It's a truism that's been phrased many ways by many wise people: “A lack of transparency results in distrust and a deep sense of insecurity.” That's the case in any number of situations, but it's especially applicable to the administration of a condo, HOA, or co-op community. Lack of clear, forthright communication between boards, managers and unit owners is one of the top perennial complaints association members have about living in their communities, whether they're small, self-managed buildings or sprawling suburban developments. As far as residents are concerned. being transparent means having a board that’s open and honest, not secretive. 

Crystal Clear

While some states (like Florida, for example) require residential associations to be transparent with their owners regarding the community's operations, other states leave it more up to individual boards. “If you read the bylaws and the business corporation law, there is surprisingly little legal obligation to disclose to shareholders/unit owners,” says attorney Geoffrey Mazel, a partner at the law firm of Hankin & Mazel, PLLC, with offices in Manhattan and Long Island. “There is a requirement of the board to submit financial statements and minutes of annual meetings, but there isn’t an obligation in terms of transparency.” 

However, Mazel says that in his 30 years of experience, it only helps when boards are transparent. “It eliminates suspicion and questions and talking behind people’s backs,” he says. “But certain things don’t get disclosed until it’s the appropriate time. For example, if the board is thinking of redoing the lobby in a 250-unit building, it’s up to them to make the decision first and then invite some shareholder/unit owner participation.” 

“We always encourage our boards to be as communicative and informative as they can with their residents,” says Donna Shahrabani, a partner at the law firm of Buckalew Frizzell & Crevina, LLP in Glen Rock. “Just so that they feel not only that they actually have a say in what's going on...but so that they don't think that something is going on that isn't.” 

Many board members do not wish to share information because they are concerned that they’ll be sued as a result of their candor. “The danger of people talking about board issues outside of [a board meeting] is you might be overheard divulging confidential information, or telling someone something that's not actually the board's official position,” Shahrabani continues. “And people may rely on that information and make certain decisions based on it, when it's actually not really what the board decided in the first place.”

The danger also comes from bylaws and statutes that boards should be following to the letter. “In general, there's a statute that governs which meetings have to be open to the public,” says Anne Ward, an attorney at the law firm of Ehrlich, Petriello, Gudin, & Plaza, P.C. in Newark. “Generally speaking, unless they're discussing confidential matters such as litigation or something's that covered by attorney-client privilege, or something personal or embarrassing to a unit owner, those should be public and open to all.” 

Lisa Caltabiano, president of Efficient Management in Forest Hills, New York, concurs that many board members and managers fear causing a panic, and therefore err on the side of saying too little. “They don't realize that appropriate communication can often allay fears,” she explains. “On the other side, owners who are over-involved in day-to-day operations and question everything cause delays and create unnecessary work for managers. Property managers are licensed professionals and have much more experience than a typical owner. A board is voted in by the majority, and that board should be trusted to act in the best interest of the owners.”

Warren Schreiber is co-president of the President’s Co-op & Condo Council in New York City and a member of the Bay Terrace Community Alliance in Queens, and says that board members should enter into a non-disclosure agreement to protect themselves. “You have to protect everything—including people's jobs—through a policy of non-disclosure, but that doesn’t mean you don’t communicate.”

However, when it comes to terms, Schreiber, a longtime co-op board president, prefers the word ‘communication’ over ‘transparency.’ “Most boards go beyond what the actual statute calls for, because it creates good relations and harmony in the community,” he says. “But I’m not sure it’s possible or even wise to have total transparency. If we’re discussing as a board an issue that is of interest to a particular shareholder, you can’t have a lot of transparency because of the need to keep certain things confidential. 

Owners' privacy is crucial as well. For example, Schreiber says that if one owner is in arrears, that's not for anyone else to know. “We would be violating the shareholders’ confidentiality,” he says. “Some co-ops and condos publish names of shareholders/unit owners [in arrears], and I don’t think that’s appropriate; I think it’s counterproductive. If someone is having problems, you can’t really shame them. Speak with them privately and set up a payment plan. Have private discussions with your attorney to maintain attorney-client privilege.”

“If we’re negotiating contracts, you have to have that confidentiality so you don’t compromise the negotiation,” Schreiber continues. “Afterward, you can communicate and let the shareholders/unit owners know what’s going on.”

For example, Schreiber says that his board recently decided to replace the community's five aging playgrounds. “They were almost 50 years old,” he says. “They didn’t meet safety standards—and people are passionate about that. Under the business corporation law, this decision falls on the board of directors, but we sent out a survey that allowed us to see how the shareholders felt about it and what they were thinking. Most other communities don’t even take your opinions into account.” The results of the survey showed that 70 percent of the shareholders were in favor of replacing the playgrounds. “It was a very helpful technique,” he says. “We’re in process of doing the removal now. There’s no reason to have five playgrounds.”

Schreiber, who is also on his own board and has served as its president, says that his board holds 'town hall' meetings so unit owners can voice their opinions. “We give information to the unit owners and, in turn, we receive information from them and that information is invaluable,” he says. “I think there is a big difference between communicating in writing and where you see people face to face.”

Unfortunately, offering any kind of open meetings doesn’t always mean that the whole building community will turn out for some spirited discussion. “People are complacent,” says Mazel. “Hopefully a low turnout is a sign of a well-run building. If you want a big crowd and uproar, raise the maintenance fee.” 

Talk it Out

A good board always looks for ways to improve communication with its residents. “A lot of associations have newsletters that go out quarterly—or even monthly depending on how big the association is, and how many people volunteer to do the newsletter. A lot of times, the newsletter will inform people about what kinds of things the board is discussing,” says Shahrabani.

But even when boards and managers broadcast meetings and information and broadly as possible, sometimes unit owners still don't put in the effort. “Unit owners have a responsibility,” says Ward. “Property managers have to make sure that notices are sent as required by the bylaws, and unit owners have a responsibility to show up and participate. Meeting minutes should be made available to unit owners whenever they want to see them. Under the condo law, they have a right to see the minutes of those meetings, unless they contain privileged information. They should be posted in very public places, maybe a bulletin board in the common area designated for that purpose alone.”

Mazel advises boards to have minutes available for review. “Have mechanisms for shareholders and unit owners to contact the board and give suggestions and be active,” he says. “I encourage my boards to have more than just the annual meeting. Once everyone is in the room, a board makes their report, and the shareholders/unit owners feel better.” 

And doing those things is getting easier and easier, thanks to next-generation technology tools to help keep in contact with residents. These include sophisticated interactive management websites, and communication software systems that allow for email blasts and telephone blasts, as well as posting announcements that appear on all email devices. 

Like the old saying goes, communication works for those who work at it. Successful boards make sure they work at it and keep their residents informed.  

Lisa Iannucci is a freelance writer and a frequent contributor to The New Jersey Cooperator. Associate Editor Tom Lisi contributed to this article.