Whether you’re providing homeowners with access to the homeowner association’s governing documents, trying to manage a construction project for the association, or meeting the association’s discovery obligations in a lawsuit, good record keeping is essential to the proper governance of a Minnesota homeowners’ association.
Many associations do not have good recording keeping policies and practices in place. One of the most common mistakes is that association records are not kept in a consistent place. For instance, they might be traveling records that go from secretary to secretary. Or, in some cases, no official association documents are ever created but, instead, the board relies upon personal board member notes and files. This can be the case particularly when it comes to electronic records, including emails.
Many associations also fail to understand whether an association’s documents held by a management company are the association’s documents or whether they are the management company’s documents. For instance, what does the contract between the management company and the association say about these records? The responsibility for these records could become material if the association is in litigation and is required to produce documents that are being held by the management company. The ownership of the documents may factor into who has to pay for the cost of production in a lawsuit (for instance, if owned by the management company, a subpoena may be required to obtain copies).
Management companies often use proprietary software and create websites to manage the association’s documents. On its face, this is an appealing service to an association, but what if you have to produce documents from this software for a lawsuit, or what if the association cancels its contract with the management company? Who owns the documents, and who has to pay to have them transferred out of the proprietary software or from the website?
At a minimum, associations should consider the following:
- If the association has a management company, review the contract to understand how it treats association documents. Know who is responsible for the costs of transferring those documents out of any proprietary software or website databases.
- Establish a central database or repository for association documents, and ensure it has adequate security and data backups.
- Establish a line between personal records and business records. Board members should avoid commingling association documents with their personal documents. Board members and property managers should use their association-related email accounts for association business matters.
- Consider instituting board member specific email addresses that can be passed from board member to board member. Request a copy of your management company’s email use policy, or consider adding a provision to the management contract prohibiting personal use of property manager email accounts.
Contact the attorneys at TTLO Law to help you with all of your association’s needs.