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How long should your HOA retain its records?

You are elected Secretary of your homeowners’ association. Congratulations! Someone hands you the minute book, owner roster, and the governing documents. You think, hey this is not overwhelming at all. Then the retiring Secretary mentions in passing that “If you’re home tomorrow I’ll deliver the boxes.” You ask “What boxes?” “Oh, all of the HOA’s records are boxed up and have been in my garage – I’ll bring them by,” replies the retiring Secretary.

What do you do with the boxes? What records and documents do HOAs need to keep? How long do you need to keep them? How should they be stored? This blog post provides some basic guidance on best practice tips for community association record retention.

HOA Filing Information

Community associations are small businesses and we use many of the same considerations that we use for businesses in determining the records to keep. Documents typically fall into the following categories:

  1. Financial and Accounting
  2. Personnel
  3. Governance and Corporate
  4. Legal
  5. Insurance

Various factors come into play when determining how long you retain certain records. For financial records, state and federal law and guidance from the Internal Revenue Service should be consulted. Although you should confirm with your HOA’s financial and accounting professionals, the Virginia Society of CPA’s (“VSCPA”) provides guidance for determining how long you should maintain certain financial and accounting records:

Financial and Accounting Records

Retention Period                                Type of Record

PERMANENT Balance Sheets; financial statements; check register; cash disbursement and receipt record; income tax returns; payroll tax returns; profit and loss statements; journal entries; general ledger.
7 YEARS Accounts payable; accounts receivables; bank statements and reconciliation; vendor invoices; petty cash records; purchase orders; expense reports; charge slips.
4 YEARS FICA/Income tax withholdings.
3 YEARS Bank deposit slips and budgets.

Personnel Records 

PERMANENT Retirement plans agreements, W-2 forms.
10 YEARS Worker’s Compensation benefits, employee withholding exemption certificates and payroll records.
7 YEARS Attendance records; medical benefits; performance records; personnel files; payroll checks and time reports.

For governing documents and documents specific to the administration and operation of the community association, state and federal law should be consulted, as well as checking with any requirements of your insurance policy. As a general rule, communities should consider the following schedule for record retention:

Governance and Corporate Records 

PERMANENT Governing documents, including Declaration of Covenants, Conditions and Restrictions, Bylaws, Articles of Incorporation and any supplements, modifications or amendments. Deeds, Plats, and Easements. Rules and Regulations and any amendments.
PERMANENT Minutes from Board meetings, and Annual and Special Member Meetings. Board resolutions.
PERMANENT Architectural approvals.
PERMANENT Owner Rosters.
7 YEARS Election records.
5 YEARS General correspondence

Legal Records

PERMANENT Legal opinion letters.
PERMANENT Reserve Studies.
7 YEARS (after last action/final payment) Collection letters, debtor correspondence, payment ledger, notices, certified mail receipts, judgments, foreclosure notices, summons for interrogatories or garnishment. Enforcement correspondence and records.
7 YEARS Completed Service Contracts.
7 YEARS Claims of injury, property damage or alleged violations of the law, including accident reports, demand letters, Fair Housing claims.

Insurance

7 YEARS Inactive Insurance Policies, settled claims files.

Conclusion

Storing all of these files becomes another issue for common interest communities. Depending upon the community’s size and age, your HOA may need to invest in paperless alternatives and storage facilities. In any case, it is important to discuss these topics with your financial professionals and community association law firm to ensure that your HOA has a proper record retention policy.

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia

 

Republished by Blog Post Promoter

Susan Tarley

Susan chairs the firm's common interest community (HOAs and Condos) practice area. She was admitted into the College of Community Association Attorneys (“CCAL”). Susan is one of fewer than 150 attorneys nationwide to be admitted to CCAL, for distinguishing herself through contributions to the evolution or practice of community association law.

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Filed under: Common Interest Community, HOA, HOA litigation, Susan B. Tarley, Unit Owners Association by Susan Tarley

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