 Welcome to Condo Insider, Hawaii's show about association living, mostly condos, and we are on every week, every Thursday from 3 to 3.30, and we hope we bring you helpful and insightful information about association living. One of the issues that has come up over and over again, and in fact is often one of the leaders in requested mediation, is the production of documents to homeowners. The Living Association are entitled to know, for the most part, how their association is run and operated, recognizing there are probably some documents if disclosed, might violate the fair debt law, or might put the association a harm if it's a legal matter. So I'll invite one of my really good friends, one of our industry great professionals, Nalaan, an attorney, to visit me today. Welcome back to the show now. We're going to talk about documents. So remind our viewers a little bit about your background. Great pleasure to be here again. My name is Nalaan. I'm with the law firm Moodo Oka and Rosenberg. We specialize on condominium and community association representation, including general matter consulting, collection for closure, and litigation matters. And so getting to the issue here, because I can tell you as an association manager, over and over and over again, I get email and text regarding wanting, quote, information, not necessarily documents. And we respect the right that owners have a right to know how their association is operated. But looking at the statute, basically what documents are owners entitled to? There are several types of documents. First, you know, there's the resale of a unit situation, then, you know, all the, you know, like project documents. Or if it's a lease hold, then master these or any financial statement, like regarding the association's common elements and financial status, of course, those are relevant. There are also other documents about like operations of the association, like meeting minutes, like association's contract, you know, like, you know, reserve study, all those kind of documents. But some of the ones I guess I'm going to throw you kind of a list and you tell me yes or no, or maybe whatever it may be. Recognizing that an owner has the right to make a request for any document. It just doesn't mean the board has to give it to them. But it does say in the statute that the board has to answer whether they are going to give it to them or not give it to them as I read the statute. So they can be an owner can request anything. But the statute is pretty clear what documents are mandated to be given to owners. So let's look at some of the ones that I consider are often misunderstood. So you live in a condo and I live in a condo the same condo. And I Richard say I know you live there now but I want Fred's ledger on his charges and payments for his unit. Can I get another owner beside your own? Obviously you're entitled to have your own charges and payments made. But can you mandate that the board give you the financial ledgers of another owner? No that's actually prohibited by the federal law. There's a Fairdeck collection acts. The association as a creditor cannot just disclose anybody's delinquency information to a third party without authorization from the owner. But the statute does allow the association to give out like a general statement like summary statements of delinquencies for over 90 days because it does impact the association financial situation. Yeah. Because that's basically what most management companies will say. Here is the delinquency list of those unit owners over 90 days. It specifies the unit and or the owner's name on that list. But it's a general list of all those owners over 90 days and does not include the ones that are less than 90 days. And certainly if we receive the request saying I want to see Fred's ledger all his charges and payments we would decline to give that to because it's covered by the Fairdeck law. So how about the other common one I get is the statute says we have to give an owner's list. And they say well I want not only the owner's list which is their address but I want the email the phone numbers and other owner information in addition to just the names and address of the owners on the owner's list. We have to do that. No that's a misinterpretation. The statute actually only talks about the owner's list only includes the name of the owners and their address. So if it's a like agreement of sale then you apparently needs to know you know the purchaser's name. But other than that emails and phone numbers those are all information that's not required to be produced. I think what happens is owners get really upset about something and they want to lobby the owners and of course email has become prevalent and they think all the owners have the same interests that they may have in the issue. Oftentimes we get many phone calls from owners who somehow they did get the email or the phone number not given by the management company where the owners are saying how can I get off this person's list they're harassing me they're calling me every day. You know their board meetings coming up with the annual meetings coming up and they're getting 10 emails a day from this partner. The only answer to them is look we didn't give it to them but we suggest you just write them a polite email saying thank you for interested in the association please take me off the list because that's about all we can do but a lot of owners misunderstand the real issue that under the current statute in the past there's been suggestions to amend the law to require email to be given but none of those have ever passed so at the moment it's the owner's name or agreement of saleholders name and their contact snail mail address their address for record purposes and that's what they can get. So anyway let's look at the issue of boards go out and they get legal opinions from a charity that matters. The owner says I want us the board made this decision based on a legal opinion I want to see the legal opinion so they have to hear the legal opinion? No the legal opinions that's considered a protected attorney kind privileged information because it's a communication made between you know attorney and kind in confidence and trying to facilitate or trying to obtain legal advice. Unless it's waived by the kind it is always confidential it's protected. If you know the the board wants to communicate with the owner about the basis of their decision it's always good to do a separate for example like a you know like a newsletter to owners to try to explain the matter or like a memo to all the owners instead of give the original communication because once you do that you basically waive the attorney kind privilege and also waive you know the privilege for all and any matters relevant to that communication which is horrible. I think at the end like you said the board could elect to waive it but more times than not they're going to protect the association maintain the attorney client privilege and then what they're going to want to do is issue a separate statement or newsletter or document explain their opinion probably approved by the lawyer with that statement that's been issued. Yeah and give them some relevant information with respect to it but people think it's really easy like well why did they make the decision we have to have 80% vote to make this change in the condominium. Well those times more than not the summary statement by the attorney will be adequate but then there are situations with the suit with an owner there's some other disability act issue that because it's still in progress in some form of litigation or dispute resolution the board may not want all the facts out of the table because they're trying to protect the association. Maybe a lawsuit against the vendor for example that they're not going to want to disclose these legal opinions so it's really a board decision at the end of the day and they should probably seek to counsel their lawyer. Yes that's always a good idea and actually you know talking about a pending litigation there's also another doctrine you know that is employee which is the work product doctrine. Basically if it's something a material prepared in anticipation of litigation down the road then it gives this broader protection compared with attorney kind privilege for example if you get consultants you know to work out like some reporting investigation and that's that you do that for the purpose of preparing for potential litigation it's protected unless you know the other side can prove it's necessary I mean there's going to be and do hardship if you don't give it to them it's also going to be protected. Yeah of course the most protected category is if it's your legal counsels you know like a summary of their mental impression that's always protected actually. And I think the common when it comes up related to litigation is that I want to see the copy of the invoices the lawyer sent with respect to a matter and more times than not the managing agent will redact that information because often time the attorney's description of what he's doing might be foretelling what's all what the issues are what's going on is that kind of your understanding as well? Yes basically because legal invoices sometimes depending on how detailed the time entries are it would include certain privilege communication there and it's always a good idea to have your counsel you know review and do the redaction before you just send it out. So the legal side is something that boards who are owners also and have the same rewards and risks of living in an association are doing the best they can to protect the association for potential legal fallout by listening to their attorney and then and following his advice with regard to these opinion letters and invoices. Right. The other one that kind of comes up then I want to move on to a law that was just passed and the controversy behind that but the other one that comes up is owners say I want bank statements or even the signature cards of when the management company opened a trust account and that's not specifically defined in the statute. No it's not yeah. And you see risks in giving bank statements and signature cards? Well definitely you know like sensitive information like your account numbers like signature these days you know with you know internet cybersecurity is really something you know we should keep in mind before we do something before yeah. So I can see a reason why the board would do not want to produce that or at least want to redact out all the sensitive info. I don't think the statute requires it but my experience has been having seen bank statements and signature cards in today's electronic world it's easy to steal that signature or you can get someone's account number if that got in the wrong person's hands we saw a recent internet fraud case in one of the condominiums here in Hawaii where a third party was able to get access to bank information was able to take the funds so even owners who pay electronically oftentimes there's information that might be helpful to someone to get the access to the owner's banking had information who made the maintenance fee payment so more times than not most most management companies won't give the bank statements or signature cards they'll say that the financial statement gives you an accurate representation how much money we have in the bank where we've had cases that were pushed a little we've redacted all of the account number all the electronic banking information all the signature information so that no one could in essence use that for some false purpose yeah and for requesting owners I mean it's also legal for the association to request you to sign an affidavit basically you know confirming you know under the perjury you're testifying that you're only using the information you're getting for good purpose of like a association matters not for your own personal purpose or do something unrelated to the association business that's also permissible under the statute I think the key to me is before we move on to this controversial which was corrected by the law House Bill 1498 is it clear to say that owners should be entitled to information but isn't there a risk of you know you know I see more common than not an owner will say they're angry I want to see every record that the law gives me the right to the last 10 years and they think it's sitting there in some file but when it may be 50 file boxes of information over the last 10 years and they think they can get it for free is that your experience well that's actually because this matter is within the jurisdiction of record regulated industry on office I mean there's actually they have online forums regarding this matter and if you look at it one of the reasons how the association can deny a request is because it is too broad over broad like in this situation for 10 years a lot of the you know information could be stored offside on in a storage space you know that means the association has to incur expenses to retrieve those you know in those boxes back and process it and then make it available it's basically you got to be focused like for example identify the date or the subject matter what you're interested in and it is such in other situations where the association couldn't find your information they can also offer that you know here the documents are here it's available for you to inspect but they also have the right to sending a property manager to sit in you know to supervise that and you know just to pre-win anybody from you know changing the record modifying it without any authorization yeah okay well I have a little more on this subject but we're going to take a short one minute break and come back to how owners can keep the cost from getting out of control when requesting documents so we write back with condo insider in a little richer conception the whole of Hispanic Hawaii you can watch my show every other Tuesday at 2 p.m. we will bring you entertainment educational and also will tell you what is happening right here within our community think tech Hawaii Aloha I'm your host Sharon Thomas Yarbrough where we motivate educate and power and inspire all women we are live here every other Thursday at 4 p.m. and we welcome you to join us here at sister power Aloha and thank you welcome back to condo insider we're sitting here talking with one of my great friends and very professional lawyer Nalaan about the common misunderstanding between owners and maybe sometimes boards or what documents people are entitled to and I was before we took the break I was summarizing that the common mistake I see as owners will request all the documents that the statute says for the last 10 years well these records are kept in a off-site warehouse someone's got to pay to have them retrieved delivered refiled back at the warehouse documents they're going to put a property manager in the room with the owner because in theory if there's litigation or problems we wouldn't want an owner to be able to accidentally take a document they weren't entitled to and corrupt the file or add a document maybe they shouldn't be there so manager companies are very protective to maintain the validity of the files they have in their possession so there's a cost to that so as you said earlier you need to say these are what I'm looking for and so when I get a request for owner I want to see all the invoices for the last two years I always suggest they get a check register then check off those invoices they really want to see because they pay insurance electric bills water sewer bill they pay tons of different bills and this get this broad request I'm entitled to this under the law doesn't mean you're not going to have to pay for it and sometimes it could be a thousand dollars to get all these records and that's before you reproduce them so I this caution owners to say yes you're entitled to these records but don't do it when you're who who think that what do I really want to see and try the narrow the request to make it reasonable within that that spectrum but before I was talking about House Bill 1498 and one of the most controversial arguments was an owner because a statute today says they're entitled to contracts and so the association with sign and employment contract with the resident manager general manager whatever the title might be and the owners say I want the managers contract and the board would say no I'm not going to give them the managers contract and so this legislature dealt with that in HB 1498 so what's the rule today so it's a legislative bill it's enrolled to the governor for approval so if you know on Monday we don't hear from the governor's office that he's going to wait to it so this this bill will probably become law and it's going to be effective July the first of this year so the new law will be the association has the statutory obligation to also produce management contracts with general manager on-site manager resident manager to the to the owners but they are able they are they can redact out all these personal information let's see like their birthday social security number you know cell phone like personal emails all those kind of information but like the compensation number or the job duty those you have to leave it in for the owners to review so to make it clear because this was the big issue when this law passes assuming it does pass and we'll know by Monday because it'll either make the veto this Monday or it won't and I'm speculating it's not going to make the veto list it doesn't rise to the level of I think it's going to get that much attention but the key is that a owner who requests it can get the manager's contract and it must include the compensation package or bonus package it must include the job description yes the fact that must include everything except personal information which is spelled out because the statute clearly says things such as social security number health information actually his signature on the contract can be redacted yes and so things that protect his privacy his bank account number his passwords these types of very personal information to that resident manager can be redacted but they can't use that redaction as a way to avoid giving the compensation and job description and his other duties that would be a violation of the statute yeah that'd be a violation and why do you think they passed this law basically I think the purpose is to increase transparency and you know because owner as members of association they have a right to know like you know like how much they're paying their dental manager which is probably them the person they're dealing with on a daily basis the most they also want to know you know the you know what what he's in charge of the detailed job descriptions to encourage owner to participate in more on the appreciation of the association it was explained to me one time even though it's not a corporation I guess it can be the corporate we know in the paper for example with all the top officials that the public use rated companies are Bank of Hawaii first wide bank those types of entities we know what the top people make so this particular law focuses on the top person in an association doesn't include the gardeners in the lower level job responsibility people it's primarily the main guy at the condo association and since those owners I hate to say involuntarily but they decided to belong to the association but they have to pay these fees that the budget is adopted by a board that they're entitled to transparency know where their money's going that's how I look at it so my advice to all of you out there and the boards of directors is that when you get a request you have to provide the information it's simply that that simple I guess my question to you is can a board say to a management company I know the law says provide up but I'm giving you instructions management company not to give it to them it's a statue so I think the managing agent has the obligation to comply with especially that they are also licensed so you know recall is going to step in if you give that kind of instruction to your agent I think that's very clear in the law because managing agents are the head person in the company as a licensed real estate broker and there's very specific statutory obligations for a broker one being complying with the law yes and so if the law says to a management company you have to give this document they would certainly advise the board that particular owner asked for this document but at the same time they wouldn't be holding it up waiting for approval it's better for to be transparent and not put roadblocks up for owners it sends a message like you're trying to hide something if the statute says give it to them you give it to them yes and the management company is not going to be able to say I took instructions from the board and they told me not to give it to you even the law says I'm supposed to give it to you they're going to create liability for them under a licensing law violation that's not going to be a valid defense yes so 1498 number one deals with management contracts I should say association employee manager contract management contracts of managing agents now they have to be given to the owners that's that's not way debatable and it hasn't been debatable for some time in the industry so the management company contract as a managing agent they're entitled to that automatically that's never been controversial as much as in the past boards would say well he's entitled to have his financial situation protected and and that's why we all give it to him and now the statute clearly says well you have to give it to him it's up so what else in 1498 do I know it double tenants also yeah it basically prohibits a tenant from serving as a board member yeah so if a tenant's on the board now and this is effective July 1 in your opinion is this probably create a vacancy on July 2 yes oh I should quantify that because the tenant not owner I mean if it is a tenant at the same time it's also owner of another unit then you know of course this allowed right it's if it's only a tenant not having any ownership interest in the project then you cannot serve as a board director I think that came about because there are entities out there and some of the religious entities that own units and they rent them for income for their facility or for their organization and they have put a tenant on there and in some ways his interests are different than that of a board they want to keep the fees really low or maybe not make repairs because they don't want the maintenance fees to go up because then their rent will go up and that's kind of the thought behind it that they're interested in the association they're not really an owner they're a tenant that has a really different interest than the owner itself which may be this particular organization and so what's going to happen is on July 1 again if this law is not meet the veto test it's going to have to create a vacancy and you're gonna have to elect another owner recognizing that if they're already an owner they could be elected I guess it gets complicated because of it's a mixed-use project and they were elected by a class of owners and so they're elected as a tenant by a class of owners of that organization then they're not elected by the common people it's elected by a class I guess that's why we have lawyers huh answered all these questions and what really goes on so effective do I want in theory if the law gets it will no Monday the law goes through associations have tenants on boards we'll have to look at that with the help of their council and determine but probably a vacancy has been created and they will have to appoint to the next annual meeting a replacement owner to fill that slot yes for mixed use projects you better also look at the new law because there's going to be changes regarding directors removal process and the election you know basically as to whether you know if your director is elected by a class specific class of owners then they can also be removed or replaced by a majority of that class or you know if it's a situation where the association allows the director to be elected by all class of owners then for associations if you own a certain commercial unit and you wouldn't be prohibited under the new law to also vote with your ownership in that unit basically to give leverage more power for the association in that situation I think for what I've been told I'm not an expert in this that clarifies the law that you may have an owner who was elected by a class but the law was vague on removal and so people who didn't elect them could then vote to remove them even though they ever elected them in the first place and so this law basically says even as if you can elect by class but then you have to be removed and reelected by the same class and also if that particular unit in that class the board owns that unit because of a foreclosure they can vote on those types of issues with respect to that particular class. At that point in time we covered a lot of material and we're done with our show for this week and I want to thank NAFRA always coming you're always very professional and very knowledgeable on these subjects. Next week we're going to be talking about this famous well misunderstood problematic of the class action foreclosure lawsuit out there where there's all these rumors about what's really going on whether they're foreclosures under nonjudice or illegal or not legal what the major issues are in this class action foreclosure lawsuit we have attorney John Morris coming in so until then we'll see you next Thursday on condo insider aloha