The Critical Elements of HOA Document Retention
Your HOA board of directors, as the governing body of your HOA, is responsible for keeping track of the many critical documents that go into the legal and ethical management of your property. There is one problem: over time, regardless of whether it is kept in digital form or stored in physical filing cabinets, all of those documents quickly become unwieldy and hard to handle. You will soon start thinking about whether or not you can get away with cleaning out some of those older documents--but how do you know how long to keep them? Understanding the most important elements of HOA document retention will help your HOA make wiser decisions about your storage.
Dealing with taxes is always a headache--but you do not have to keep track of past tax information indefinitely. Tax information can be cleaned out after three years when an audit is no longer a possibility. Note that since taxes are not filed until the year after supporting paperwork was acquired, it--including statements of HOA dues, payments made to outside contractors, and other information--should be held for four years to prevent problems.
Your board minutes are part of the legal documents that help protect both the members of your board and the members of your association. According to many state regulations, it is necessary to keep board minutes indefinitely--so make sure that you have a clear storage system and know how to easily access that information if needed.
You recently had repairs done to the communal playground or pool. Perhaps there have been recent repairs to shared structures within your HOA. While there might not be legal requirements for storing this information, it is still something your HOA should keep track of. Many maintenance and repair companies offer warranties for their work, and if they have to come out within a specific period of time, they will fix up any mistakes for free or offer a discount on future repairs. Keeping this information at hand will make it easier for you to negotiate with contractors when necessary. Blueprints and drawings should also be stored indefinitely, since they may be useful for your HOA in the future.
Has your HOA been involved in a lawsuit? Are there legal papers that are relevant to your association--for example, the contract that must be followed in order for owners to remain part of the HOA? Keeping track of legal documentation is critical since you do not want it to come back to bite you later. This includes keeping track of any legal communications with your owners or other individuals you deal with as the board.
As an HOA, you generate much paperwork. How much of it do you really have to keep track of? After checking your state laws to ensure that you know what paperwork must be retained and what paperwork can be dropped in the round file, follow these guidelines.
- Keep any communications to and from members of the HOA to ensure that if there is a dispute, you have the paper trail. These communications should be retained for at least four years--though in some states, this may extend to 6 years.
- Create a policy for any records that don't have state mandates. Make sure that your policy is consistent and that all members of the board understand it.
- Develop a filing system that can be easily understood by every member of the HOA. This might, for example, mean dividing it according to financial information, legal information, and maintenance information.
Keeping track of paperwork does not have to be your biggest headache. When you have a clear filing system and an annual clean-out already on the books, you can effectively keep track of all the paperwork you need while still retaining your space and your sanity.