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Does a co-owner of a condominium unit have the right
to see the Association's financial records showing
which co-owners are delinquent in their association
assessments, the amounts of the delinquencies, and
other such financial information?
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Under
Section 57 of the Michigan Condominium Act, the books,
records, and contracts concerning the administration and
operation of the condominium project shall be available
for examination by any of the co-owners and their
mortgagees at convenient times. MCL § 559.157.
However,
obvious privacy considerations weigh against a Board of
Directors disclosing to the co-owners the names of
delinquent co-owners and specific amounts they owe. The
delinquent co-owner no doubt desires to keep such
information private, and if the Board chooses to
disclose the information, such disclosure could expose
the Association to potential legal action by the
delinquent co-owner for violation of the co-owner's
right to privacy, defamation, etc. Further, disclosing
this information really does not serve any useful
purpose for the Association or for any of the
non-delinquent co-owners, since the Association's Board
of Directors alone is responsible for pursuing
collection action against delinquent co-owners. While
the non-delinquent co-owners (or the Board) may wish to
disclose the information as a means of shaming the
delinquent co-owners into paying what is owed, such
tactics are not advisable given the risks of a
counter-suit by the delinquent co-owner. The Board is
more likely to recover the unpaid assessments through
the legal remedies providing by the Condominium Act and
Michigan law, without unnecessarily creating additional
animosity between the Association and the delinquent
co-owner (a relationship that is tenuous enough once the
Association pursues collection action against the
delinquent co-owner).
It is
usually permissible for a Board of Directors to disclose
the total dollar amount of the Association's current
delinquencies. The co-owners, as members of the
Association and owners-in-common of the condominium, are
entitled to such general information about the
Association's financial status. However, a Board should
never disclose the names of delinquent co-owners to
other co-owners unless compelled to do so by a court
order. Also, if and when a Board first learns that a
non-delinquent co-owner (or co-owners) is seeking
disclosure of the names of delinquent co-owners via a
court proceeding, the Board should, if possible, provide
written notification to the delinquent co-owners of the
pending court proceedings so that they may have the
opportunity to attend any court hearings on the issue
before an order is granted by the court.
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