Board Withholding Budget
Q - I filed a civil action against my condo association’s board. At the end of each year, each condo owner legitimately and rightfully is entitled to obtain the balance sheet and budget for expenses. I requested that the managing agent make these documents available for me to copy. I received a reply from the condo’s attorney saying I must cease and desist from all and any communication with his clients (the condo association). He also indicated that my request for documents, i.e., the financial statements, is not a proper discovery request, and that I must prepare and serve a discovery request in accordance with the rules governing the courts of the state of New Jersey. Is a unit owner who files a lawsuit against the condo barred from obtaining financial accounting, budgets, and statements from the association?
—Litigating Owner
A - “First, I am going to assume that you are litigating this matter against your association on a pro se basis,” says Christopher A. Florio, an attorney with the law firm of Stark & Stark in Princeton. “That is, you have not engaged the services of a licensed legal professional to represent you in this matter. Second, without knowing exactly how the association’s attorney responded to your discovery inquiry by setting forth the form of discovery as improper, I will answer this question based not only in a litigation context, but as it relates to any member’s request for certain information from any condominium association in New Jersey.
“As it relates to your discovery demand, unless the association can show the information requested is privileged under New Jersey Rules of Court (there are certain other ways the association can argue in court that you are not entitled to certain discovery requests, but for purposes of your general question, the privileged exception is the most common), the association must produce the discovery requested.
“Notwithstanding the discovery process under the New Jersey Court Rules, my personal opinion, based on New Jersey regulations, is that almost all functions of a condominium association, including documentation, is open and available to the members of the association. That is, notwithstanding the lawsuit you have commenced, as a member of the condominium association, you are entitled to almost all documentation that is generated as it relates to the operation of the association. New Jersey regulations as it pertains to the conduct of open meetings sets forth four instances where member attendance can be restricted upon the following criteria: 1.) Any matter the disclosure of which would constitute an unwarranted invasion of individual privacy; 2.) Any pending or anticipated litigation or contract litigation; 3.) Any matters falling within the attorney-client privilege, to the extent that confidentiality is required in order for the attorney to exercise his or her ethical duties as a lawyer; and 4.) Any matter involving the employment, promotion, discipline or dismissal of a specific officer or employee of the association. (N.J.A.C. 5:20-1.1).
“As almost all condominium associations in New Jersey are formed under Title 15A of the New Jersey Non-Profit Corporations Act, you should be aware that N.J.S.A. 15A:5-24 deals with the ability of the corporation’s members to have reasonable access to the books and records of the corporation. I have successfully utilized this provision a number of times to compel an association to turn over books and records to a member when it had initially refused to do so. Additionally, your master deed and bylaws may require the board to conduct an annual audit, and to provide that audit to its members. Failure by the board to abide by the terms of its master deed or bylaws as it relates to an annual audit could be cause in asserting the trustees have breached their respective fiduciary obligations to the association.
“If your allegations against the association involve alleged financial improprieties; or the failure of the board to provide required financial information to its members; or any other basis dealing with the finances of the association, in order for you to prove your case—you must have access to the financial information of the association. The discovery process provides you with the mechanism to obtain this information and notwithstanding the counsel for the association advising that your discovery request is improper, you are entitled to this information. Assuming you are pursuing this matter on a pro se basis, upon motion with the court, you can demand that the association make this information available to you.
“Finally, you indicated in your colloquy that the association’s attorney stated that you ‘must cease and dismiss from all and any communication with his clients.’ Because counsel represents the association, even though you are pro se, you must direct all inquiries relative to this matter to the association’s counsel.”
