rECORDS & RETENTION

Every common interest community needs to address document retention. Board members consistently ask: what documents do we need to keep on file and for how long?

State statutes typically address procedures related to books and records. In Washington State, both nonprofit corporation AND common interest community (CIC) statues require a combination of document retention, disclosure and/or inspection. Notably, CIC statutes prior to WUCIOA (effective as of July 2018) do not contain detailed lists of records to retain.

In addition to document retention required by statute, there are also a number of documents your association should keep because doing so is reasonable. Consider documents that relate to projects like schematics, renderings, deliverables from experts contracted by the association such as engineering studies, envelope reports, reserve studies, legal memos, etc.

DOCUMENT BREAKDOWN BY AUDIENCE / EASE OF ACCESS

  • Documents available to all owners proactively (minimum friction, maximum efficiency)

  • Documents available to all owners by request (see 'Access to Records' below)

  • Documents that are confidential to the Board

  • Documents that are confidential to the Management Company

    • e.g. certain types of employee records, individual unit files, etc. that are typically not accessed by the Board


WHERE DO YOU STORE FILES?

  • Email (ouch!)

  • Paper (are printers, copiers and three-ring binders are still in vogue?)

  • Association document repository (Dropbox, Google Drive, MS365 / Sharepoint, etc.)

  • 3rd party IT infrastructure (Active Building, BuildingLink, CondoSites, eUnify)


CONSIDERATIONS

  • Consider the difference between IT infrastructure that your association can easily control vs. third-party infrastructure that may cease to exist if you change management or change IT vendors

  • Does your IT infrastructure

    • facilitate collaboration features for a team of people (your Board, Committee, etc.) to share and edit documents?

    • allow you to search for documents and index the text they contain to make that searchable as well?

    • allow you to easily download and/or transfer all your files to another platform?

    • provide data security and backup/disaster recovery?

  • If your IT infrastructure is not cloud-based, how are you ensuring redundancy in case of storage failure? Do you have a written digital redundancy policy and/or backup procedures and checksums?


READ: 7 Ways to Avoid a Data Breach

Example File Structure

Record Retention: Nonprofit Corporation Act

Washington's WUCIOA statute does an excellent job of identifying categories of documents that must be retained.

RCW 24.03A.210 - Corporate Records


(1) A nonprofit corporation shall keep permanently a copy of the following records:

(a) Minutes of all meetings of its members and of its board of directors;

(b) A record of all actions taken by the members and board of directors by unanimous written consent; and

(c) A record of all actions taken on behalf of the corporation by a committee of the board.

(2) A nonprofit corporation shall keep a current copy of the following records:

(a) Its articles of incorporation or restated articles of incorporation and all amendments to them currently in effect;

(b) Its bylaws or restated bylaws and all amendments to them currently in effect;

(c) All communications in the form of a record to members generally within the past six years, including the financial statements furnished for the past six years under RCW 24.03A.225;

(d) A list of the names and business addresses of its current directors and officers; and

(e) Its most recent annual report delivered to the secretary of state under RCW 24.03A.070.

(3) A nonprofit corporation shall maintain appropriate accounting records.

(4) A membership corporation or its agent shall maintain a record of its members, in a form that permits preparation of a list of the names and addresses of all members, in alphabetical order by class, showing the number of votes each member is entitled to cast.

(5) A nonprofit corporation shall maintain its records in written form or in any other form of a record.

(6) All records required to be maintained by a nonprofit corporation may be maintained at any location within or without this state.

Record Retention: WUCIOA

Washington's WUCIOA statute does an excellent job of identifying categories of documents that must be retained.

RCW 64.90.495(1) - An association must retain the following:


(a) The current budget, detailed records of receipts and expenditures affecting the operation and administration of the association, and other appropriate accounting records within the last seven years;

(b) Minutes of all meetings of its unit owners and board other than executive sessions, a record of all actions taken by the unit owners or board without a meeting, and a record of all actions taken by a committee in place of the board on behalf of the association;

(c) The names of current unit owners, addresses used by the association to communicate with them, and the number of votes allocated to each unit;

(d) Its original or restated declaration, organizational documents, all amendments to the declaration and organizational documents, and all rules currently in effect;

(e) All financial statements and tax returns of the association for the past seven years;

(f) A list of the names and addresses of its current board members and officers;

(g) Its most recent annual report delivered to the secretary of state, if any;

(h) Financial and other records sufficiently detailed to enable the association to comply with RCW 64.90.640;

(i) Copies of contracts to which it is or was a party within the last seven years;

(j) Materials relied upon by the board or any committee to approve or deny any requests for design or architectural approval for a period of seven years after the decision is made;

(k) Materials relied upon by the board or any committee concerning a decision to enforce the governing documents for a period of seven years after the decision is made;

(l) Copies of insurance policies under which the association is a named insured;

(m) Any current warranties provided to the association;

(n) Copies of all notices provided to unit owners or the association in accordance with this chapter or the governing documents; and

(o) Ballots, proxies, absentee ballots, and other records related to voting by unit owners for one year after the election, action, or vote to which they relate.

Record Retention: Condominium Act

Washington's WUCIOA statute does an excellent job of identifying categories of documents that must be retained.

RCW 64.34.372(1)- Association Records - Funds


(1) The association shall keep financial records sufficiently detailed to enable the association to comply with RCW 64.34.425. All financial and other records of the association, including but not limited to checks, bank records, and invoices, are the property of the association, but shall be made reasonably available for examination and copying by the manager of the association, any unit owner, or the owner's authorized agents...


RCW 64.34.425 - Resale of Unit


(1) Except in the case of a sale where delivery of a public offering statement is required, or unless exempt under RCW 64.34.400(2), a unit owner shall furnish to a purchaser before execution of any contract for sale of a unit, or otherwise before conveyance, a resale certificate, signed by an officer or authorized agent of the association and based on the books and records of the association and the actual knowledge of the person signing the certificate, containing:

(a) A statement disclosing any right of first refusal or other restraint on the free alienability of the unit contained in the declaration;

(b) A statement setting forth the amount of the monthly common expense assessment and any unpaid common expense or special assessment currently due and payable from the selling unit owner and a statement of any special assessments that have been levied against the unit which have not been paid even though not yet due;

(c) A statement, which shall be current to within forty-five days, of any common expenses or special assessments against any unit in the condominium that are past due over thirty days;

(d) A statement, which shall be current to within forty-five days, of any obligation of the association which is past due over thirty days;

(e) A statement of any other fees payable by unit owners;

(f) A statement of any anticipated repair or replacement cost in excess of five percent of the annual budget of the association that has been approved by the board of directors;

(g) A statement of the amount of any reserves for repair or replacement and of any portions of those reserves currently designated by the association for any specified projects;

(h) The annual financial statement of the association, including the audit report if it has been prepared, for the year immediately preceding the current year;

(i) A balance sheet and a revenue and expense statement of the association prepared on an accrual basis, which shall be current to within one hundred twenty days;

(j) The current operating budget of the association;

(k) A statement of any unsatisfied judgments against the association and the status of any pending suits or legal proceedings in which the association is a plaintiff or defendant;

(l) A statement describing any insurance coverage provided for the benefit of unit owners;

(m) A statement as to whether there are any alterations or improvements to the unit or to the limited common elements assigned thereto that violate any provision of the declaration;

(n) A statement of the number of units, if any, still owned by the declarant, whether the declarant has transferred control of the association to the unit owners, and the date of such transfer;

(o) A statement as to whether there are any violations of the health or building codes with respect to the unit, the limited common elements assigned thereto, or any other portion of the condominium;

(p) A statement of the remaining term of any leasehold estate affecting the condominium and the provisions governing any extension or renewal thereof;

(q) A copy of the declaration, the bylaws, the rules or regulations of the association, the association's current reserve study, if any, and any other information reasonably requested by mortgagees of prospective purchasers of units. Information requested generally by the federal national mortgage association, the federal home loan bank board, the government national mortgage association, the veterans administration and the department of housing and urban development shall be deemed reasonable, provided such information is reasonably available to the association;

(r) A statement, as required by RCW 64.35.210, as to whether the units or common elements of the condominium are covered by a qualified warranty, and a history of claims under any such warranty; and

(s) If the association does not have a reserve study that has been prepared in accordance with RCW 64.34.380 and 64.34.382 or its governing documents, the following disclosure:

"This association does not have a current reserve study. The lack of a current reserve study poses certain risks to you, the purchaser. Insufficient reserves may, under some circumstances, require you to pay on demand as a special assessment your share of common expenses for the cost of major maintenance, repair, or replacement of a common element."