The Limits of Transparency: Lessons from Galpin v. University Shadows HOA

1. Introduction: The Battle for the Books

In the world of community associations, few issues ignite as much friction as the "battle for the books." When a homeowner suspects financial mismanagement—or simply demands total visibility—the tension between a member's right to inspect records and a Board’s operational reality often results in litigation. The case of Ann Galpin v. University Shadows Homeowners Association, Inc. (No. 25F-H099-REL) serves as a definitive case study for Arizona HOAs. It addresses a fundamental question of modern governance: Does an Association’s duty to provide access to records include an obligation to "data mine" its software to create new, customized reports or convert digital data into a specific format to satisfy a member’s request?

2. Case Background: Ownership History and the Scope of the Dispute

The petitioner, Ann Galpin, a 29-year owner in the Tempe-based University Shadows condominium, initiated a series of aggressive record requests starting in April 2025. In response to her initial inquiries, the Association was remarkably transparent, producing over 1,000 pages of documentation and two separate flash drives. Despite this, Galpin filed a subsequent request on October 14, 2025, which ultimately led to an administrative hearing.

The dispute centered on two specific categories (Categories #3 and #5) spanning from 2018 to 2025. Galpin’s demand was not for existing documents, but for the generation of specific, multi-year compilations including:

• Detailed General Ledgers in Excel or CSV format.
• Accounts Payable and Receivable Ledgers in Excel or CSV format.
• Vendor-Specific Ledgers (spanning seven years) for 11 specific contractors: ASAP Restoration, Asphalt Restoration Services, Atlas Companies, 5 Guys, LG Painting, Great Western Landscaping, Great Western Tree, Great Western Pest, Green Keeper Landscaping, Green Keeper Tree, Swain Asphalt, and Heywood Community Management.
• Supporting Materials: Change orders, communications, and "standing walkthrough notes" related to these vendors.

Crucially, the Association’s formal Records Retention Policy (Exhibit 10) mandates that "Financial Reporting and Documents" and "Bank Statements" are only maintained for 3 years. Galpin was demanding data four years beyond the Association's legal retention window.

3. The "Creation vs. Production" Conflict

During the hearing on March 26, 2026, the legal arguments hinged on the definition of a "record."

The Petitioner’s Stance: Galpin argued that the Association was withholding "digital records." She contended that because the Association uses accounting software, the data exists as "bits and binary data" that must be "converted" into a readable written form (like Excel) per ARS § 10-11601(D). She distinguished between "source documents" (invoices) and the underlying "digital records" stored within the software.

The Respondent’s Stance: Led by attorney Mark Lines and witness Austin Haywood, the HOA argued that they had already complied with the law. They maintained that the multi-year, vendor-specific reports Galpin sought did not exist in the ordinary course of business. To provide them, the HOA would have to generate a new report rather than simply produce an existing one.

The Disconnect: Petitioner Requests vs. Association Records

4. Technical Insights: The HOA’s Accounting Workflow

The testimony of Austin Haywood provided a sophisticated look at the technical reality of HOA management. The Association utilizes Caliber for core accounting and Strongroom for managing third-party payables.

As a matter of internal control and financial integrity, the Association maintains a strict separation of duties:

1. Entry: One individual enters bills and invoices into the system.
2. Payment: A separate individual processes the payments.
3. Reconciliation: A General Ledger (GL) accountant reconciles these disparate actions against bank statements to produce the monthly reports used by the Board.

Because of this workflow, the "General Ledger" is a compiled result of these separate duties. The HOA argued effectively that while the raw data exists within the software, a "Vendor Ledger" is a report that must be specifically generated. If the Board does not use or maintain such a report for its monthly business, it is not an "existing record."

5. The Legal Verdict: Interpreting ARS § 33-1258

On April 15, 2026, Administrative Law Judge Nicole Robinson issued her decision, denying Galpin’s petition. The ruling was a significant win for Associations on two fronts:

First, the Judge clarified the statutory authority. While Galpin relied on ARS § 10-11601 (Nonprofit Corporations), the Judge ruled that this statute does not govern condominiums in this context. Instead, the dispute was decided strictly under ARS § 33-1258.

Second, the Judge established a clear boundary regarding format and creation. The verdict explicitly stated: "The statute does not require an Association to create new documents or generate data into a particular format." The law compels the disclosure of existing records, not the performance of customized accounting services or data conversion for a member's convenience.

6. Key Takeaways for Homeowners and Boards

This ruling serves as a vital precedent for community associations and legal analysts:

1. Format is Not a Mandate: While owners often prefer Excel or CSV files for their own analysis, an HOA is not legally required to "convert" its records if they are maintained as PDFs or paper files.
2. Creation vs. Access: There is a sharp legal distinction between inspecting records and demanding the generation of custom reports. Transparency laws apply to what is in the file cabinet—physical or digital—not what could be produced via software.
3. The Supremacy of Retention Policies: Boards must adhere to their retention schedules. As shown in Exhibit 10, because the HOA only retained financial records for 3 years, Galpin’s request for 2018 data was legally unenforceable.
4. The Burden of Proof: In an administrative hearing, the burden lies with the petitioner. As the Judge noted, Petitioner had no proof that the Association actually possessed the requested records and refused to provide them; "presuming" a record exists is legally insufficient.

7. Conclusion: Moving Toward Clarity

The Galpin v. University Shadows decision reinforces that "transparency" is grounded in the production of existing business records, not the provision of customized "data mining." For boards, the lesson is to maintain a clear records retention policy and a consistent accounting workflow. For homeowners, the lesson is that while the right to inspect is broad, it is limited to the records the Association actually uses to conduct its business. Understanding this distinction is the only way for both parties to avoid the significant costs of administrative hearings.