Transparency is touted as a cornerstone of good board governance. Shareholders and unit owners want—and have the right—to see what goes on behind the curtain at board meetings and better understand why certain decisions are made. Residents are mindful of their financial investment, and understandably want timely access to information about how it’s being managed and governed.

​While sharing as much information 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—albeit 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,”  says attorney Mark Einhorn, partner at Marcus, Errico, Emmer & Brooks, P.C. in Braintree, Massachusetts. “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, says Einhorn. Boards and board members may acknowledge pending litigation within the building or HOA, but “Generally speaking, it really should just be whatever is in the public domain. If a complaint is filed, that's publicly known. You know even who the parties are. But details of the analysis 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, Einhorn continues. For one, “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 is to preserve fairness and impartiality—say, in the context of bidding out a contract with multiple vendors or service providers involved. “You really shouldn’t discuss these things publicly, because you could give an unfair advantage to certain parties,” says Einhorn. “That information, as well as any other type of negotiation, should be kept confidential.” 

​Knowing What to Share, With Whom

According to attorney David Berkey of New York law firm Gallet Dreyer and Berkey, board members should not divulge residents’ personal information unless expressly authorized by the board to do so. Indeed, he notes, “We have a code of conduct that we ask our client board members to sign that includes seven ‘Shall Not’ items that can open up boards and board members to liability risk. They are as follows: 

“Board members and directors

• Shall not publicly discuss any other directors’ or shareholders’ personal or private business they may have learned in connection with their board service

• Shall not publicly discuss shareholders’ or staff members’ personal matters learned in connection with their board service without board authorization

• Shall not divulge the contents of delinquency reports 

• Shall not share documents containing personal information, or permit such information to be read by unauthorized persons 

• Shall not reveal confidential bidding information from contractors, or provide unauthorized information to bidders about the review of bids 

• Shall not use shareholder information as a topic of conversation with other non-board shareholders during official meetings 

• Shall not peruse files that contain private information about individual shareholders.”

When it comes to what information can and should be shared with non-board residents, establishing and making good use of regular, accessible means of communication is key to getting the word out—and not alienating shareholders and unit owners. For example, an electronic bulletin board or regular email notices are a great way 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.

Michael Mintz, CEO and founder of Manhattan-based MD Squared Property Group, recommends filling residents in on the specifics of anything requiring a vote or documentation, and keeping everything else as broad as possible. “You want to avoid any possibility of litigation. It’s a balancing act that managing agents learn along the way,” he says. “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.”

Mintz says he’s seen prospective buyers attempt to get detailed information about maintenance issues like leaks, or resident issues like 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 Berkey, “Board members generally have the widest authority to see every corporate record that exists, and 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.”​

Andrea Arnold served on her Manhattan building’s board for nearly eight years, and says, “It’s a two-way street—and I recognize that now being on the outside, because as a non-board resident, I really want to know what's happening in the background. I want to know what is happening with our money, maintenance projects, and building operations. When you’re on the other side, you get a different perspective on how much information should be divulged.”

“I think that board members have an obligation to preserve the confidential nature of information,” adds Berkey. “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.”​

Sharing & Storing Information

​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 Einhorn. He cautions board and property 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.” 

​Meetings - a Key Forum 

When it comes to resident-board communication, the annual or biannual meeting—whether it’s held in person or remotely, 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. According to Arnold, in a post-pandemic world, this means adopting a hybrid model. “If all meetings are only held in person,” she says, “we’re disenfranchising people who can’t physically get there,” while online-only meetings exclude residents who aren’t tech-savvy, or who don’t have computers at all. Until the pandemic hit and forced everything online, “I hadn’t realized at that point that I felt quite so strongly about holding both styles of meetings within a year,” Arnold says, “because there were neighbors that work or that have children or can’t get to in-person meetings for other reasons.”

Regardless of the format, Arnold continues, “Realizing we don’t need to meet and share information in person really does have an impact on how we keep information confidential. We need to pay attention, and agree on how we are communicating, as well as what we put in writing.”

Mintz agrees, adding that since the pandemic, the rules 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 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. 

​Einhorn agrees. “People send off emails, and they think they just disappear, but they don't. It’s hard to understand tone in emails, and that can be damaging if they’re discoverable [during litigation],” he says. “Also, you need to be careful with emails in terms of final decision-making. If you have four pages of email chains going back and forth, and someone says ‘okay, I agree’ and another person says they agree as well, what are they really agreeing to? There may be a number of proposals being discussed in one chain. It’s unclear.”

​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.”

Getting Personal 

While the rationale for keeping things like lawsuits and residents’ arrears private may be fairly straightforward, what about the personal information of board members themselves? Does serving on your board make you a public figure, and 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 Mintz. “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 the bylaws.” He adds that “Most boards don’t want to give out everyone’s contact information unless it’s required.”

​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, says Berkey, 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