A homeowner’s association is a non-profit corporation. Every corporation produces business records which can be a life line or anchor for a business. If a business keeps proper records, these records can help lessen the threat of litigation. If a corporation fails to maintain proper documentation, the ability of the corporation to defend itself is hindered. The lack of clear, concise business records also makes a business vulnerable to lawsuits because weak business records provide adversary parties with an opening. Business records may include tax, accounting, contracts, payroll, insurance, responses to disputes, etc.
An association needs to have procedures in place to deal with the numerous records it generates. These procedures can become very important when dealing with a vendor or a dispute with an angry homeowner. Nothing is more frustrating than attempting to resolve a dispute when you cannot locate the documents supporting the Association’s side of the story.
Business records are often used as evidence if there is a lawsuit. For this reason the records should be clear and concise. The record should state the facts without including remarks which do not serve to tell the association’s side of events. An association’s business records are admissible in Court when it can be established that (1) the document was made at or near the time of the matters recorded in it; (2) the document was prepared by, or from information transmitted by, a person with knowledge of the matters recorded; (3) the person or persons who prepared the document did so as part of a regularly conducted business activity; (4) it was the regular practice of that business activity to make such documents; and (5) the document was retained and kept in the course of a regularly conducted business activity.
Many cases are won and lost because of a party’s business records. Court’s generally trust the party with the clearest and most complete business records.
An important point to remember when you are thinking about the association’s business records is that disputes don’t happen when everything is going great. Disputes most often happen when one party is in financial trouble and they are seeking everyway to ensure their own survival. If you wait until after problems arise to begin maintaining clean business records, you will most likely be preparing for the next problem. Inadequate or poor business records will not help you when faced with an immediate problem.