Following is a general guideline for how long records should be kept. The guideline does not cover all records or situations. Boards should work with legal counsel and a CPA to establish their own records retention policy.
A. Permanent
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
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. After that, 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
- budgets
- 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
- reconciliations
- 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
7. Newsletters
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 they 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.
Going Paperless
Reasons to go Paperless. Many associations have been slow to embrace the digital age and still cling to paper files. Paper files take up valuable physical space, create a fire hazard, make it difficult to find records, can be stolen, and can be destroyed by floods, fires, and varmints. Storing them digitally eliminates all of these problems. It also provides greater security against loss since the cloud has built-in redundancy.
Electronic Records Allowed. The Corporations Code specifically allows all corporate records to be kept digitally. "[M]inutes and other books and records shall be kept...in any other form capable of being converted into clearly legible tangible form... When minutes and other books and records are kept in a form capable of being converted into clearly legible paper form...[they] shall be...accepted...to the same extent as an original paper record." (Corp. Code § 8320(b).)
Records Policy. Associations should review their paper records and retain only those that satisfy a records retention policy adopted by the board. Some records must be kept permanently, while others can be disposed of. When eliminating paper records, they should be destroyed, preferably by shredding. Simply throwing them into the trash can result in potential liability if confidential records end up in the wrong hands.
Digitizing Records. Retained records can be digitized and stored in the cloud. For scanning, boards should use a service that uses optical character recognition (OCR) software that automatically transforms documents into searchable text. Doing so makes it easier to find what you need with a few keystrokes. Make sure you ask for this feature since many scanners convert documents into images that cannot be searched.
Scanning Services. Many law firms use First Legal for high-volume scanning. In addition, the company provides both onsite and offsite digitizing of documents, including blueprints. It can also store records in the cloud and make them available to authorized users. Another service is Konica Minolta. The company offers a cloud infrastructure, digitizing records, and information technology (IT) services. Boards can use local blueprint shops to digitize blueprints.
Storage. For smaller self-managed associations, files can be stored using Microsoft 365’s “family” subscription, with access for up to six persons (board members who can log in and manage data). The Microsoft suite of apps, plus six terabytes of OneDrive storage, is available for a low monthly fee. With storage in OneDrive, boards can provide members with a link to entire folders or single files upon request without those members needing their own subscriptions.
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.