Why Keep Records?
If you’re a new member of your local HOA board, you’ve probably been introduced to the sometimes overwhelming amount of papers and records your board keeps on file. From board minutes to tax returns to policies, keeping it all organized is a tremendous job! But why do HOA boards need to keep careful records anyway? In many cases, it’s legally required to keep a physical record of documents not only for tax purposes but also for informational value. When your board retains records of policies, changes, and structure, the wider community you manage will run smoothly.
In this article, we’ll focus on best practices for maintaining physical and digital HOA records. We will also go over the general types of documents you should make sure your board is consistently retaining. Once you have a solid and reliable system in place for organizing papers and a familiarity with the types of documents you should flag to keep on file, maintaining your HOA records won’t be such a scary project. Suppose your HOA is just starting to organize data that haven’t been properly maintained over the past years. In that case, we recommend designating a few people with natural skills in the organization to spearhead the work.
What Documents Should You Keep?
Before we provide you tips on how to maintain your HOA’s records successfully, your board must understand which documents they should be keeping in the first place. Because there is often a constant turnover rate in board members of an HOA, there’s sometimes a lack of standards for what kind of documents should be kept and maintained over time. One committee might keep a solid record of board meeting minutes. In contrast, the following committee only thinks minutes are there to be circulated to the team and later forgotten. Having first a set of standards for which records should be kept (and for how long they should be kept) is key when it comes to HOA record retention.
On a big picture scale, your HOA should organize and maintain all legal, financial, insurance, and maintenance-related documents. HOA Leader suggests that the first order of business in determining which HOA records should be kept is to check with your state law and its governing documents. It’s important to see if there’s an official list of records that HOA should keep and the amount of time they must be kept. Many states provide HOA’s with a list of documents they expect for you to keep on file, and the state will lend detailed direction about how long each item should be kept. If your state doesn’t provide guidelines on HOA documents, you should be sure that your HOA retains all of its bylaws and board meeting minutes forever.
We understand the word “forever” might sound intimidating. However, your board’s goal should be to establish a long-term and consistent flow of documents so that if you need to refer to a document drawn up seven years previously, you can access it with ease. It’s also crucial to record the HOA’s tax returns, vendor contracts, insurance contracts, loan documents, architectural records, and official HOA rules. As a member of your board, you can rest assured that someone at some point will come calling for one of these documents or will have a question that will require you to refer to records to answer it. It is better to err on the side of safety by keeping as many official documents as your HOA can.
How Should I Store the Records?
You’ve gotten a handle on the types of documents; now it’s time to get to work. You’ve gone through past documents and attempted to organize them into an orderly fashion; it’s time to figure out how and where they will be stored. Grand Manors advises that first and foremost, the board should require storage of HOA records in a dry, safe area–preferably in a fireproof storage closet if possible. It’s also important to first consider the volume of documents your HOA board will be saved. Suppose you have boxes and boxes of records from multiple years past. In that case, it may be wise to keep current documents that are frequently referred to in paper form and use an electronic storage system for documents.
While it is wise to hold on to documents for as long as possible, there are instances in which it is permitted to destroy documents after an allotted period of time. WTP Law explains that after you’ve reached the expiration date for specific documents, you will need to plan for discarding those documents. The method the board selects should preserve the confidentiality of the records. They often feature personal and sensitive information, and that once the documents are destroyed, it is permanent and unchangeable.
Creating a System
The biggest favor you can do for yourself as you begin to organize and retain all of your HOA’s files is first to create a system for what and how you will keep your records. Designating point people as individuals to take charge of this task and to continue being the key point of contact throughout the project will aid inconsistent and smooth record keeping. If you’re lucky enough to be a member of an HOA that already keeps organized records, then take the time to learn their system and work to continue its progression. If you’re starting from scratch, take it day by day, and get clear on your own HOA’s plan to get organized before you dig through the files!