Document organization best practices for HOAs
If you had to guess, how many records do you think your HOA produces and acquires in one month? Consider all of the invoices, minutes, and requests.
Many communities would easily hit 100 records in less than a week. That’s a lot of documents!
With so much information moving between people and the association, it becomes essential to organize records so that they can be retrieved later if they are needed again. But what is the best way to organize so many records?
Read on to discover some helpful advice for effective HOA record maintenance.
Table of contents
- Why do HOAs need to keep records?
- Owners have a right to see records
- HOAs are required to retain certain documents
- Managing community records: Best practices
Why do HOAs need to keep records?
There are a few reasons why associations must keep records. For starters, there are legal requirements for keeping certain records. Owners also have a right to view most documents since they are funding operations.
Records also serve as proof. Whether it’s a tax return or maintenance record, association documents capture what actions occurred, and when. New board members need to review records to get up to speed, and a lawyer may need certain records if the association requires help with a legal matter.
Does that mean the association must archive everything? No, but it does need to keep a lot of the records it produces or receives for an extended period of time.
Owners have a right to see records
Owners have a right to access records, excluding certain confidential items (see the next section for details).
They have this right because they invest money in the association in the form of dues or assessments. They are stakeholders, and therefore, should know how the community is performing.
Some states have detailed statutes about what records must be made available to owners and how quickly those documents must be provided. For example, in Florida, unless otherwise provided by law or the governing documents of the association, most records must be maintained for at least 7 years and be made available to owners for inspection or photocopying within 45 miles of the community, or within the county in which the association is located within 10 business days after a written request from an owner is received.
HOAs must ensure they follow legislative requirements and respect time limits in order to avoid legal issues.
Hosting certain documents on a password-protected HOA website or portal can minimize any issues pertaining to document access.
HOAs are required to retain certain documents
State laws and governing documents may also detail the records that HOAs must keep, and for how long they must be preserved.
If there are no rules or policies about this, then consider using a general guideline from Davis-Stirling.
Associations are also encouraged to work with an attorney and a certified public accountant to establish a working record retention policy.
Below is a short list of key documents that HOAs must hold on to. Keep in mind that this is just a guideline; different associations will have different requirements.
Permanent records
These documents need to be maintained by the association for as long as it is operating. There should be at least two copies of these documents – one hard copy and one digital copy.
- *Governing Documents (CC&Rs, bylaws, articles of incorporation, parcel map)
- *Minutes (board and membership meetings, committee meetings)
- *Deeds to property owned by the association
- *Architectural plans
Records that should be retained for 10 years or less
These records can be destroyed after a decade.
- *Maintenance records – kept for the first 10 years of an association’s existence. They may be needed in potential litigation against the developer. Thereafter, maintenance records older than 5 years can be safely destroyed
Records that should be retained for 7 years or less
Many financial records need to be maintained for 7 years. This includes:
- *Budgets
- *General ledgers, journals and charts of account
- *Year-end financials
- *Accounts payable
- *Accounts receivable
- *Canceled checks and bank statements
- *Invoices from vendors
- *Deposit slips
- *Reconciliations
- *Purchase orders
Property management and human resource records should also be saved for 7 years. Those items can include:
- *Expired contracts
- *Insurance records
- *General correspondence
- *Closed litigation files
- *Newsletters
- *Expired warranties
- *Tax returns
- *Owner architectural submissions
Owners cannot see these documents
Some records must not be released to owners. These include items that contain personal or private information:
- *Any record protected by lawyer-client privilege
- *Information obtained by an association in connection with the approval of the lease, sale, or other transfer of a parcel
- *Information an association obtains in a gated community in connection with guests’ visits to owners or community residents
- *Personnel records of association or management company employees, including, but not limited to, disciplinary, payroll, health, and insurance records
- *Medical records of owners or community residents
- *Social security numbers, driver’s license numbers, credit card numbers, electronic mailing addresses, telephone numbers, facsimile numbers, emergency contact information, any addresses for an owner other than as provided for association notice requirements, and other personal identifying information of any person, excluding the person’s name, parcel designation, mailing address, and property address
- *Any electronic security measure that is used by the association to safeguard data, including passwords
Managing community records: Best practices
1. Keep digital records when possible
Digital records are easier to store, find and update. Most would agree that searching through a cloud-based database using a keyword is more effective than searching through files. Even the best-organized systems are prone to human error, and paper is susceptible to heat and moisture.
Plus, you have to be in the same room as the documents in order to see them. If files need to be updated, it’s a tedious process, and it could confuse others who come looking for certain records after changes are made.
None of these issues come into play with a solution like HOA Sites’ digital file cabinet. Create folders and subfolders for photos, events, minutes, forms and more.
The Folder Viewer allows admins to display file folders they have created. Files that have been added to those folders are displayed on the website and grouped by folder, making them very easy for owners to access.
Remote access capabilities not only empower owners to find information on their own, but they also support team collaboration.
Security considerations
Cloud storage is generally more secure than traditional storage because it uses encryption. However, cloud storage can face security risks such as unauthorized access and data breaches. Admins must be extra careful about where they upload documents, and who has access to files.
2. Assess your current document organization system
Meet with other staff and/or board members and discuss the strengths and weaknesses of your current organization processes. Identify what works well and what needs to be changed.
If it’s always hard to find documents, this is the perfect time to create an organization system that makes sense for the HOA. Don’t forget to add subfolders based on the year to prevent one folder from getting too large. As an example, under the “Minutes” folder, add a subfolder for 2022, 2023, 2024 and 2025.
3. Delete and archive old files and folders
If you have duplicate files or documents that are not serving a purpose, delete them. If you’re not sure whether you need to keep something, put it in a folder titled “Archive.” This way, the records aren’t gone, but aren’t taking up space in other folders.
Finally, delete records after the HOA is no longer required to keep them. Some may be tempted to hold on to everything, but that strategy ultimately creates more problems than solutions.
4. Establish a system for version control
If the HOA updates certain records more than a few times each year, establish a clear way to indicate the change. For example, the team can agree to a specific file name ending (V2 or Revision1) so that it is clear this is a new version of the record. Discuss whether the old versions should be kept or replaced.
Conclusion
The best way for HOAs to keep good records is to establish and use an online database. While it is important to keep some physical records, digital items are much easier to find, share and update.
