Guidance for HOA Managers re: Records Retention
- January 27th, 2016
- Miles Buckingham
- Comments Off on Guidance for HOA Managers re: Records Retention
January 13, 2016 — A new Director Position Statement by the Colorado Department of Regulatory Agencies: Division of Real Estate pertaining to record retention duties of Community Association Managers (“CAMs”) has been published. The Statement sets forth the Division’s opinion of the scope of currently-existing retention regulations.
While a CAM has a right to decline to hold all of the records of the Associations it manages, all CAMs are required to retain “a copy of the common interest community’s documents and association records maintained and produced during the management of the common interest community for a minimum period of 3 years following termination of the management agreement.” This retention requirement is articulated in 4 Colo. Code Regs. 725-7:F-1(2). The Regulation fails to define exactly which records must be retained for that period. The new Director Position shares the Division’s interpretation of this regulation and its language.
According to the Director, a CAM is obliged to hold documents it has produced or “been involved with” during the CAM’s tenure. What constitutes a record that a CAM “has been involved with” remains murky and un-defined. Under the Statement, a CAM might be excused from retaining those documents which pre-date the CAM’s representation of the Association, or any publicly recorded documents.
The Position uses strong language to reinforce that for a CAM to charge an Association for retention of records, the contract between them must contain specific contractual language which details the anticipated cost or expense of such retention, and must be agreed-to in writing.
Although a Director’s Position Statement does not carry the legal force of a statute or rule, CAMs should be aware of this Statement nevertheless, because it speaks to how the Division will evaluate CAMs in the event of a complaint.
In light of the Statement, Community Association Managers should review the standard contract which they use to contract with their managed associations, or retain counsel to have such a review take place in light of this, and all other significant recent changes in the laws and regulations.