In Bafna v Echo Valley Condominium Association, an unpublished Michigan Court of Appeals opinion, the Plaintiff, a member in a condominium association, requested seven categories of records from the Association: (1) bills or invoices showing the cost of past litigation, (2) records related to swimming bands (to access the pool), (3) work orders for bulb replacements in his building, (4) board minutes from April to September 2019, (5) records relating to when his checks were received and posted to his account, (6) board minutes for 2018, and (7) financial statements for 2017 and 2018. The Association denied the requests on the basis Plaintiff did not state a proper purpose, leading to a lawsuit. The trial court granted summary disposition in favor of Plaintiff, ordering the Association to produce the documents. The Association appealed.
The Nonprofit Corporation Act requires the Association to produce records for reviewing and copying if a member states a proper purpose for the request. While the initial requests were hard to understand (English was apparently not Plaintiff’s native language, his complaint was much clearer. The appeals court held that the complaint could clarify the requests. The appeals court also held it need not consider whether a proper purpose was an implied requirement under the MI Condominium Act, which also contains a records review provision.
Regarding proper purpose, the appeals court held, based upon a case interpreting a basically identical provision of the Business Corporation Act, the legislature did not intend to erect a formidable obstacle to review of a corporation’s records. The court granted all seven of the requests, finding a proper purpose had been stated. With respect to the request for board minutes, the court stated “we can perceive no legitimate reason why any corporation would find it permissible to withhold its corporate Board meeting minutes from one of its shareholders/members.”
A dissenting opinion argued that the trial court and the court of appeals were wrong in considering the requests in light of the amended complaint.
An Association should take co-owner requests to review records seriously and allow the inspection unless there is a compelling reason to deny it. The court dismissed Association arguments that the co-owner was contentious, that providing the records serves only to empower a co-owner to complain without a remedy, or that decisions regarding swimming bands were within the control of the board. Records review is a part of the statutes and thus an administrative expense for an Association.