What Types of Financial Records Should an HOA Keep & For How Long?

The older a homeowners association is, the more files it accumulates. Storing all of these records can take up a lot of space and require careful organization. The board may wonder if it’s keeping too much, and whether some of these files can be safely destroyed. The answer really depends on state laws, what the document is, and how much time has passed.

There are legal requirements for keeping certain records such as board minutes and tax returns. Board minutes are permanent records and need to be retained indefinitely, while tax returns can be audited up to three years from when they are filed. 

Here are some tips for which records an HOA should keep and for how long, depending on the record type. 

Permanent Records

1. Governing Documents
   1. CC&Rs
   2. Bylaws
   3. Articles of Incorporation
   4. Condominium Plan
   5. Parcel Map
2. Minutes (board and membership meetings and committees with decision-making authority)
3. Deeds to the property
4. Architectural plans for the common areas

Ten Years

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; maintenance records older than five years can be disposed of.

Seven Years

To ensure that all statutes of limitations have passed, the following records should be kept for seven years:

1. Financial Records
   1. Budgets
   2. General ledgers, journals, and charts of account
   3. Year-end financial statements
   4. Accounts payable
   5. Accounts receivable ledgers, trial balances, and billing records
   6. Canceled checks and bank statements
   7. Expense analysis and expense distribution schedules
   8. Invoices from vendors
   9. Deposit slips & reconciliations 
   10. Petty cash vouchers
   11. Purchase orders
2. Expired Contracts
3. Personnel Records (for 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
7. Newsletters
8. Expired Warranties

One to Four Years

Tax information can be cleaned out after four years when an audit is no longer a possibility. Since taxes are not filed until the year after supporting paperwork was acquired, it – including statements of HOA dues, payments made to outside contractors, and other information – should be held for four years to prevent problems.

Other records that can be kept for one to four years include:

1. Meeting agendas
2. Monthly financial statements (other than general ledger)
3. Documents related to projects that have been completed or issues that have been resolved
4. “Light” correspondences with residents

Ensure 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.

If you’re looking for an experienced HOA management company to help with your HOAs finances and accounting, APS Management can help. Take a look at our HOA management services or contact us for a proposal.