Shareholders and unit owners are mindful of their financial investment and understandably want timely access to information. They want—and have the right—to see what goes on behind the curtain at board meetings and under the hood of hired vendors’ service contracts, to better understand why certain decisions are made and where their money is going. 

​Transparency around these things is touted as a cornerstone of good board governance, but while sharing as much as possible sounds great in theory, even the most forthcoming, open-door board has a duty to protect sensitive and confidential information. Finding the right balance of transparency and privacy can be challenging.

​Leaning Into Transparency

When it comes to sharing information as a board or as an individual, transparency is generally regarded as the best approach—as long as it’s paired with a reasonable consideration that not all information can, or should be, made public.

​“There really isn’t anything to hide or be afraid of in being transparent,” notes one condo attorney. “I try to lean towards being transparent as much as possible. The only times you really need to be careful are in the cases of sharing sensitive or personal information.”

​So what counts as ‘sensitive’? Ongoing litigation is one big example, according to the legal pros consulted for this article. Boards and board members may acknowledge pending litigation within the building or HOA, and what parties are involved, but details and opinions on the circumstances around the dispute should not be shared with non-board residents or outside parties. 

​The reasons for keeping details of litigation close to the vest are not to hoard information or keep non-board residents in the dark. As another attorney puts it, “Board members may take different positions, and they may not want the general public to know exactly what they’re discussing or analyzing, because it could be a liability.” 

Another reason for confidentiality in some situations is to preserve fairness and impartiality—in the context of bidding out a contract with multiple vendors or service providers, for example. That information, as well as any other type of negotiation, should be kept confidential to prevent even the appearance of impropriety or unfair advantage. 

Getting Personal 

Another place where confidentiality is both appropriate and supported by law is individual residents’ personal information—things like arrears, medical information that may have been disclosed to the board for whatever reason, and as mentioned above, the details of any pending litigation. 

“Board members have an obligation to preserve the confidential nature of that kind of information,” says one attorney who specializes in co-ops and community associations. “Personal information about individual shareholders or unit owners, information related to the business of the cooperative or condominium where it might be inappropriate to disclose it, and information concerning complaints that have been made… all this information should be kept in strict confidence.”

Which raises an additional question: the rationale for keeping things like lawsuits and arrears private may be fairly straightforward, but what about the personal information of board members themselves? Does serving on the board give the residents you serve the right to know your address, phone number, and email? 

Access to board member contact info is a common request, says Michael Mintz, founder and CEO of NYC-based MD Squared Property Group. “Generally, that’s governed by what’s in the individual building’s governing documents. Some stipulate that the managing agent has to provide the contact information for every unit owner in the building; others don’t allow it. So when people come asking for that information, we refer them back to their bylaws.” He adds that “most boards don’t want to give out everyone’s contact information unless it’s required.”

​Knowing What to Share, With Whom

When it comes to what information can and should be shared with non-board residents, establishing and maintaining accessible channels of communication is key to getting the word out and keeping shareholders and unit owners appropriately looped in. Electronic bulletin boards or regular email notices are both great ways to keep residents apprised of what’s happening in their building or association. The contents of a newsletter or email blast can be vetted and approved by the board, and, if necessary, their legal counsel prior to sending to make sure that no confidential information is being distributed.

Legal pros also note that as vested shareholders or association members, residents have the right to examine contracts their board or management enter into on behalf of the community. According to Vanessa Peña, an attorney with Buckalew Frizzell & Crevina LLP in Towaco, “Unit owners are entitled to inspect copies of various documents that are held by the association and its managing agent. Among these are copies of executed agreements between the association and the contractors it has chosen to perform work on the association’s common property.”

Mintz recommends only filling residents in on the specifics of items requiring a vote or documentation—and keeping everything else as general and broad as possible. “You want to avoid any possibility of litigation,” he says. “It’s a balancing act that managing agents learn along the way. We caution boards to check with us to see if there’s anything questionable [in a communication] before they act, so they don’t unintentionally share anything that shouldn’t be publicly shared.”

Or shared with the ‘wrong’ people; Mintz says he’s seen prospective buyers attempt to get detailed information about maintenance issues like leaks, or resident issues like chronic noise complaints before purchasing a unit in a given building. While that may sound sensible and even innocuous, “We train our managers to be very cautious and speak to the building’s board and legal counsel before releasing any information,” he says. “As a managing agent, we don’t want to make any potentially misunderstood or false representations.” 

​While there are strict limits on what information outside parties can demand to access, residents with a legitimate purpose can request to review their board’s records. According to one legal pro, “Shareholders have very limited authority to see board minutes. As a policy, the board can permit shareholders to review items, but otherwise, all shareholders are entitled to information set by law.”

That doesn’t necessarily mean that a resident can just drop in to their management office unannounced and demand to see a document or contract on the spot, however. According to Peña, depending on how an association’s governing documents set forth access, residents can typically request to schedule a time to inspect whatever information they’re requesting access to. “Typically, an association would require that this request be made in writing and allow the association a certain amount of time (i.e., 10 days) to set up a time for the unit owner to inspect the documents.”

And, adds Peña, residents’ right to access information they’re entitled to isn’t something boards should take lightly. “An association’s refusal to permit such access may result in a court deeming that refusal to be contrary to the Business Judgment Rule, which boards must follow to assess requests to review of associated records.”​

Sharing & Storing Information

​​When it comes to resident-board communication, the annual or biannual meeting—whether it’s held in person or via online platforms like Zoom—is a crucial forum. Lobby notices can be missed, after all, and emails unread, but regular meetings allow residents, board members, and managers to get and share information, ask questions, and raise concerns in real time. 

That’s why it’s so important for boards to make meetings as accessible as possible, so all residents can attend and participate. In a post-pandemic world, this means adopting a hybrid model. After all, in-person-only meetings may disenfranchise residents who can’t physically get to the meeting location either because of health challenges or conflicting work schedules, while online-only meetings exclude residents who aren’t tech-savvy, or who don’t have computers at all. Hybrid meetings with hybrid follow-up in the form of digital and physical digests of what was discussed and decided are a powerful way for boards to communicate effectively with their constituents. 

Mintz agrees, adding that since the pandemic, the rules and norms around emailing information to residents have loosened somewhat—though that convenience can be a mixed blessing. “It used to be that you were only able to physically come into the management office and read meeting minutes,” he says, “but now a lot of boards allow them to be emailed.” However, he cautions that “Anytime anything is put in writing, we tell managers and boards to be extra careful and thoughtful about what information they’re sharing” because once you hit ‘send,’ that information is out of your hands, and can be retained and/or shared at will. 

​That said, there are times when physically going into an office to sit down and review information is more beneficial for all involved. “If anyone wants to see things like unaudited financials, they are allowed to at any time,” says Mintz, “but because it’s unaudited, it’s basically in a draft form. The challenge with that is people look at it without context. Once they have the context, we can explain it to them and show them more information so they understand the full picture. That’s much easier to do if they’re physically sitting with us in an office.”

Another component to both transparency and privacy is information security. As boards have evolved from paper files to digital documents, organization remains vital to proper record-keeping and protection of those records, says attorney Mark Einhorn, partner at Marcus, Errico, Emmer & Brooks, P.C. in Braintree, Massachusetts. He cautions board-management teams to stay on top of how sensitive internal information is stored and shared. “All the information, confidential or privileged in general, is usually lumped together electronically in a file, and that limits what files you can share. You’re forced to either hand-pick it and copy what can be shared or not. Boards should keep this in mind in case someone wants to review anything.” 

​Board members, management, and residents all have to balance many responsibilities and decisions every single day. The needs are ever-evolving, and it’s no wonder questions arise concerning transparency versus confidentiality. Ultimately, education is the most critical component for board members and residents to understand what the law requires and best practices are so there is no guessing; the best practice of all is to establish clear policies, check in with trusted professionals, and keep the lines of communication clear and open. 

Kate Mattiace is associate editor of CooperatorNews