Legal Guidelines Concerning Association Books and Records
Minnesota laws impose certain specific legal requirements governing Association books and records. These laws dictate what records should be maintained, how long the records should be retained and who is entitled to access the Associations books and records. The Minnesota Non Profit Corporation Act, Minnesota Statutes Chapter 317A, provides specific guidelines of what records are to be maintained, how long such records should be retained and who is entitled to access such records. The Minnesota Common Interest Ownership Act, Minnesota Statutes Chapter 515B, contains provisions dictating what type of records shall be maintained and allowing access to unit owners. This article examines the current legal requirements.
Records Required to be Maintained
Community Associations are generally non-profit corporations and, as such, are subject to Minnesota Statutes Chapter 317A. This statute specifically requires that certain records be maintained. The statute specifically provides, in pertinent part, as follows:
A corporation shall keep at its registered office correct and complete copies of its articles and bylaws, accounting records, voting agreements, and minutes of meetings of members, board of directors, and committees having any authority of the board of directors for the last six years.
The statute further provides that members are entitled to financial statements of the corporation. The statute specifically requires disclosure to a member of a statement showing the financial result of all operations and transactions affecting income and surplus during its last annual accounting period and a balance sheet containing a summary of its assets and liabilities as of the closing date of the accounting period.
The Minnesota Common Interest Ownership Act, Minnesota Statutes Chapter 515B (MCIOA), also governs Association Records. MCIOA states, in pertinent part, that:
The Association shall keep adequate records of its membership, unit owners meetings, board of directors meetings, committee meetings, contracts, leases and other agreements to which the association is a party, and material correspondence and memoranda relating to its operations. The Association shall keep financial records sufficiently detailed to enable the Association to comply with sections 515B.3-106(b) and 515B.4-107.
The foregoing, quoted statutory provisions clearly provide what records an association must maintain. The association should maintain organized, complete files concerning its operations. Often, community association attorneys maintain the Associations records and act as registered agent for their client-associations. If you are interested in these services, you should contact your community association attorney. We strongly recommend that our clients keep accurate minutes and other legally required documents in a minute book or otherwise maintain these records in an organized fashion.
How Long Should Records Be Retained?
Records should be maintained as long as needed. Although the above quoted statute requires that records be maintained for only a minimum period of six years, there are valid reasons to maintain certain records for a longer period. The Association should maintain copies of Governing Documents and permanent resolutions indefinitely. Governing Documents typically include Articles of Incorporation, Bylaws, Declarations of Covenants, Rules and Regulations and all Amendments thereto. Permanent resolutions are generally written decisions on various issues that may have long-term application or effect. It is wise to keep these records permanently because they remain in effect indefinitely.
Frequently, an owner will lose his or her documents and need to obtain duplicate, replacement documents. For this reason alone, the Association should maintain a complete set of its governing documents for duplication, as necessary. Similarly, since the Association should act consistently and may make decisions with long-term effect, it is important to retain copies of permanent resolutions. Boards of Directors should act consistently over time and rely on past decisions to maintain consistent policies in the operation of the association. The association may need to reference prior actions to decide current issues in a consistent manner. In order to maintain consistent decision making, the association should keep all permanent resolutions for possible future reference.
Who Has Access To Association Records?
The Associations records are considered to be generally open. MCIOA provides in part, that all records shall be made reasonably available for examination by any unit owner or the unit owners authorized agent, subject to the applicable statutes. The Minnesota Non Profit Corporation Act provides inspection rights, stating as follows a member or a director, or the agent or attorney of a member or a director, may inspect all documents [referenced above] for any proper purpose at any reasonable time. A proper purpose is one reasonably related to the persons interest as a member or director of the corporation. In the event that copies are sought, the corporation may charge the requesting party a reasonable fee to cover the expense of providing copies of documents requested under the statute.
The association must comply with requests to make available books and records. In the event that a member or director is wrongfully denied access to or copies of documents authorized under the statute, said party may bring an action for injunctive relief, damages, and costs and reasonable attorney fees. The statute specifically allows for such an action and for recovery of costs and attorneys fees.
