Mass. Legislature Aims to Strengthen Condo Rules for Financial Records

Efforts by Massachusetts lawmakers are underway to change the rules regarding condo financial records, potentially exposing condo associations to legal actions by unit owners.

The Legislature is close to passing a bill that would force condo associations to make a variety of documents easily accessible to unit owners or risk paying the price in court.  The bill, S.621, would amend the current law regulating condominiums to ensure that condo associations are responsible for “all reasonable attorney fees” in actions brought by either unit owners or their mortgagees to attain documents.  The bill has passed in the Senate, but awaits approval in the House of Representatives.

As The Boston Globe has reported, some see the bill as a common-sense measure to facilitate unit owner access to basic condo records. Yet, such a change to the law could enable owners to exploit the provision at the expense of associations.

As the law stands, unit owners are already entitled to access accurate financial records. Condo associations (or property management companies serving as the agent for condo associations in matters related to financial management) must retain financial records for a period no shorter than seven years.  Such records include: receipts and expenditures, audits, reviews, account statements, service agreements and contracts, and insurance policies.  Now, however, the proposed bill introduces a financial penalty for condo associations that don’t meet immediate demands for these documents.

But even if the House can’t muster the votes to pass the bill, condo associations should still get their records in order and provide them to unit owners in a timely manner upon request. Nothing prevents legislators from re-filing the bill in another session with a more favorable set of members.  And, given the recent growth of condo unit sales in Massachusetts, pressure to toughen up laws that benefit owners may continue to mount.