Knowing which association records should be kept, where to keep them, and how to store them can help an association maintain access to important historical data. Association records should contain information that the board can use as a reference for future projects or possible evidence in a lawsuit or audit. Records are useful when the board is negotiating contracts for landscaping or snow removal. Boards can refer to work records, financial records, or even minutes from the meeting where a contractor was chosen to weigh future decisions.
Should associations keep records, and if so, what records should be kept? Most associations keep records and some states, including Wisconsin, have statutes that outline which records are required and for how long they must be kept. An association’s governing documents may also describe which records are supposed to be kept. Records that are commonly kept include financial records, tax records, owner files, meeting minutes and work records (including contracts with vendors, employee records, warranty documents, etc.).
Financial records and the manner in which they are kept are typically based on recommendations by an auditor or standard accounting principles. Tax returns and similar financial records should be kept for at least seven years, per the Internal Revenue Service, as that is how far back an association may be audited. Miske said that the law requires the association to keep certain corporate records — including its declaration, bylaws and minutes — indefinitely, as that is the association’s corporate history. Apart from government statutes and requirements from the governing documents, associations should use their own reasonable discretion as to how long to hold on to various records. Miske explained, “Keeping documents longer than is legally required adds costs and creates risk for the association, which is why associations should adopt document retention policies. Keeping documents that are no longer required to be kept also adds risk because it allows someone who is suing the association additional documents to review for evidence. This creates additional costs in a number of ways, not the least of which are the association’s attorney fees to review these documents — that could and should have been destroyed before there was an issue — before they are produced to the opposing attorney.”
The location and manner of storage of the records depends on the association and any regulations from the state or the community’s governing documents, he said. An association with a clubhouse will usually store its records there, and one with a management company will usually store its records with them. If an association has neither of these things, it may choose to store its records in the home of a board member or the board president. Regardless of where the information is stored, Miske said that person must make certain records available for inspection to other members on request. (See Section 181.1601-1604 Wis. Stat.) Many associations are now choosing to keep electronic records. When doing so, it is important to keep a backup and to make sure they can be reproduced on paper if needed.
Currently, there are no restrictions against making records available online for members to view. However, associations do need to be careful about posting the personal information of owners and other private information online.
Who has access to records and can some records remain private? Individual owners should have access to those records that the law entitles them to inspect (see prior section for statutory authority), including financial ones. Miske stated, “This includes the right to copy them, or have them copied, for a reasonable charge.” Any inspection process put in place by the association must be reasonable and lawful.
What is an association’s responsibility regarding members’ personal information? Access to members’ personal information depends on the community’s governing documents and state law. Access over other privacy concerns also varies. For example, if an owner decided to build an addition to their house, such as a deck, other community members would be able to see the paperwork for that in that owner’s file. In reality though, knowledge of the deck wouldn’t be kept private anyway as it would be quite obvious to neighbors. Information that may be kept private, Miske said, generally, is one or more of the following:
1. Communications with the association’s attorney.
2. Debts owed by members, including the amount of the debt.
3. Personnel information relating to employees and agents.
4. Medical records and information.
5. Contract bidding.