How long should an association keep documents and other records?
Each association should consult with their attorney and CPA to create a retention policy that is appropriate for their specific situation. Castle Breckenridge Management errors on the side of keeping records beyond what is recommended, or until a plan can be coordinated with the board of directors. Once a retention policy is in place, we have a professional shredding company destroy the records. If there is any doubt, we recommend scanning and maintaining documents online, where they can easily be searched. Here are some guidelines from the California Civil Code to follow:
1. Governing Documents (CC&Rs; Bylaws; Articles of Incorporation; Condominium Plan; Parcel Map)
2. Minutes (board and membership meetings (Civ. Code §5210(a).) and committees with decision-making authority)
3. Deeds to Property Owned by the Association
4. Architectural Plans for the common areas.
B. Ten Years. Due to possible construction defects, maintenance records should be kept for the first ten years of an association’s existence. They may be needed in potential litigation against the developer. After ten years, the statute of repose limits any actions against the developer. Thereafter, maintenance records older than five years can be disposed of.
C. Seven Years. To ensure that all statutes of limitations have passed, the following records should be kept for seven years.
1. Financial Records
- general ledgers, journals and charts of account
- year-end financial statements
- accounts payable
- accounts receivable ledgers, trial balances and billing records
- canceled checks and bank statements
- expense analysis and expense distribution schedules
- invoices from vendors
- deposit slips
- petty cash vouchers
- purchase orders
2. Expired Contracts
3. Personnel Records (least 3 years following the date of termination/separation)
4. Insurance Records (accident reports, settled claims, expired policies, fidelity bonds, certificates of insurance)
5. General Correspondence
6. Closed Litigation Files
8. Expired Warranties
9. Tax Returns
10. Owner architectural submittals.
D. One to Three Years. Election materials must be retained by the inspector of elections for one year after the date of the election, at which point the statute of limitations for challenging an election expires and the materials are transferred to the association. (Civ. Code §5125.) When the records can be disposed of is unclear. Since the election materials no longer have any value, there is no reason to retain them. However, some associations prefer to keep them for three years so members can inspect election records for the current year and prior two years. (Civ. Code §5210.)
E. Secure Disposal. Whenever an association disposes of records, it must ensure that the records are completely destroyed, preferably by shredding or incineration. Simply throwing them into the trash can result in potential liability if confidential records end up in the wrong hands.
F. Litigation Hold. Records should not be destroyed if the association has a litigation hold.