I recently received a question from a reader regarding record keeping. The reader wanted to know how long an association should keep records. If you have resided in an association that is over ten years old or if you are a manager of an association or several associations, you know how quickly the records begin to accumulate.
As discussed in prior columns, the Illinois Condominium Property Act (“Act”) has specific requirements regarding an owner’s right to review records. Section 19 of the act applies to all condominium associations throughout Illinois. Section 18.5 of the act applies to all common interest communities throughout the State of Illinois, which includes most townhome and homeowner associations. Although these two sections of the act have procedural differences, the records which an owner is entitled to review are similar.
1. Declaration, Amendments to the Declaration, Articles of Incorporation, By-Laws and Rules and Regulations. These documents should be kept permanently. As there is a need to use these documents on a day to day basis, they should be kept at the office of the association and not in a storage facility.
2. Contracts and Insurance Policies. All pending contracts and insurance policies should be kept in the office of the association for further reference. Once the contract is completed or a new insurance policy is entered into, these documents may be placed in storage. However, an association should hold on to all completed contracts and expired insurance policies for seven years. Even though this is not required by Illinois law, issues may arise where these documents are needed. After seven years, it should be safe to discard these documents. Prior to disposal, please review each document to make certain that it is no longer needed.
3. Ballots and Proxies. The Illinois Condominium Property Act provides that owners have the right to review ballots and proxies for one year from the date of the meeting at which a vote was held. After one year from the date of the vote, or whichever is later, these ballots and proxies may be discarded. Please note that if there was a challenge to the vote, it may be wise to hold these ballots and proxies until the issue has been resolved. With regard to election, after the next annual meeting, the issues are usually moot.
4. Minutes of the Board and association. Under the Illinois Condominium Property Act an owner may request minutes of association meetings for the past seven years. We recommend that these documents be held onto permanently. If they are voluminous, they may be placed in storage. However, it is not a wise idea to discard them.
5. Federal and State Income Tax Returns. These documents should be held onto permanently. After three years, they may be removed from the office of the association to storage.
6. As Built Specification Plans, Deeds to Property and Plat of Survey. These documents should be held onto permanently. Major construction projects and maintenance issues require that these documents be reviewed continuously throughout the life of the association.
7. General Ledgers and General Journals. An accountant suggested that these documents be kept permanently. The Act states that owners may review books and records of account for the preceding ten years. If for some reason they become too voluminous, they may be placed in storage. However, it is not a wise idea to discard them.
8. Legal Files. All pending legal files should be kept in the office of the association. The matters which have been resolved may be sent to storage. Legal opinions can be reviewed by boards for many years. This will help cut down on legal expenses for the association. We recommend that you contact your association’s attorney prior to discarding any legal files.
Obviously there are other records of the association which I did not cover. However, the above should be a good guide for some fall cleaning. When in doubt, do not throw them out.
Originally published in the Pioneer Press (July 2001).
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