Paper, or electronic? It’s now a choice for everything, from the books we read for pleasure to the books we keep on our associations and corporations. Even restaurant menus are digital today in the wake of the need for ‘touch-free’ environments amid the COVID-19 pandemic. With that said, co-op and condo communities generate volumes of information and data every year, from minutes of meetings to receipts for expenses and payments to financial information on unit and share buyers. But how much of all that really needs to be kept, and for how long? And is there anything that should be kept specifically in paper form, as well as digitized?
What Does the Law Say?
Mark Hakim, an attorney with the firm Schwartz Sladkus Reich Greenberg Atlas, is of counsel to numerous co-op and condo buildings in the greater New York area. According to him, “Under Section 624(a) of the Business Corporation Law of the State of New York (BCL), corporations are required to maintain ‘correct and complete books and records of account and shall keep minutes of the proceedings of its shareholders, board, and executive committee, if any, and shall keep at the office of the corporation in this state or at the office of its transfer agent or registrar in this state, a record containing the names and addresses of all shareholders, the number and class of shares held by each, and the dates when they respectively became the owners of record thereof. Any of the foregoing books, minutes, or records may be in written form or in any other form capable of being converted into written form within a reasonable time.’
“In essence,” Hakim continues, “there is nothing in the BCL that mandates a paper format. We often counsel our clients asking each to apply common sense while keeping in mind what may be necessary with respect to tax records (and audits) and in the unfortunate event of litigation. We would always recommend keeping original signed documents such as proprietary leases, recognition agreements, tax records, and other agreements in written form, while simultaneously maintaining electronic copies of each, together with electronic copies of the balance of the corporation’s records.”
Richard Brooks is a principal with the law firm of Marcus, Errico, Emmer & Brooks located in Braintree, Massachusetts, and says that “in whatever format they are contained, certain records must be accessible to the owners per the [Massachusetts condominium] statute. Not all records have to be reviewable—the statute contains a list. It may actually be easier to let owners have access if they are in electronic format. Most professionally managed associations are putting the records online so that owners have access without much trouble. Therefore, there is more transparency, and it is easier for everyone involved.”
The Practical Approach
“Pre-pandemic,” says Dan Wollman, CEO of Gumley Haft, a management firm based in New York City, “[our company was] moving to a new space that was smaller than our previous office. We scanned a million documents—we also got rid of a lot of documents. We culled through the files and scanned every single closing file, approved board package, stock certificate, financing info, etc. We had all this in a huge file room before. Now that it’s all been digitized, that room barely exists. When someone sells their apartment, their file gets deleted because we don’t need it anymore. Digitization is secure, protected, and available when needed. Everything is backed up in the Cloud. Everything is in a secure place with limited access, and we have lots of bells and whistles for security.”