When it comes to ensuring that important association documents are private and secure, board members and managers have to follow specific protocols. However, due to ignorance or carelessness, those rules aren’t always followed.

“Probably the most common mistakes that a board makes when it comes to record-keeping is not realizing what records are required to be kept pursuant to statute,” says Attorney Steven Rappaport, an associate in the Community Associations Practice Group of the Boca Raton-based law firm of Sachs Sax Caplan, P.L. “If there is a question or concern, it is very important for an association to consult with its legal counsel to determine whether a particular written record is considered an official record, or whether it may be considered a protected or privileged record that is not to be disclosed to a requesting owner.”

Figuring out what documents fall under that classification—and what to do with them—can be a cumbersome process. Lisa Magill, who is a shareholder attorney with the Fort Lauderdale community association law firm of Becker & Poliakoff, explains that those responsible should first look to Florida Statutes Chapters 718, 719 and 720.

“Specifically, they should identify the official records the association must maintain, but there are other laws that may apply under various circumstances,” says Magill. “For example, if the community qualifies as Housing for Older Persons—55 and older—both federal and state law require the association to have policies and procedures that demonstrate the intent to comply with the Housing for Older Persons exception to discrimination laws, along with surveys and affidavits establishing the ages of the occupants of the property.”

There are other requirements under the Condominium or Homeowners’ Association Act that are often overlooked, explains Magill. These can include statutes governing elevators requiring the association to maintain the Certificate of operation, various service contracts and “No Smoking” signs.

Storage Location

The all-important first step is determining what files and records are considered sensitive requiring secure storage. The second equally important step is determining where and in what fashion the documents are to be stored.

“These documents shouldn’t be stored at someone—like a board member's—home,” says Marita Butzbach, a property manager with Boca Raton-based Lang Management. “We are seeing more and more storage in the cloud. There is a movement away from paper-based record keeping.”

Electronic filing is a streamlined approach to record-keeping, but for many associations the cost and time involved presents issues. “It is expensive to transfer the files,” says Butzbach. “We have one association currently doing it and they dedicate all their down time to scanning and transferring.” When copies are requested, she explains that on an attorney’s advice, files are printed or copied and a minimal charge is levied.

While there is a growing movement toward e-based recordkeeping, many associations still relay on hard copies. Rappaport explains the Condominium and Homeowners’ Association Act requires that the official records are kept within 45 miles of the association property.

New Laws

In fact new laws for HOAs regarding record keeping took effect July 1st as a result of House Bill 7119 and signed by Gov. Rick Scott in June, according to Becker & Poliakoff’s Joseph Adams, a managing shareholder in the firm’s Fort Myers and Naples offices. Official records will now have to be maintained for seven years and made available for photocopying within 45 miles of the community or within the county in which the association is located. Owners may be charged no more than 25 cents per page (down from 50 cents per page) for copies. The association’s right to pass on personnel costs has also been restricted. The association may not prohibit unit owners from using portable devices (such as smart phones, tablets, or portable scanners) to copy documents, and the association may not charge a fee for use of such a portable device, he says.

“The association’s official records are generally stored in the association’s management office or some other office of the association. If there is no such office, oftentimes they are kept in the association’s clubhouse or some other portion of the common areas,” says Rappaport. “But they are not required to be kept on the association property.”

A leading issue many association experience is not only redundant files, but files located in disparate locations such as a board member’s home or at the property manager’s office. This common occurrence often results in confusion.

“Unfortunately many community associations do not establish formal record retention policies and many times records are stored where not immediately accessible to others,” says Magill. “This can create a myriad of problems as it can be quite difficult for the board or even its manager to truly know where all the documents are such that full compliance with a records inspection request or discovery in a case is difficult to accomplish.”

Who Can Access Files?

Knowing what documents to file and where they are to be stored are critical to the successful running of an association. Once these two variables in place, there are other considerations such as how long they should be stored and who can access these sensitive files.

“Access to the documents is controlled based on policies and procedures adopted by each association. Only members of the association or their authorized representatives or agents are entitled to an inspection of the association’s official records,” says Rappaport. Associations, he added, can adopt “reasonable” policies and procedures governing the manner and duration of inspection requests.

There are records that are not accessible by all board members, explains Magill. These include any record protected by lawyer-client privileges, medical records as well as records protected by the work-product privilege, including records reflecting mental impressions, conclusions, litigation strategy, and legal theory of the attorney or the association prepared in connection with pending or anticipated litigation/adversarial proceedings.

Information obtained by an association in connection with the approval of the lease, sale or other transfer of a unit, is also private. Additionally, social security numbers, driver’s license numbers, credit card numbers, e-mail addresses, telephone numbers, facsimile numbers, emergency contact information are off limits.

“Personnel records of association or management company employees, including, but not limited to, disciplinary, payroll, health and insurance records can’t be accessed by members,” says Magill. “However, written employment agreements or budgetary/financial records showing compensation is still open to the owners.”

Future Filing

When it comes to the duration of storing sensitive documents, Butzbach says the general rule of thumb—and what the new legislation requires—for board minutes or accounting documentation is a seven-year time period. However, she adds, “Some keep records forever—it depends. For example, equipment warranties might be kept for a longer time whereas a proposal might be kept for one year.” Election records, such as ballots and proxies, are only required to be kept for one year.

As Butzbach notes, more associations are transferring files to the cloud, which requires time and effort as documents need to be scanned. As this process is undertaken, the issue of backing up files in the cloud and disposing of hard copy files arises.

“The Florida statute does not address the disposal of documents. I would assume that any secure method of disposal would be appropriate, as long as it is reasonable and as long as it properly disposes of any personal information,” says Rappaport. “I do believe that some form of shredding would be appropriate.”

Rappaport explains that there isn’t a legal distinction between hard copy and electronic record keeping. “The storage or disposal of such records is not specifically addressed in either statute. Both statutes do specifically provide that any electronic security measure that is used by an association to safeguard data, such as passwords,” he says. “Additionally, the software and operating system used by the association, which allow for the manipulation of data, are not considered official records and are therefore not inspectable or discoverable by an association member.”

Boards and managing agents should be aware that ramifications do exist for the improper handling and/or disposal of files. Magill notes these types of issues occur frequently. “Failing to allow members access to records, or at least claims of same, are common disputes between community associations and their members. The statutes provide penalties for violation of the record access laws,” she says.

When a viable inspection request is filed, an association must respond in due time. If the board or managing agent fails to respond, an association member can file a cause of action for willful disregard of a proper written inspection request, explains Rappaport. The association, he adds, may be subject to statutory damages up to $50 per day for a maximum of $500.

“A licensed community association manager could be subject to sanctions from the Florida Department of Business and Professional Regulation (DBPR) for any violation of the statutory provision,” says Rappaport. “However, the association, and therefore, its management representatives and agents, are not liable where such privileged or protected information is included in another official record of the association that has been voluntarily provided by a unit owner.”

Due to the frequent turnover on most association boards, issues arise when an incoming president, for example, is seeking files from the outgoing president. In many cases, there might have been an ousting and perhaps the transition is considered hostile.

“We have experienced problems where the files and information aren’t turned over,” says Butzbach. “In these cases, with the help of an attorney, the association files against the management company or the management company files against the board.”

For new board members, or if questions arise from seasoned members, Butzbach says that the Community Associations Institute (www.caionline.com) has information to guide boards and management companies about document-related issues. “It only takes a few minutes to review and tells you how best to store your files,” she says.

Magill also encourages continued education on the matter. “There are plenty of resources available for community leaders and volunteers. I recommend looking at the DBPR website (www.myfloridalicense.com) first. The website features a section for condominium and cooperative associations entitled “Official Records,” which describes the records required by statute and member access rights.

“The law is not exactly the same for homeowners’ associations, but the Division guide is still helpful,” says Magill. “Board members are also encouraged to take a Division-approved Board Certification class, which are offered free throughout the state.”

While CAI and DBPR are considered excellent resources, Rapport says boards should also consult their attorney to ensure they are operating within sanctioned regulations. “Most attorneys will have resources available on their websites, or they will provide regular updates on various topics to their clients,” says Rappaport. “There are also educational seminars provided by Division-approved speakers, like our firm, to educate both managers and board members.”

W.B. King is a freelance writer and a frequent contributor to The South Florida Cooperator.