The ongoing operations of a homeowners association involve the receipt and creation of huge volumes of varying types, sizes and shapes of documents. The proper management of those documents can become quite complex and the task is compounded by such things as the passage of time, changes in personnel, space limitations, and technology. To properly manage all of the records that are involved in the day-to-day operations of a homeowners association, association management personnel must have an HOA Retention and Destruction Policy for recrds, and association management personnel must have a general understanding of how records should be categorized and how long they should be retained. As this knowledge is passed on to successors who assume management roles, the association needs to have a clearly defined records retention policy that will enable the successors to maintain consistency in the retention of the association’s records. Records Retention When it comes to establishing an HOA retention policy for records, there is no single rule that all associations must follow. Because states may have varying rules relative to document retention the proper establishment of a records retention policy should include an inquiry into any applicable laws that need to be considered in the jurisdiction where the association is domiciled. Assistance in discovering those laws and input on standard practices can be provided by legal counsel and/or accountants. After obtaining information on the types of documents to be retained and the length of the retention time, the association management personnel should make decisions about the specific types of documents to be retained by type and retention period. The following is a general guideline of how records would be classified for retention, and the period for which they should be retained: Documents That Should be Permanently Retained A. Association Governing Documents

  • Articles of Incorporation
  • Bylaws
  • Declaration
  • Covenants, Conditions & Restrictions (CC&Rs)
  • Condominium Plan
  • Parcel Map
  • Rules and Policies
  • Other Governing Documents

B. Minutes of all past board, membership, and committee meetings C. Documents of title to property that is owned by the association D. Architectural plans pertaining to the association’s common areas E. Tax returns and government reports pertaining to tax liability F. Accounting ledgers

Documents That Should be Retained for Seven Years

A. Financial Records

  • Budgets
  • Journals and charts of accounts
  • Year-end financial statements
  • Accounts payable records
  • Accounts receivable records
  • Bank statements, cancelled checks, deposit slips, and reconciliations
  • Credit card records
  • Expense reports
  • Vendor invoices
  • Purchase orders

B. Contracts C. Personnel Records (payroll and employee records) D. Insurance Records

  • Insurance policies
  • Certificates of insurance
  • Fidelity bonds
  • Accident reports
  • Claims files

E. General Correspondence F. Closed Litigation Files G. Newsletters H. Expired Warranties I. Homeowner architectural submittals Documents That Should be Retained for One Year Ballots for all association elections should be retained for a minimum of one year following the date of the election. Documents Pertaining to Legal Matters Irrespective of time periods, association personnel should not destroy records that pertain to judgments in favor of or against the association and any records that the association has notice of or reasonably believes will be involved in a lawsuit. Absent specific approval from association legal counsel, associations should not dispose of any documents that relate or pertain to a threatened or pending civil or criminal legal proceeding. Destruction of Records The records retention policy should include mandated procedures for the destruction of records after they have been retained for the required period of time. Frequently, association personnel will establish the categories for maintaining records and then store them perpetually year after year without ever disposing of the records that are beyond the required retention period. The volume of the records that builds up over time results in a need for more space to store records, and more time to find records as they are neededeven if many of the records are stored electronically. Thus, to maintain proper organization and control, the association records retention policy should include an annual review and destruction of records that are no longer required to be maintained. The destruction of records means just that— association records that are beyond the retention period should not be merely discarded by throwing them in a trash can or dumpster. The best method of destroying the outdated records is by shredding. If the shredding process is done internally, the shredded remains can then be disposed of in the trash. Given the volume of the records that would need to be shredded on an annual basis (especially for larger associations), the use of an outside service that is properly licensed and bonded to pick up and destroy the records is generally the preferred method to employ. Associations that do not have established record retention and destruction policies should take appropriate action to establish and implement such policies. Creating and implementing the policies will initially require a significant investment of time on the part of association personnel but in the long term, the investment will be well worth it.