relevant
- Timely responses are critical
By understanding the interplay between the Michigan Condominium Act and the Michigan Nonprofit Corporation Act, community associations can respond to records requests in ways that minimize risk and ensure compliance. Similarly, if a condo or HOA has questions on how to respond to a document inspection request, it is always best to contact a community association attorney.
