Records Retention: Risks of Failing to Comply with the Statute - Fines and the Division
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You may be wondering why such a simple topic is being addressed in a blog after all isn’t records retention 101 the first thing an Association Board and its managers learn? The truth is I have found that many times the Association simply does not follow the statute and this can cause problems. I have had Boards tell me that former Board members or the prior management company did not return all the documents; the e-mails communicating with the managers were not kept; the final version of a document sent to the members was not kept; or we have documents dating back to the beginning of time. In many instances, the Board simply shrugs off the issue. The truth is not properly maintaining the Association’s records could result in:
- Statutory Fine
- Division Investigation
- Spoliation/Presumption Against the Association in a Lawsuit/Arbitration
- Evidence Used Against the Association in a Lawsuit/Arbitration
In this post, I will address the first 2 items above; the next 2 will be addressed in my next post and the one after that will touch briefly on things the Association can do to ensure statutory compliance.
Statutory Fine
Whether a condominium or a homeowners association, both statutes which govern the retention and inspection of your records permit a fine to be levied against the Association for failure to timely produce records requested in an inspection. [§718.111(12)(c) and §720.303(5)] If the Association is not properly maintaining its records then each time a member asks to see the “missing” records the Association would be unable to produce them for inspection. In that instance, the Association has exposed itself a fine of $50 per day fine (up to the statutory cap) in damages to the member. There is also nothing which prohibits the same member from asking to see the records over and over again turning the Association’s non-compliance with the statute into a money making venture. This risk continues until the missing records fall outside the statutorily mandated retention period.
Division Investigation
A condominium member could file a complaint with the Division claiming the Association is not in compliance with the Condominium Act. An investigation by the Division is never welcome as there could be other issues the Division uncovers as part of its investigation which the Association was not even aware of. Assuming no other violations are found, the Association could still be subject to a fine imposed by the Division for the failure to properly maintain its records.
Records retention-lived in HOA 16+ years and same management company but 7-10 property managers. How often are documents reviewed? It has never happened yet in my community.
While the statues are clear about keeping records etc, my Association filed a complaint against our manager a year ago and NOTHING has happened. We also have issues of theft by this manager and comingling. The investigation has moved all the way to the 'legal dept' where is has sat for over six months. The State was well aware that the manager did not keep ANY records, much less the required ones and has taken no action against him. There were two investigations, one against him, the other against the Assocation, when the owner that filed the complaint asked the State to dismiss the investigation against the Association, the State was happy to do so, knowing there were serious issues. This past year has been a real eye opener. Bottom line for my Association, unless you have the funds to pursue matters in the legal system, the State has done nothing to help, or to enforce statues and has allowed this manager to maintain his license without any penalities to date.
we are changing property management companies and want to retain the e mail files that the manager has been sent over the past 18 months. Is this our property as we are being told it belongs to the management company.
Our developer has not answered our request to see records for years. Only after hiring an attorney to represent the membership, did it scheduled a transition meeting which is years overdue. We have never had an annual meeting or budget meeting and the community is 20 years old. The management contract has never been produced either.
With regards to records retention, will you be able to address the paperless office and what records can be scanned and saved into a hard drive and what cannot. Also what is done with the documents that have been scanned?
As I suspected, there seem to be many issues/concerns regarding records retention amongst associations and rightfully so. The statutes place the burden on the Association to maintain and the responsibility is also the Association’s for any failures to do so even if the Association believes it is the management company's responsibility. My last post in this 3-part series (slated for March) will provide ideas on what to do.
To Shelby Hernley:
Records are reviewed by members of the Association whenever they make a request to view them under 720.303(5) or 718.111(12)(c). These requests can occur whenever a member wants to see the records (so long as the documents of the Association do not restrict the frequency of the requests) but there is no statutory requirement that they be reviewed monthly, quarterly, yearly or with any other frequency. The statutes simply require that they be maintained. That your Association has not been subject to any requests could very well be a testament to how well the Association is being operated and how well its members get along.
To PQ and Cindy Montsinger:
My third post in this series gives some great ideas for proper records retention.
To Ken Blyth:
I recommend that you looking at my posts regarding E-mails Instant Messages (IM) Twitter & Official Records which were in another 3-part series this summer as it gives some general information about emails and whether they are official records.
To Marcela Santiago:
Your query is a one that I unfortunately did not consider addressing in this 3-part series. But since I think the query is a good one, I will work on a post that will be added shortly. Keep an eye out for it.
Everyone:
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What is the legal authority for an HOA not keeping voting ballots beyond one year. Can't find it in 720