CAI-NJ Sep.2016

MEETINGS AND ELECTIONS... from page 44.

Which records must be disclosed? Are the records confiden- tial? How can we tell? Is the association potentially exposed to a lawsuit or the board makes the wrong the decision? The bills also increase “transparency” by making business and financial records available at reasonable times and reasonable locations in response to an owner’s written request. The statute goes into detail to set forth definitions of the terms “business records” and “financial records.” Thus, under the statute, “business records” that must be made available include “notices, agendas and minutes of meetings, governing documents, including copies of the declaration and by-laws, and governmental orders.” “Financial records,” which must also be disclosed include such things as “all receipts and expenditures, invoices and cancelled checks and an account for each unit setting forth any shares of common expenses or other charges due, the due dates thereof, the present balance due, and any interest in common surplus.” The association would also be charged with the respon- sibility to redact all personal identifiers from these records, which can be a very substantial and onerous task. You may wish to consult with your legal counsel to consider developing a standard “Record Review Policy.” Depending, of course, on the individual needs of your association, it is possible a standard “Record Review Policy” published to all owners may serve to clarify some ambiguities. For example, who pays for copies? How much should the copies cost? Can an owner take notes of the records? Can we set a time limit on available records? What is a reasonable time frame; three years, five years, seven years or more, or less? A “Record Review Policy” may assist any association in seeking to avoid potential future pitfalls and may help provide a stan- dard set of information for all so one can say they received greater or lesser access than another owner. Again, these are things you may want to discuss and address with your legal counsel and be guided accordingly. It has been our experi- ence these types of “Record Review Policies” can go a long way to avoiding potentially unnecessary litigation over issues such as access to records. Election Recalls. The bills allow for recall elections with or without cause. Thus, 5% of the owners can make demand for a vote to

sions.” To a certain extent this type of language codifies well-established and already existing case law which sets these standards for volunteer board members. The lan- guage in these bills fortifies the already existing fiduciary standards by specifically putting them into the law. In a nut- shell, a fiduciary duty is a legal duty to act solely in another party’s interests and to not profit from that fiduciary duty. In English – do not hire your brother-in-law as the landscaper. Seems obvious, but there is a reason why these laws are passed. If you are concerned about individual liability as a board member, you should consult with your legal counsel if you have any questions. Nevertheless, most governing documents provide for indemnification of the board or individual board members for actions taken within the board’s authority. Members as Owners. Both bills also state that membership in a common interest ownership association “shall be comprised solely of all of the owners of dwelling units or homes . . ..” Many common interest ownership associations have governing documents which contain this type of language already. Nevertheless, it appears clear this proposal is designed to clarify the point and to make sure that “membership” is equal to “ownership” and to bring an end to non-unit owners being members of a common interest ownership association. This seems to be driven by a feeling that those making the decisions for a common interest ownership association should have an equity stake in the association. This makes sense inasmuch as many units or homes, as the case may be, are the primary investment of the owner. The Bills also confirm that (unless specifically stated otherwise in the governing documents) the percentage of ownership interest “shall be” in the same proportion of the common element expense to that unit. Inspectionof “BusinessRecords”and“Financial Records.” Inspection of business records can also be a cloudy and nebulous issue. After all, what records can be disclosed?

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