1. KEEP GOOD, ORGANIZED & ACCESSIBLE RECORDS! (CORP CODE 8320)
All Association records should be kept in a professional manner so that they are organized and accurate. Accounting records, minutes and member's names, addresses and voting rights should be easily accessible. Forward thinking suggests the possibility of a "paper-less" office and electronic means, for record keeping and for review.
2. ADOPT A POLICY FOR INSPECTION (MUST BE REASONABLE) - INCLUDE A FORM
People cannot argue with paper very easily. Note the hours, place, times etc. for review (must conform to statute CC 1365.2); address costs (per statute - and note charges are iffy for minutes per Oso v. Moran case; consider/address electronic review methods; make it as simple as possible - for owner and for association (difficulty breeds mistrust!)
3. DON'T RESIST PROVIDING RECORDS OR MEMBER LIST UNLESS GOOD REASON
The moment the association or manager shows any resistance to providing records, you can expect a stronger desire than ever, and a request for even more records. However, reasonable people will usually respond to reasonable request. It is best to communicate with the owner to find out what information that they actual are requesting and offer suggestions for how to contain review.
For membership lists, have a plan in mind. Verify that it is a valid request. Give owners an opportunity to "opt out" if they do not want to have their information given out. You should have alternative means to mail out owner communications at owner's expense instead of giving the list. Don't resist to giving out the owner list unless you have a very good reason. There are penalties for withholding access to owners for a valid purpose related to their membership.
4. KEEP A MINUTES BOOK
In a California case by the name of Moran v. Oso, an appellate court criticized an association's attempt to charge $200 to an owner for the time to dig through boxes of records looking for minutes and records going back 10 years. Minutes should be readily available in a separate minute book. Never keep Executive Minutes in the minute book.
Keep in mind that content of minutes is important. - do not overstate. Include only quorum count, business discussed, motions and reports. It is important to keep in mind the possible extent of who will be reviewing your minutes, as the ultimate audience might could include owners, buyers, realtors, lawyers, etc. Keep all minutes as permanent records.
5. KEEP A RESOLUTIONS/POLICIES BOOK
These are also records that should be readily accessible. An organized resolution/policies book will help in many ways both for association reference and for records review. This organization is also a way to pass on consistency with Boards.
6. REVIEW FINANCIALS AT LEAST QUARTERLY (CIVIL CODE 1365) & USE RESERVE STUDY FOR PLANNING.
It is critical for boards to review the bank statements and financials records and not rely 100% on management to give reports and do the financial review and planning for the association. Keeping financial reports for at least 7 years is important and the more organized the records, the more readily accessible they will be, hence, the less stress and/oron production.
7. KNOW THE REQUIRED ANNUAL DISCLOSURES and MAKE THEM!
There are many required annual disclosures including budget, reserve study and worksheet, collections policies, IDR/ADR (Internal Dispute Resolution/Alternative Dispute Resolution) policies, insurance coverages, architectural policy, and records inspection policy.
8. KEEP CONFIDENTIAL AND EXECUTIVE PRIVILEGED DOCUMENTS IN SEPARATE FILES FROM OPEN FILES
It is important to keep confidential, executive session and attorney-client privileged records separate from the other records of the association. These records are not subject to owner review and may even be withheld in some cases from Directors (if there are possible privacy or confidentiality breach issues). Disciplinary files should also be tagged in some way so that if there is a records review request, these records can be segregated. Likewise, individual property files are not subject to review under the statute.
Owner correspondence is another area of records that should not be produced for inspection and review by members. Complaints about owner conduct can sometimes lead to retaliation so be careful about how these are filed too.
There are some misconceptions about manager reports. If they contain information that is covered in the new records inspection law, they are subject to inspection. Thus, it is important for managers to keep any records which are entitled to confidentiality, executive session and/or privacy need to be segregated from the other records in the managers report.
Secure legal advice if a question about the right/obligation to segregate the records so that they are not subject to review is needed.
9. REQUIRE WRITTEN REQUESTS, COMPLAINTS, ETC. (PICTURE IS WORTH 1000 WORDS!)
Association records are so critical! Written complaints can promote accountability (although sometimes they need to be protected - see above). A good "paper trail" often helps to support the Association in any legal action against an owner for violation of the governing documents. Policies help provide clarification - example - of exactly what an owner wants to inspect or copy.
On the same level of importance with good financial records are good maintenance records. They can be critically important. Records on maintenance that has been performed on the common area facilities will help very much in determining what needs to be done in the future. Records with regard to maintenance performed on the separate interests is also very important. A good example is water intrusion incident, maintenance and repairs. It is extremely important for an Association to show diligence in any situation. Good records proving diligence may help keep the Association out of court.
Good architectural review records are another important aspect of record keeping. If a board wants to know what improvements have been approved in the past, because of a pending application or because of a consistency question that has arisen, the only way to know is to have good records.
10. ADOPT POLICIES TO CLARIFY AND INTERPRET VAGUE CC&RS AND ENCOURAGE COMPLIANCE (THE VALUE OF A ROAD MAP!)
Like the records policy, the more a board can adopt and follow policies relating to rules, CC&R provisions, interpretations of obligations, and anything else that concerns owners, the easier times boards will have in acting rationally, reasonably, consistently and efficiently. Having a "road map" to follow with regard to practices and procedures will help streamline the handling of any issues, and help assure legality and avoid attempts to interject personal feelings or agendas into association practices. In addition, good policies help in the transition from Board to Board.
By Beth A. Grimm, Attorney. A "service oriented" attorney and member of ECHO and CAI and various other industry organizations in California and nationally, host of the website www.californiacondoguru.com; two Blogs: California Condominium & HOA Law Blog, and Condolawguru.com Blog, and author of many helpful community association publications which can be found in the webstore on her site.