This column is comprised of questions that have been posed to me by homeowners, property managers and related professionals regarding legal issues they have encountered with respect to their associations.
"I just became president of my association and was given a stack of binders to ‘hold onto.’ The binders seem to have everything the board has ever done, including all financial records. Do I have to keep all this ‘stuff’”?
Yes, for a while anyway. In Minnesota, a corporation (associations are non-profit corporations) must keep complete copies of its governing documents, accounting records, voting records and all minutes of meetings of the members, of the board and of any committee that has the authority of the board for six years. Anything older than that can be discarded from a legal standpoint.
However, although you can discard information older than six years, many associations find that it is inexpensive and easy to maintain records for longer. Your binders full of paper can be reduced to electronic format and stored on a flash drive, DVD or even your association website (but please password protect your financials!). By utilizing electronic storage of documents, you will be able to retain documents well past the six-year minimum. This may be useful in the future to see how an issue was addressed previously.
"Is my association governed under the Minnesota Common Interest Ownership Act (MCIOA)?”
While I am tempted to give the common legal answer here – "it depends,” I will instead provide a brief overview of which associations are governed under MCIOA (or "the Act”). MCIOA is located in section 515B of the Minnesota Statutes. Minn. Stat. §515B-1.102 provides the gritty details on which associations are governed by the Act, which ones are not and if only certain sections of the Act apply. Although there are exceptions, the easiest way to break down the governed/not governed by MCIOA is with these simple rules:
1. If the association was created on or after June 1, 1994, it is, by default, governed under MCIOA;
2. If the association is a condominium, and not a townhome or a single family association, it is, by default, governed under MCIOA regardless of when it was created;
3. If the association is a single family or a townhome association and it was created before June 1, 1994, it is NOT governed by MCIOA unless the association votes to amend its declaration and "opt-in” to MCIOA.
Again, as with all rules, there are exceptions. However, these three rules cover most associations in Minnesota. Here are some examples to show how the rules play out in more practical terms:
- A condominium association that was created in 1978 is governed by the Act. (See Rule #2)
- A townhome association created in 1991 is not governed by the Act unless it has taken specific actions to amend its declaration for the purpose of opting-in to the Act. (See Rules #3)
Whether your association is or is not governed by MCIOA, keep in mind that all associations are required to comply with the Minnesota Nonprofit Corporation Act, which is found at Minn. Stat. §317A. These statutes provide details on running a conforming nonprofit corporation in Minnesota and must be followed.
"I heard that my association has to register with the state each year. How do I do that?”
As I stated above, associations in Minnesota are nonprofit corporations. They are required to file an annual corporate renewal with the Secretary of State. There is no charge for filing the renewal and it is very simple to complete. The one page form can be submitted online via the Secretary of State (SOS) website or can be printed and mailed in to the SOS. The renewal process ensures that the State has current contact information for the association. Failure to file the annual renewal will subject the association be being involuntarily dissolved, thereby losing its nonprofit status. Should this happen, an association can retroactively reinstate its corporate existence by simply filing the annual renewal form. To check the status of your association’s standing with the State, please visit http://mblsportal.sos.state.mn.us/ and enter your association name. If your association is not found by this initial search, click on the "Advance Options” link and select "inactive” and re-run your search. If you are inactive, the website has a link to the form that should be completed and returned as soon as possible.
To have a question answered in a future article, please email it to me at firstname.lastname@example.org with the subject line of "Ask the Attorney.” While I can’t promise that all questions will be answered, I will do my best to include questions that have a broad appeal. Questions will also be answered by other attorneys practicing in this area of law. The answers are intended to give the reader a good understanding of the issue raised by the question but are not a substitute for acquiring an opinion from your legal counsel.