The older a homeowners association is, the more files it accumulates. Storing all of these records can take up a lot of space and require careful organization. The board may wonder if it’s keeping too much and whether some of these files can be safely destroyed. The answer really depends on state laws, what the document is, and how much time has passed.
Here’s a breakdown of some common rules of thumb, but make sure you double-check the requirements for your state or specific records to be sure:
- Meeting Minutes: These are records of all of the actions taken by the Board, so they should be kept indefinitely.
- Tax Records: Audits can occur up to three years after the HOA has filed its taxes, so it’s a good idea to keep records for four years, then they can be destroyed. However, you should permanently keep any paperwork granting tax exemptions or issuing a tax ID number.
- Legal Papers: If there has been any legal action taken by or against the HOA, you’ll want to retain all files related to these claims. Check with your attorney about how long to keep these records.
- Financial Records: Hold on to monthly financial records until your CPA has provided an annual statement. Four years is common for keeping monthly general ledgers, deposit slips, billing or collection documents, bank statements, and time cards.
- Homeowner Correspondence: As long as a member continues to live in the community, it is a good idea to maintain these records. This is especially important if they have racked up multiple violations and the board is looking at taking further action.
- Vendor Agreements: A good rule of thumb is to keep these documents until the next agreement is filed. A new contract will supersede the old one. The same often applies for insurance policies as well – but hang on to documents if there are any unresolved issues.
- Warranties or Repair Records: Keep warranties until they have expired because you never know when you might need them. For instance, if you have a 30-year warranty on the clubhouse roof and something happens in year 29, you don’t want to have destroyed the warranty prematurely. Files should also be kept on any repair work that was done on current equipment or facilities.
These are just some of the documents the HOA may have on hand. Make sure files are stored in a secure location and well-organized so they are easier to locate. It’s a good idea to label bankers boxes with contents as well as box numbers to keep them in order. You may also want to separate them between records that are kept permanently versus those that will eventually be destroyed. If records are electronic, ensure they are backed up.
Reviewing records annually can help keep things more manageable and cut down on unnecessary storage. Partnering with a HOA management company like Kuester can help the HOA better understand what should be kept, for how long, and how to effectively store files. Contact Kuester to learn more about how we can help with records management. We serve Charlotte and Myrtle Beach, SC regions.