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Most Arizona HOAs (i.e. homeowners associations) and condominiums are non-profit corporations. In Arizona, these non-profit community associations are governed by the Arizona Non-profit Corporation Act. The Non-profit Corporation Act has a provision in it that addresses the association’s books and records. A.R.S. §10-11601 states that the association must keep “as permanent records minutes of all meetings of its members and board of directors, a record of all actions taken by the members or board of directors without a meeting and a record of all actions taken by a committee of the board of directors on behalf of the corporation.” It the analysis were to stop there, it would seem that “permanent” means forever. But the statute goes on to say the association only needs to keep a copy of financial records, minutes of and actions taken at Board and Member meetings and general communication between the HOA and Members in its offices for three (3) years. A.R.S. §10-11601(E) says:
A corporation shall keep a copy of all of the following records at its principal office, at its known place of business or at the office of its statutory agent:
1. Its articles or restated articles of incorporation and all amendments to them currently in effect.
2. Its bylaws or restated bylaws and all amendments to them currently in effect.
3. Resolutions adopted by its board of directors relating to the characteristics, qualifications, rights, limitations and obligations of members or any class or category of members.
4. The minutes of all members’ meetings and records of all actions taken by members without a meeting for the past three years.
5. All written communications to members generally within the past three years, including the financial statements furnished for the past three years under section 10-11620.
6. A list of the names and business addresses of its current directors and officers.
7. Its most recent annual report delivered to the commission under section 10-11622.
8. An agreement among members under section 10-3732.
Some attorneys argue that this means that associations must keep all corporate records indefinitely but can move some of those records (see 4 and 5) to a storage area after 3 years. Other Arizona HOA attorneys argue that associations can “destroy” the records after 3 years. And still other attorneys take a middle line approach that the records be kept for 10 years or so.
The courts have not defined what “permanent” means in Arizona so this is an open ended question.
The safest thing to do, especially in litigation prone communities, is to keep all of the records forever. This is especially true if a homeowner wants to try and argue that the association must keep “permanent” records pursuant to 10-11601(A).
Now, what is the definition of “records?” One Arizona Court of Appeals case (it is unpublished so it does not create binding law) said that a member is only entitled to inspect “records” listed in ARS 10-11601(1-8). But that case did not address the additional statutory requirements set forth in the Planned Community Act. Those additional statutes make it seem like everything the association generates in writing is a “record” that needs to be disclosed to the members upon request. Accordingly, it may not be advisable to destroy documents/records not mentioned in ARS 10-11601(1-8) above.
Whatever a community decides to do, it should consider their specific circumstances with the help of a qualified Arizona HOA attorney with community association experience.
