Page 10 - CooperatorNews Las Vegas Fall 2021

10 COOPERATORNEWS NEVADA— FALL 2021 NEVADA.COOPERATORNEWS.COM Write to CooperatorNews Nevada and we’ll publish your question, along with a response from one of our attorney advi- sors. Questions may be edited for taste, length and clarity. Send your questions to: darcey@cooperatornews.com. Q&A box display with the original historical items in their boardroom.” “Pre-pandemic,” says Dan Wollman, CEO of Gumley Haft, a management firm based in New York City, “we were moving to a new space that was smaller than our previous of- fice, with less room for document storage. 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 room barely ex- ists. It’s all digitized now. Everything is in a secure place with limited access availability. When someone sells their apartment, their file gets deleted because we don’t need it any- more. Digitalization is secure, available when needed, and protected. Everything is backed up in the cloud, and we have lots of bells and whistles for security.” “We shifted to digital records some eight or nine years ago,” says Scott Wolf, manag- ing partner at BRIGS, a large real estate man- agement firm located in Massachusetts. “We started converting documents when scanning became available. Digitalization got rid of the file cabinets and boxes. I personally like paper, but I’ve come to understand that it’s redun- dant. Everything is available online now. We email everything with attachments—no more shifting papers and boxes by hand, which is particularly important now in light of COV- ID-19. I believe a majority of our competitors have converted to digital as well.” As concerns current documents necessary for day-to-day management, Moran says, “Fi- nancial documents are arriving in digitized form or are being digitized immediately. Bank statements and other invoices now arrive 75% of the time by email, and are then automati- cally uploaded into our platform by our cor- porate accounting department. Paper invoices in Manhattan, sees digitization as a positive are scanned immediately. Retention of docu- ments is also going to digital format. It’s just that being said, he does note some points of too easy to lose paper documents. We use a concern. He points out that digitized infor- digital cloud-based format. Payments are also mation is easily accessed and can be accessed done digitally. Board members can log in from anywhere—which has both positive with a secure password and can see the pay- ments, give a second signature, etc. It’s com- pletely transparent.” Are All Documents Equal? “Ninety percent of what we receive now is digitized,” says Wollman. “Nothing comes by paper anymore. Bank statements, invoices, bids—they all arrive digitized. You can attach things to email digitally, so we don’t even write checks anymore. Everything is done electron- ically. If we do have to process anything, we scan it and send it to a bank, or whoever the recipient might be.” Wollman stresses that most companies are moving in this direction, and if they aren’t, they’re behind the curve. There’s not much trepidation on anyone’s part relative to the digital revolution these days—including con- dos, co-ops, and HOAs. Going digital is in- creasingly not just important, but mandatory really needs to be kept in both digital and for maintaining best business practices. Re- gardless, that process must be secure. Atten- tion must be paid to what type of document online are more protected and secure than is sent in what manner, and very sensitive in- formation must be handled with an appropri- ate level of security. “We do our best to keep make sure you’re capturing the entire docu- things as secure as possible,” Wollman says. ment. If someone feels the need to keep paper “Board packages are sent through Dropbox copies, Zanjirian says that holding onto them or BuildingLink. Sensitive material, like board for a year should be enough for most docu- packages with private personal information, ments. shouldn’t be sent by attached email anymore. There’s no security there.” In terms of what might be necessarily with Las Vegas-based Boyack Orme Anthony kept in both digital and print formats, Wolf & McKeiver, explains that “there was a recent takes a ‘belt and suspenders’ approach with legislative change to Nevada’s condominium some types of documents. “There’s nothing I act that states that as of January 2022, all ba- can think of that cannot be digital,” he says. sic and legally required docs pertinent to an “But there are documents that it’s manda- tory to have signed and sent to the Registry quired to be accessible via electronic portal.” of Deeds. We keep a paper copy of these, and when they become official, they are saved motes the use of electronic records. Starting electronically as well. Initially we saved legal documents, insurance claim information, and and personal lives move online and into the stuff like that. Over time we realized we didn’t cloud, building and association managers, at- need any paper at all. We used to keep leases torneys, accountants, board members, and— in a hard copy in Massachusetts, but not any when appropriate—residents need to have longer. From a condo standpoint, everything access to crucial documents, while also be- gets digitized. The majority of new paper we ing assured that those documents are stored receive today comes from new business inher- ited from other companies sending their stuff to us as new management.” An Accountant Weighs In Avi Zanjirian, a partner with New York transferring, storing, and accessing records. accounting firm Czarnowski & Beer, based trend for co-op and condo accounting—but and negative aspects. “No one wants cabinets of paper for seven years, but if everything is digitized on a server and you have closing statements, bank statements, transfers, etc., personal information must be secure. If you keep that on the cloud and you get hacked, it’s a potential problem. “We do live in an age where we can digi- tize everything,” Zanjirian continues. “I rec- ommend that those things with personal in- formation be kept secure. These documents should not be open to everyone in the office. In terms of workflow, especially this past year, we didn’t have to go into an office; we could do all our audit work digitally. It provided more efficient work for us, and for the client as well, since they didn’t have to make room for us in their office.” Lastly, Zanjirian points out that nothing paper forms, with the possible exception of mortgage documents. Scanned documents paper—just remember to check both sides of any hard copy you’re converting to digital to What Does the Law Say? Edward Boyack, an attorney and principal HOA or other housing association are re- In fact, says Boyack, Nevada actively pro- in January 2023, monthly assessments for common charges, records of past pay- ments, and the option to autopay must all be available online. “I don’t believe there is anything that must specifically be kept in paper form,” he says. “Eighty percent of our associations are electronic now. All closing statements and transfer deeds are also electronic—and are now required to be so by law. We do keep some physical files, but nothing specific.” As more and more of our administrative securely and appropriately. With everything in one easily accessible place, tasks like audits and reviews become easier to complete. The key is security and conscientious care when n A J Sidransky is a staff writer/reporter for Co- operatorNews, and a published novelist. DIGITAL DOCUMENTS continued from page 1 “Eighty percent of our associations are electronic now.” — Edward Boyack running for the board if the company he worked for managed the association. “There is another provision in the law \[NRS 116.31187\] which provides that a member of the board cannot enter into a con- tract with the association for goods or ser- vices. Please note that neither of the sections referenced is sophisticated enough to include a prohibition against a company in which the president owns shares or an interest or a company for which the president works be- ing similarly barred from entering into a con- tract with the association where the company would provide management services. “Generally, corporate law provides that if a member of a board of directors has a conflict of interest with respect to a matter, includ- ing, but not limited to, the engagement of a certain company, either because he works for such company, he owns shares in such com- Q&A continued from page 5 pany, or he has family members or friends that work for such company, then the board member is supposed to disclose such conflict of interest and recuse himself from voting thereon. The language relating to such corpo- rate conflicts of interest is in both NRS 116 and NRS 82. The interesting part is, it argu- ably specifically conflicts with the language of NRS 116.31034 (quoted above), which states a person who may stand to gain any personal profit, compensation from anything that comes before the board, may not be a board member. That conflict between the statutes has never been tested in court. Arguably, both sections can be read together and there are certain cases in which a board member may have a conflict of interest, but not have a financial interest in something coming before the board, and therefore, could remain on the board, but recuse himself from voting on the specific issue. “The bottom line is, if any officer or board member has a conflict of interest in any mat- ter that comes before the board, the board member needs to disclose the conflict and likely recuse himself and not vote on such matter. “With respect to the final hypothetical of the board member negotiating a contract with a company he works for without any other members of the board being involved, that would be a breach of the ethical duties of the board member. …\[I\]f an association is going to negotiate a contract with a company for which one of its board members or offi- cers works, then \[again\] the board member or officer should at least recuse himself and not participate in the vote. The Nevada law may even be interpreted someday to provide that the board member or officer has to resign from his position as a board member or offi- cer if he stands to receive any financial gain from the actual contract. As stated above, that final issue has not been tested in the Nevada courts or in cases before the Commission for Common Interest Communities and Condo- minium Hotels.” n Disclaimer: The answers provided in this Q&A column are of a general nature and cannot substitute for professional advice regarding your specific circumstances. Always seek the advice of competent legal counsel or other qualified profes- sionals with any questions you may have regard- ing technical or legal issues.