Part of running a homeowners’ association is creating and maintaining records essential to operations. From financial statements to meeting minutes, your HOA board should keep them. But how long should HOA records be kept, and is there a standard period of time for HOA record retention?
What is HOA Record Retention?
HOA record retention sets the period of time your HOA keeps its documents. After that period, HOAs usually securely destroy or archive these important documents.
To stay consistent, your HOA needs a retention policy that sets time limits for each type of document. It should also always mention who’s responsible for keeping these records.
Proper recordkeeping helps both protect your HOA and make things easier when it’s time for a board transition. When the records are accessible, incoming board members use them and review previous boards’ decisions and the rationale behind them.
Proper records also support HOA audits and owner record requests. They are also useful in many other operational aspects.
No universal HOA records retention period exists. There are several factors to consider, including state laws and tax rules.
What Records Should an Association Keep?
An association needs to keep records that document how it operates and its authority. These records must preserve materials that show and support decisions the HOA board makes. In California, Civil Code Section 5200 broadly defines “association records,” which may include many financial, governance, contractual, and election-related materials.
Governing and Corporate Records
Your HOA should preserve the documents that form the foundation of your community’s operations. This means governing documents must remain readily accessible so future boards can easily confirm the HOA’s authority and residents’ obligations.
HOAs, in general, should always keep their governing documents on file permanently, including a log of any changes or amendments made to them. The same practice should also apply to HOA-owned properties and important architectural plans.
In the state, under California Corporations Code Section 8320, incorporated associations must also keep adequate accounting books, corporate minutes, and a list of HOA members. They may keep these documents electronically, as long as they can be easily printed clearly.
Financial and Tax Records
Your association’s financial statements and records showcase how your HOA funds are being managed. These are key documents that the board and management review. Accountants hired by your HOA also rely on them, and residents usually have statutory rights to inspect some of them.
According to the IRS, records that support items in an HOA’s tax return should also be retained, at least until the applicable limit period ends. Meanwhile, if your HOA has personnel, retain employment tax records.
Meeting and Election Records
Keep the minutes of all HOA board meetings properly and carefully. After all, they document all formal decisions the association makes. In California, residents may inspect board and membership meeting minutes at any time.
Election materials, however, are handled differently. California law requires HOAs to keep these election-related materials for at least a year following the election. It also allows
Maintenance Records
Another set of documents your HOA should keep are your maintenance records. While many may overlook this, keeping maintenance histories helps later boards understand which major components have already been repaired or replaced.
Maintenance records shouldn’t be automatically disposed of or destroyed after a basic member-inspection period. Warranties typically require longer document retention.
California HOA Record Retention Rules
Under California law, there is an important difference between how long records can be inspected and how long your HOA should ultimately keep them. Under Civil Code Section 5210, homeowners can inspect most HOA records from the past three fiscal years.
However, that doesn’t mean you must dispose of or destroy all HOA documents after three years. Some records usually have longer statutory retention requirements. Others may need to remain available for tax or contractual obligations.
How Long Does an HOA Need to Keep Records?
Again, there’s no universal time frame. Usually, the answer depends on the record or document itself. For proper guidance, your HOA should create a written schedule rather than assigning a single date to destroy all files.
Here are the typical retention periods for common HOA documents.
Permanent Records
Some HOA records need to be retained permanently. Determining which ones you will need to keep indefinitely will depend on state law and how useful and evergreen the contents of those records are.
Additionally, it’s also recommended to permanently retain any HOA deeds and architectural plans. These records will help your association avoid any loss of information that remains relevant throughout the lifespan of your planned community.
Seven Years for Business Records
For HOA business records, homeowners associations commonly keep them for seven years as best practice. These records may include key financial reports, records and several other general categories. Having these records on hand helps the HOA make decisions and develop a legal business policy with help from the HOA attorney and a CPA.
This timeframe is not a required period under state law. It’s merely a suggestion for most HOA boards.
One Year for Election Records
Under California law, your HOA is required to maintain your association’s election materials for over a year following the election. Usually, the inspector of elections keeps these records during that period.
During that year, you may file an election challenge. After that period, the inspector of elections transfers custody of the records to the association.
Because of this, HOA boards should avoid routinely destroying key election or recount records while disputes remain unresolved.
Two Cycles for Structural Inspection Reports
A special HOA records retention rule applies to condominiums in the state. Covered by Civil Code Section 5551, COAs should keep any written exterior elevated element inspection report. The HOA must keep it for at least two inspection cycles.
Typically, this inspection occurs about every nine years. As such, keep these records for at least 18 years.
Keeping the Right Records
Effective HOA record retention helps keep your association running consistently. To ensure this goes smoothly, boards can create a specific schedule aligned with the state’s requirements.
Optimum provides expert management services to community associations in Southern California. Call us today at (714) 508-907 or contact us online to learn more!
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