As a community association board member, you’ve likely received requests from members to see various association documents. Though these requests can seem simple on the surface, there are laws and statutes in both North and South Carolina that dictate what types of records members can and cannot see. In order to have a successful tenure as a volunteer community leader,  it is imperative to know what types of records can be shared, under what circumstances they can be shared, as well as how long different types of records must be kept on file and how to handle confidential information. In this article, we’ll go over the types of records members can see as explained in the NC & SC nonprofit acts, how to handle such requests, and best practices on meeting minutes and handling sensitive information.

Records Members are Entitled to See

Both North and South Carolina have nonprofit acts that detail what types of records members are always entitled to see and the language in these acts is virtually identical. In NC, this information can be found in NCGS 55A-16-01, and in SC, it can be found in the SC Code of Laws Chapter 33-31. 

These records include:

• Articles of incorporation and all amendments currently in effect
• Bylaws, Resolutions, and Covenants, and all amendments currently in effect
• Minutes of all membership meetings and records of all actions taken by members without a meeting for the past 3 years
• Written communications to ALL members within the past three 3 years and the financial statements that would have been furnished to a member 
• Names and business or home addresses of current directors and officers 

Inspection Requirements & Limitations

In addition to the above, Board members may receive requests or demands from owners to view other documents not listed above. It is a best practice for the Board to operate in a transparent manner; however, if a member requests to see records, do not jump to immediately hand them over! There are requirements and limitations surrounding how, when, and why association records must be furnished to a member when requested.

Members are entitled to inspect and copy these records at a reasonable time and location specified by the corporation (association) if the member provides written notice of the request at least five business days prior to the date on which he or she wishes to see the records. 

There are, however, limitations on members’ inspection rights. The member must make their request in good faith and for a proper purpose. They must also describe the particular purpose they have in seeing those records and must show that the records they wish to see relate to that purpose. In other words, they can’t request to see these records “just because”. 

If a member’s record request requires extensive research by the association or management company, it is perfectly legal for a charge to be associated with this request. NCGS 55A-16-03 states “the corporation may impose a reasonable charge covering the cost of labor and materials for producing these records…”. It is important to note that this cost may not exceed the estimated cost of producing or reproducing these records. Attorneys who specialize in community associations advise that whoever is responsible for researching and producing the records come up with an estimate of how long it will take to gather the records and how much it will cost to make copies and charge that amount to the member upfront before providing the requested documents. 

Financial Records

Members are, of course, entitled to see the association’s financial records. Within 75 days of the close of the fiscal year, an income statement and balance sheet must be made available at no charge. Note the term “made available” here – the association does not have to send each member a copy of these, but rather make them available in an easily accessible location like an online portal. 

Records Members are NOT Entitled to See

If there are records that members are entitled to see, there must be some they aren’t entitled to see, right? Yes! Most of the records members are not entitled to see center around confidential or proprietary information.

These include:

• Vendor contracts and invoices (as these may contain proprietary information)
• Information related to violations or enforcement actions taken against other members
• Other members’ account statements
• Ballots or proxies (though it is OK for members to view vote tallies)
• Information related to specific delinquencies
• Privileged communications between the board and the association’s attorney

Whether a member is or isn’t entitled to see a particular record, it is always important that the board and management company comply with the request or inform the member of denial in a timely manner lest an accusation of lack of transparency arises.

Meeting Minutes and Board Communications

While every board member plays an integral role in the successful functioning of the board and the association, some may say the secretary plays one of the most important roles as he or she is charged with taking accurate meeting minutes. When taking minutes, it is key to remember that information within could potentially be used in any future litigation that may arise, so it is advisable to keep information in minutes to the basics. 

Minutes should not include everything that is said in a meeting, but rather include a description of each motion made and action taken. They should not include sensitive, personal, or private information – if this information is going to be a topic of discussion, the board should go into an executive session where separate minutes can be taken. 

Keep in mind, that members are entitled to see board and membership meeting minutes, but executive session meeting minutes should be kept separate and never revealed without a subpoena or discovery request connected with pending litigation. 

Separate minutes? Only recording certain information? That’s confusing! It can be – that’s why many industry professionals suggest creating a template to go by when taking meeting minutes, and, if that’s something your board is interested in, your community manager can easily assist in creating one.

Record Retention Guidelines

How long a record must be retained depends on the type of record. Some may be discarded in as little as three years whereas others should be held on to permanently. Here is a general guide on how long records should be retained as recommended by Attorneys Mike Hunter and Ben Karb of Offit Kurman, Attorneys at Law.

Three years:

• Credit card and cash receipts
• Invoices
• Proxies and ballots
• Non-construction-related contracts (things like management, pest control, etc.) for three years after termination

Eight Years:

• Personnel records
• Member communications
• Maintenance records
• Construction-related contracts
• Accounting records, tax records, 1099s
• Membership files (eight years after the sale of the property)

Permanent Retention:

• Meeting minutes
• Corporate resolutions or actions
• Corporate governing documents
• Reserve studies
• ARC requests, denials, approvals, and supporting documentation
• Annual budgets
• Legal documents
• Real estate documents and tax records
• Tax returns
• Insurance policies and claims

Though we could probably write a small novel on record requests and retention, the points mentioned here are a great place for board members to start when learning more about the ins and outs of handling the association’s records and documents as well as responding to requests to view them. The biggest takeaway is to always be mindful of what a member is requesting, double-check whether they’re allowed to see what they’ve requested, explore their reasons for seeing it, and when in doubt, check with your attorney. Also, always make sure you’re protecting yourselves and the association by maintaining accurate records and keeping copies so that when you do need to produce them, they’re readily available.