Massachusetts Condo Records Inspection, Financial Reports and Remote Meetings

The record keeping duty in § 10(c) is specific about what must exist. The organization of unit owners must keep a complete copy of a true and accurate copy of the master deed as recorded and amended, the by-laws including recorded amendments, the minute book to the extent minutes are kept, and financial records. The financial records category is itself itemized: records of all receipts and expenditures, invoices and vouchers authorizing payments, receivables and the related bank statements; records of the replacement reserve fund or any other funds of the organization and the related bank statements; audits, reviews, accounting statements and financial reports; contracts for work to be performed or services provided to the organization; and all current insurance policies naming the organization as insured or obligee. Where the organization appoints a manager or managing agent responsible for collecting assessments, paying common expenses or the accounting or custody of common funds, that manager is the party responsible for keeping the financial records category.

The access right is written in plain terms. Records must be kept in an up to date manner within the commonwealth and must be available for reasonable inspection by any unit owner, or by any mortgagee holding a recorded first mortgage on a unit, during regular business hours and at such other times as the management agreement provides. Access includes the right to photocopy the records at the expense of the person making the request, so a Massachusetts association may charge for copies but may not use copying cost as a reason to refuse inspection. The statute singles out the minute book for electronic delivery: minutes, to the extent kept, "shall be made available to unit owners through electronic mail upon request." All records must be retained for at least seven years, they are the property of the organization rather than of the management company, and on termination of a management agreement the manager must give the organization all books, records, funds and accounts in the manager's possession.

Section 10(d) turns records into reporting. The party responsible for the financial records must prepare a financial report within 120 days of the end of the fiscal year, including a balance sheet, an income and expense statement and a statement of funds available in the organization's various funds. A copy must be made available to all unit owners within 30 days of completion, and on request to any mortgagee holding a recorded mortgage. For any condominium of 50 or more units, an independent certified public accountant must review the financial report according to American Institute of Certified Public Accountants standards, annually or, if modified under § 10(m), never less often than every two years. In an action brought to enforce that paragraph the prevailing party is entitled to reasonable attorneys' fees, which is the sharpest enforcement tool in the section. In a condominium of fewer than 50 units the same review happens only if a majority in beneficial interest votes for it at a duly convened meeting, and the cost is then a common expense. Separately, any unit owner or recorded mortgagee may commission a review or audit at its own expense, and the organization and its manager must fully cooperate in providing the information.

Several related controls sit in the same section. Under § 10(f) a manager with financial responsibility must render a written report to the trustees or managing board at least monthly, and in no case less often than quarterly, detailing receipts and expenditures with beginning and ending balances and copies of the relevant bank statements and reconciliations, and must hold the replacement reserve fund and other organization funds in separate accounts that are not commingled and not subject to the manager's creditors. Section 10(g) requires reserve account checks to carry the signature of a governing board member in addition to the managing agent unless a written agreement says otherwise. Section 10(h) requires condominiums of more than ten units to carry blanket fidelity insurance covering dishonest acts, in an amount equal to at least one fourth of annual assessments excluding special assessments, with ten days' written notice of cancellation. Section 10(i) requires an adequate replacement reserve fund held separately from operating funds. Section 10(m) allows the owners, after transfer of control from the declarant, to modify the review frequency, the manager reporting frequency, the check signature requirement, the fidelity insurance requirement and the reserve fund requirement by an annual vote of 67 per cent or more in beneficial interest, rescindable at any time by a majority. Section 10(e) caps the management contract exit terms: termination for cause takes ten days' notice with an opportunity to cure, and the organization can never be required to give more than 90 days' notice to terminate without cause.

On meetings, Massachusetts law is deliberately thin in one direction and generous in another. Chapter 183A prescribes no minimum number of meetings and no notice period; § 11 requires the by-laws to cover maintenance, collection, hiring, rule adoption and use restrictions, and meeting mechanics are left to those by-laws. Section 24, by contrast, applies notwithstanding any contrary provision in a master deed, declaration of trust or by-laws. It lets the governing body hold regular or special meetings by telephonic or video conference call or other interactive electronic communication process as long as all participants can communicate simultaneously, treats electronic presence as satisfying quorum, and allows the board to vote and approve minutes by email or video conference. Subsection (b) extends the same to annual and special meetings of the unit owners, requires the governing body to notify all unit owners and provide access information, and requires reasonable measures so owners can participate fully, including by reading or hearing the proceedings and posing questions or comments. Subsection (c) permits mail in ballots and electronic voting where a quorum participates, and lets owners submit signatures or written consent electronically wherever the governing documents call for a signature.

Chapter 183A imposes no fine for a board that stonewalls a records request, so enforcement runs through the courts and through the specific hooks the statute supplies. The strongest is in § 10(d): in any action brought to enforce the financial review paragraph, the prevailing party is entitled to reasonable attorneys' fees, which makes a suit over a missing or unreviewed financial report economically viable for an owner in a condominium of 50 or more units. For a refused inspection, the owner's claim is that the records were not kept in an up to date manner within the commonwealth or were not made available for reasonable inspection during regular business hours as § 10(c) requires; the remedy sought is an order compelling production plus the photocopying access the same subsection grants.

Section 10(b)(4) confirms the organization can be sued on causes of action arising out of enforcement of the by-laws, administrative rules and master deed restrictions. A management company is a distinct pressure point: the records are the property of the organization, the manager must surrender all books, records, funds and accounts on termination of the agreement, and under § 10(e) the organization may terminate for cause on ten days' notice with an opportunity to cure. Where the failure involves money rather than paper, § 10(f) segregation of the replacement reserve fund and § 10(h) fidelity insurance of at least one fourth of annual assessments are the recovery routes, and the fidelity policy must name the organization as the insured and is for the organization's sole benefit.

Owners who cannot get a straight answer from the board may commission their own review or audit at their own expense under § 10(d), and the organization and manager must fully cooperate in supplying the information.