What is confidential in the HOA, and how does it impact your role as a board member? Kindly allow us to share a few points in order to support your important work.
For HOAs, confidential information will typically include:
- homeowners’ member account, financial account, and medical information;
- employees’ financial, personal, and medical information;
- the HOA’s aging reports, violation reports, and violation history;
- the HOA’s bank account information;
- passwords for the HOA’s online accounts;
- executive meeting discussions and minutes; and
- pending and threatened litigation, among other items.
If uncertain whether something should be considered confidential, determine whether any laws or rules in the HOA’s governing documents dictate when and how the information can be shared. Then, determine whether anyone will be harmed if the information is made public.
Being cautious when working with confidential information is important because depending on what information is shared, to whom, and how, the HOA could face legal liability. For instance, the association could be held legally responsible if the HOA’s computer is breached and homeowners’ account information is stolen.
If a board member’s grossly negligent, reckless, or intentional actions result in confidential information being disclosed, such as by sharing a homeowner’s personal health information during an open meeting, he or she could be held personally liable.
So, what can a board do to protect the HOA’s confidential information? The following tips may help:
- Review state law and the HOA’s governing documents for what may be discussed in executive session or outside of an open meeting.
- Keep information secure by using password protection, virus protection, and firewalls on the HOA’s electronic devices.
- Lock file cabinets and rooms that contain confidential information.
- Perform background checks on HOA employee candidates.
- Avoid community gossip.
- Ensure those requesting confidential information are authorized to have it.
- Create an HOA policy that explains how board members should handle confidential information.
By responsibly handling confidential information, board members can win the trust and confidence of the community, on top of protecting the HOA and themselves from legal liability.
You can find more information on the board’s fiduciary duties to the HOA and how to perform these duties in Boardline Academy’s Introduction to Risk Management course and Business Ethics and Professionalism course.