Master HOA Accounting proceedings

TThe Master HOA Accounting Proceedings seek a judicial accounting and production of the records relating to the administration of the Costa Palmas Master Homeowners’ Association. (Master HOA). According to the plaintiffs, such an accounting is necessary to provide Legacy Owners with greater transparency regarding the financial administration of the Master Condominium, including how assessments have been calculated and allocated, how funds have been administered, and how common expenses have been apportioned among different categories of owners.

As part of that relief, the plaintiffs ask the Court to order the production of a broad range of financial, corporate and administrative records that they contend are necessary to verify the administration of the Master HOA.

The proceedings do not ask the Court to determine whether particular expenditures were proper. Rather, they seek access to information that the plaintiffs contend is necessary in order to understand how the Master HOA has been administered and how assessments have been calculated and allocated.

A judicial accounting is a court-supervised process requiring an administrator to provide a complete account of its administration together with the supporting documentation required to verify that account.

This page summarizes the proceedings in plain language and provides access to the principal court documents and related materials.

According to the Statement of Claim, the plaintiffs sought judicial intervention after alleging that repeated requests for financial and administrative information had not resulted in the disclosure of the records they sought..

The proceedings arise from broader questions regarding transparency and accountability in the financial administration of the Master HOA.

According to a number of Legacy Owners, concerns developed over time as monthly assessments increased and questions arose regarding the allocation of expenses among different categories of property owners.

Some Legacy Owners have expressed concern that they may have been charged for maintenance costs, services or amenities associated with parts of the Costa Palmas development to which they do not have access or from which they derive no direct benefit.

Others have questioned how assessments were calculated and whether the costs being allocated to Legacy Owners accurately reflect their legal obligations under the governing documents.

These broader concerns provide important context for understanding why the plaintiffs sought a judicial accounting. The legal issues before the Court, however, are defined by the Statement of Claim and the relief sought by the plaintiffs.

According to the Statement of Claim, the plaintiffs ask the Court to require the production of financial, corporate, governance and administrative records relating to the administration of the Master HOA.

Among other things, they seek access to information concerning:

• governance documents,
• assembly records,
• budgets,
• financial statements,
• bank reconciliations,
• contracts,
• tax filings,
• insurance,
• audits,
• environmental reports,
• corporate documents
• appointment of the administrator.

The proceedings concern more than accounting records.

According to the plaintiffs, the requested information is necessary to determine whether assessments have been calculated and allocated in accordance with the governing documents and applicable law.

The plaintiffs contend that property owners are entitled under the governing documents and applicable law to understand how common expenses are determined, which categories of owners are responsible for particular costs and whether assessments have been allocated consistently with the legal rights and obligations attached to their properties.

According to the plaintiffs, the proceedings are intended to allow property owners to verify not only the amount of assessments collected, but also the legal basis upon which those assessments were calculated, how common expenses were allocated among different categories of owners, and how funds were administered by the Master HOA.

The defendants deny, or may deny, the plaintiffs’ claims, and the Court has not yet determined the merits of the case.

In addition to seeking a judicial accounting and production of records, the Statement of Claim contains a number of related allegations concerning the administration of the Master HOA. Among other things, the plaintiffs allege that:

• The Master HOA was appointed as administrator by the developer rather than by an assembly of condominium owners, contrary to the requirements of the Condominium Property Regime Law.
  The plaintiffs allege this was contrary to the Condominium Property Regime Law of Baja California Sur, specifically because they argue the administrator should be appointed by the Assembly of Condominium Owners (Article 35), not unilaterally by the developer.
• The 2024 Annual Assembly was conducted through voting delegates rather than direct participation by condominium owners, and that this procedure improperly treated those delegates as representing 100% of the condominium ownership interests.
  The plaintiffs allege this procedure was contrary to the Condominium Property Regime Law, arguing that treating the delegates as representing 100% of the condominium ownership improperly deprived individual owners of their voting rights.
• The financial information presented to the 2024 Annual Assembly did not include the detailed supporting information required by the governing documents, including records of assessments collected, account balances and supporting documentation for expenditures.
  This allegation is based primarily on the Master Condominium Regulations (Reglamento del Condominio Maestro), particularly Articles 49 and 51, which the plaintiffs say require more detailed financial reporting. The pleading also ties these obligations to the administrator’s statutory duties under Article 40 of the Condominium Law.
• Condominium owners have been unable to verify how assessments were calculated, collected and applied because the requested supporting documentation has not been produced.
  The plaintiffs seek relief under Article 40 of the Condominium Property Regime Law (administrator’s duties), and Article 504 of the Baja California Sur Code of Civil Procedure (the procedural mechanism for a judicial accounting).

As throughout this website, these allegations are drawn from the plaintiffs’ Statement of Claim. They have not been determined by the Court, and the proceedings remain ongoing.

The proceedings were commenced before the Second Civil Court of Los Cabos.

This section will summarize the principal procedural developments, court orders and future hearings as additional information becomes available.

The principal documents relating to these proceedings are available in the Document Library. They include court pleadings, court orders, registry documents, English summaries and other supporting materials.