Question:  Our association has struggled with document storage and management. Most of our important documents are in an electronic format and some are in hard copy. Each time we change management, it seems we have troubles getting back all of our files. The companies claim they have returned them all but we think some our missing. The problem is we can’t prove it!

What do we have to do to protect both our hard copy and electronic data and files? How do we change the way we do business? I’ve read that losing documents can be a problem if an HOA finds itself in litigation.

Answer: The best way to address your question is to discuss what can and should be done, starting with some basic principles.

First, the management company is an agent of the homeowner association, meaning that they work for you and not vice versa. Management and managers have a fiduciary duty to act in good faith, which includes protecting and preserving your records. Managers who do not protect and preserve your records can be liable for failing to do so.

Next, to the extent the records are being lost due to inadequate data security on the part of the management company, this failure could expose them to liability for negligence or, even worse, for unfair and deceptive practices in not providing adequate security for this information.

However, a board’s failure to supervise and investigate these potential problems on a regular basis might compromise the board’s position should litigation ensue. Loss of documents is a serious problem called “spoliation” that we discussed in a previous column. It can lead to court sanctions, the loss of a case and is also a criminal offense. 

So what can your association do to protect itself? 

Prior to entering into any contract, the board should demand that the management company provide its document-retention and backup policies. The association should update its contracts to require any vendor, including the management company, observe best practices with respect to document management and retention.

Those best practices should include electronic-records preservation that uses third-party services to back up and store homeowner-association records at regular intervals with the records to be stored off-site — with both the management company and the association having a right of access to the records.

Each successive board also needs to require that all communications with the management company be through, or be copied to, an email address controlled by the homeowner association to ensure there is an accessible archive of these communications.

Even if the association decides to go “paperless,” it still has to maintain a paper filing system. It is practical and functions as a backup system for lost or damaged electronic data. The sheer volume of paperwork generated in homeowner associations can be intimidating, which makes operating without a reliable paper filing system not only frustrating but costly.

The best practices protocol for paper hard copy environments should include these basic concepts:

>Organize files and cabinets logically, and keep the file index and record-keeping system current.

>Don’t let filing get backlogged, and don’t file duplicate copies with originals.

>Put a custody-and-control policy in place that limits access to association file cabinets and files.

>Sensitive and confidential files should be kept secure in a separate locked file cabinet.

>Create file retention and destruction policies requiring board review annually.

>Disposal of files should not occur without board knowledge and pre-approval.

>Keep a detailed list of all destroyed files.

A homeowner association’s knowledge-base is a valuable asset that is collected over a period of time. Because much of what has been learned just can’t be re-created, it is important to be vigilant in protecting these documents.

Remembering Benjamin Franklin’s adage that “an ounce of prevention is worth a pound of cure,” the key for your board, is understanding the concept of “prevention.” In other words, board directors acting with the requisite due diligence may prevent problems from occurring in the first place. 

An overflowing dam threatens homes in Northern California, Adele's big night at the Grammys, Trump's national security advisor Michael Flynn resigns, Federal officials say they haven't broadened the scope of immigration enforcement raids, Enrique Marquez Jr. didn't take part in the San Bernardino shooting on Dec. 2, 2015.,Russia denies that intelligence agents were in contact with Trump's campaign team, and when the pastor at a Texas church urged his congregation to embrace refugees, 300 members left. 

An overflowing dam threatens homes in Northern California, Adele's big night at the Grammys, Trump's national security advisor Michael Flynn resigns, Federal officials say they haven't broadened the scope of immigration enforcement raids, Enrique Marquez Jr. didn't take part in the San Bernardino shooting on Dec. 2, 2015.,Russia denies that intelligence agents were in contact with Trump's campaign team, and when the pastor at a Texas church urged his congregation to embrace refugees, 300 members left. 

An overflowing dam threatens homes in Northern California, Adele's big night at the Grammys, Trump's national security advisor Michael Flynn resigns, Federal officials say they haven't broadened the scope of immigration enforcement raids, Enrique Marquez Jr. didn't take part in the San Bernardino shooting on Dec. 2, 2015.,Russia denies that intelligence agents were in contact with Trump's campaign team, and when the pastor at a Texas church urged his congregation to embrace refugees, 300 members left. 

An overflowing dam threatens homes in Northern California, Adele's big night at the Grammys, Trump's national security advisor Michael Flynn resigns, Federal officials say they haven't broadened the scope of immigration enforcement raids, Enrique Marquez Jr. didn't take part in the San Bernardino shooting on Dec. 2, 2015.,Russia denies that intelligence agents were in contact with Trump's campaign team, and when the pastor at a Texas church urged his congregation to embrace refugees, 300 members left. 

Surveillance video footage shows the moment a hillside in the San Bernardino County mountains crumbles, sending rocks and snow into a drainage area below.

Surveillance video footage shows the moment a hillside in the San Bernardino County mountains crumbles, sending rocks and snow into a drainage area below.

Alhambra Resident Sergio Aguierre talks about a tree that fell and smashed into power lines on Jackson Avenue during the storm Friday.

Alhambra Resident Sergio Aguierre talks about a tree that fell and smashed into power lines on Jackson Avenue during the storm Friday.

A storm that officials said could be the strongest in years moved into Southern California on Friday.

A storm that officials said could be the strongest in years moved into Southern California on Friday.

At a press conference, President Trump shrugged off a rocky start. An executive order has been drafted to end protection for 'Dreamers,' who were brought to the U.S. illegally as children. New York real estate scion Robert Durst confessed to killing a writer, a witness said in court. The Governors Ball after the Oscars will be decked out for the stars.

At a press conference, President Trump shrugged off a rocky start. An executive order has been drafted to end protection for 'Dreamers,' who were brought to the U.S. illegally as children. New York real estate scion Robert Durst confessed to killing a writer, a witness said in court. The Governors Ball after the Oscars will be decked out for the stars.

Attorney Bennet Kelley co-wrote this column. He is principal of the Internet Law Center, a Santa Monica commercial law firm specializing in various aspects of Internet law. Vanitzian is an arbitrator and mediator. Send questions to Donie Vanitzian, JD, P.O. Box 10490, Marina del Rey, CA 90295 or noexit@mindspring.com.

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