Sowell-Law PLLC

NOTE:  Changes to the MI Nonprofit Corporation Act have significantly changed the analysis.  This post remains for historical purposes only.

In a less-than-helpful, unpublished opinion, the Michigan Court of Appeals touched on a co-owner’s right to inspect the books and records of a condominium association.  Unfortunately, the court did not recite the salient facts of the case, so it is difficult to discern what exactly transpired.

It appears that the co-owner, acting as his own lawyer (“in pro per”) sued the association and the management company seeking to compel the association to allow a review of its books and records.  The court acknowledged that a co-owner has the right to review an association’s books and records both under the MI Condominium Act and under this association’s bylaws (a similar provision exists in almost every association bylaws).  The trial court ordered that the association grant the plaintiff the ability to review the association’s books, but not at the location (the clubhouse) the co-owner desired.  The court of appeals affirmed, and refused to order damages.

The Michigan Condominium Act provides that "The books, records, contracts, and financial statements 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.”  MCLA §559.157(1).  The Michigan Nonprofit Corporation Act provides that "A corporation shall keep books and records of account and minutes of the proceedings of its shareholders or members, board, and executive committee, if any. Unless otherwise provided in the bylaws, the books, records, and minutes may be kept outside this state. The corporation shall keep at its registered office, or at the office of its transfer agent within or without this state, records containing the names and addresses of all shareholders or members, the number and class of shares held by each shareholder or the class or classes of membership held by each member and the dates when they respectively became holders of record thereof or members. Any of such books, records, or minutes may be in written form or in any other form capable of being converted into written form within a reasonable time. A corporation shall convert into written form without charge any such record not in such form, upon written request of a person entitled to inspect them.”  MCLA §450.2485.  It goes on to provide that "A person who is a shareholder or member of record of a corporation, upon at least 10 days’ written demand, may examine for any proper purpose in person or by agent or attorney, during usual business hours, its minutes of shareholders' or members' meetings and record of shareholders or members and make extracts therefrom, at the places where they are kept….  MCLA §450.2487.

The provision of the Condominium Act is more expansive than the Nonprofit Corporation Act.  The Nonprofit Corporation Act speaks only of minutes and books and records of account; the Condominium Act also provides for contracts and financial statements.  My view is that, if an association maintains it as a record, a co-owner has a right to review it.  The administrative costs of providing access is the burden of the association.

I am frequently asked if an association has to allow a co-owner to make copies.  My usual answer is that neither Act specifically requires an association to allow copying (although the Nonprofit Corporation Act specifically allows a member to “make extracts”), but sending copies in response to a reasonable request is usually cheaper than the cost of setting up an appointment and monitoring the co-owner while it goes through the association’s files to make sure that the co-owner does not delete or change anything.