by Attorney Allison Preston

The twenty-first century is morphing into the century of the cloud as individuals and companies move more and more of their information, data, software, operating systems, etc. into this virtual storage system.  In addition, electronic communication has solidified itself as the new normal with less correspondence passing via snail mail, with meetings occurring via FaceTime or GoToMeeting to accommodate key players who happen to be out of town, and with decisions being made with the push of a send button.

Homeowners Associations (“HOAs”) are beginning to see the benefits of moving towards the cloud, and we are receiving more and more inquires from both managers and board members as to whether or not HOAs can incorporate cloud storage and electronic communication into their operations.  Under some circumstances, HOAs should consider utilizing cloud storage and electronic communication to increase efficiency, reduce cost, and facilitate disclosure; however, in other instances, HOAs should keep their heads out of the cloud and stick to the policies and procedures already in place.

Cloud storage, coupled with community websites, provide HOAs the option of maintaining records online where they are readily accessible to homeowners.  A community website provides homeowners quick access to the HOA’s governing documents in the event that homeowners misplace their copies.  This saves the HOA the time and expense of handing out multiple copies of the HOA’s governing documents to the same homeowners year after year.  Instead, the HOA can simply refer the homeowners to the community website.  In addition, Arizona Revised Statutes § 33-1258 provides that an HOA shall make all financial and other records reasonably available for homeowner inspection. Providing these records via a community website provides around the clock homeowner access.

Electronic communication comes in handy for HOAs that need to send multiple notices to hundreds of homeowners over the course of the year.  In some instances, the HOA’s cost expenditure on printing and postage is unnecessary when electronic communication can provide a cost-free alternative.  Arizona Revised Statutes § 33-1260 already provides that HOAs may provide their governing documents to purchasers in either paper or electronic format unless otherwise requested.  In addition, a bill pending with the Arizona State Legislature may aid HOAs in their move towards electronic communication.  House Bill 2135, if passed, provides that HOAs for both condominiums and planned communities shall provide for votes to be cast in person, by absentee ballot, electronic mail, and facsimile.  This bill is helpful for busy homeowners who handle the majority of their affairs online and who may miss a meeting notice and absentee ballot sent via snail mail.

Although moving towards the cloud and utilizing electronic communication provides many benefits to HOAs, not all aspects of an HOA’s work can or should be handled in the cloud.  In addition, an HOA’s governing documents may only permit notice being sent via snail mail or in-person, as opposed to online meetings, which would require amendment before implementing any cloud based changes.  If you are interested in discussing how your HOA may be able to move towards the cloud, please do not hesitate to contact the HOA Attorneys at Davis Miles McGuire Gardner, PLLC.