Forbes Bender & Paolino P.C.

In Frobish v. Cedar Lakes Village Condominium Association, No. 112, 732 (Kansas Ct. App., June 26, 2015), in an unpublished Opinion, the Kansas Court of Appeals decided that Kansas state law requires a condominium association to disclose the names and addresses of delinquent owners.  Typically, an unpublished opinion is non-precedential and may not be cited as legal authority, the reader should understand.  The opinion of the court serves only to resolve the matter before it.  Nevertheless, the Court has rendered this ruling based upon the Kansas Uniform Common Interest Owners Bill of Rights Act, which became effective in 2011.

The ruling is based upon certain statutory language.  The law requires associations to keep “detailed records of receipts and expenditures affecting the operation and administration of the association and other accounting records” for five years.  In addition, an association must make those records available for inspection and copying by unit owners.   “Individual unit files” and certain specific records may be withheld by an association, according to Kansas law.

Based upon this exception to disclosure, the Association’s Board of Directors adopted a rule that names and addresses of delinquent owners were “individual unit files” and could, therefore, be withheld from disclosure.

Frobish, a condominium owner, made multiple requests to the Association, asking for the names and addresses of association members who were delinquent in their dues payments.  The Association refused.  Frobish sued the Association, claiming that he was entitled to the delinquency records under Kansas law.  The trial court granted summary judgment in favor of the Association.  Frobish appealed from the trial court’s adverse resolution of the motion, which resolution represents a decision without a trial.

The Court of Appeals determined that  Kansas law requires an association to keep detailed records of receipts and expenditures, including dues payments made by association members.  These records, the Court concluded, would indicate the date, amount and who made a payment.  The Court of Appeals held that the law’s mandatory recordkeeping requirements create an obligation to keep a record of who has paid dues, as well as those who have not.

The act allows an association to withhold private information and disclosures that would otherwise be contrary to the law.  The Court of Appeals concluded that specific information may be withheld if it is consistent with privacy protections established by an association that were in effect at the time of the request.  The Court determined that the Association could not demonstrate that privacy protection had been developed for delinquent owners.

The Court of Appeals heard argument that association members had an expectation of privacy with respect to whether association payments were made.   The Court recognized that, if an owner is sued for nonpayment, the lawsuit is a matter of public record.  The Court also noted that the law showed a preference for disclosure over secrecy.  Finally, the Court determined that collection issues are fundamental to association operations.  Unpaid dues payments negatively impact the operation of an association.

The Court of Appeals reversed the trial court’s ruling and remanded the case back to the trial court with instructions to permit Frobish to inspect and copy the records he was seeking, including the names and addresses of delinquent owners.

It is generally believed among attorneys who represent community association clients that this disclosure can create a landmine.  Most attorneys, when faced with this issue, counsel an association client to be sure that the records are totally accurate.  If they are not, the association, as well as the board members, may be sued for defamation by the person whose name was disclosed.

A related point is that most attorneys involved in this area of practice do not favor publishing a list of delinquent owners and conclude that the benefit is outweighed by the risk.  It is certainly true that owners have a right to know about an association’s financial condition.  However, a board needs to be careful about what is divulged.  If a board is adamant about disclosure, most association attorneys advise only publishing the address of the delinquent owner, not the name of the owner, in an effort to avoid a defamation claim.  Disclosure of this information would be easier to recommend if it was provided for in the governing documents of the association.  Associations must be mindful that there may be issues relating to insurance coverage if a defamation claim is presented.  Finally, one must recognize that state laws, whether statutory or decisional, differ on these subjects. Boards should consult the association attorney to ensure that any actions taken are legal and advisable.

Alexander D. DiSanti, Esq., is an officer of Forbes Bender Paolino & DiSanti, P.C.  Forbes Bender Paolino & DiSanti, P.C., is a full service law firm with offices located in Delaware County (Media) and Chester County (West Chester), Pennsylvania.  Alex has been representing condominium and homeowner associations for over 25 years.  He has the highest lawyer rating given by Martindale-Hubbell of AV Preeminent.  Alex was selected for inclusion in Legal Leaders Presents Philadelphia’s Top Rated Lawyers of 2014 and Pennsylvania’s Legal Leaders Presenting Top Rated Lawyers for year 2013.  At the request of the National Business Institute, he has served as a faculty member and instructor of Legal Aspects of Condominium Development and Homeowners’ Associations, a legal education seminar for lawyers.  Alex can be reached at (610) 627-1700 or adisanti@fbpdlaw.com.  Visit his website at www.fbpdlaw.com.