A breach of confidentiality in HOA communities is a super serious offense, and it can have some really dire consequences. So, if you come across this kind of problem in your association, it's crucial to know what to do.
Confidentiality is a topic that comes up every now and then in homeowners associations.
As a member of your HOA board, you deal with all sorts of confidential stuff, like late payments and personal health issues, employee issues, legal issues and much more. Keeping things hush-hush is just part of the job and a responsibility you have.
But what exactly counts as a breach of confidentiality?
Let's say you and your fellow board members are having a private meeting to discuss which homeowners in your community are behind on their payments.
That info should stay within those four walls. If you spill the beans to other owners, you've not only breached confidentiality but also failed in your duty as a board member.
It's important not to spill the beans on any privileged or confidential info you come across while serving on the board. You may be held liable.
Preventing a Breach of Confidentiality in HOA Communities
To ensure that confidential information remains confidential, it is crucial to start from the beginning. It is imperative that board members understand the obligations of the board, including the requirement to keep sensitive information and matters discussed during executive sessions confidential.
In addition to implementing such a standard, it is advisable to establish a code of ethics that board members must adhere to. This code should explicitly state that board members cannot utilize privileged information for personal gain or as leverage against another member.
How to Address Confidentiality Breaches
Despite emphasizing the need to keep confidential matters discussed during executive sessions strictly private, breaches can still occur.
In such instances, what steps should you take?
Address the Breach:
To begin, it is essential to send a formal letter to the board member who disclosed privileged information. This letter should serve as a reminder of their fiduciary duty and clearly explain that revealing confidential matters is strictly prohibited. This action is commonly referred to as a censure. If this initial step fails to grab their attention, a cease-and-desist letter can be sent as a follow-up.
Review Governing Documents for Penalties:
If the breach is not too severe, it may be possible to impose a fine or take disciplinary action.
Removing the Individual from the Board:
In the worst-case scenario, removing the board member from their position may be necessary.
There are alternative options available to your board. You can call for a special members meeting to explain the situation to members and request their support in removing the board member from their position.
It is important to note that there is a possibility that members may vote against removing the director.
In such cases, at least your board can demonstrate that appropriate measures were taken to protect the organization.
Dealing with a Problematic Board Member
If you find yourself concerned about a troublesome board member who continues to disclose sensitive information during meetings, there is a solution. Your board can establish an executive committee, comprising solely of board members, and exclude the problematic individual from committee meetings where confidential matters are discussed. This way, they will no longer have access to privileged information.
The Consequences of Breaching Confidentiality
You might be thinking, "So what if there's a breach of confidentiality in the HOA? It won't affect the entire community, right?"
Well, that's where you're mistaken.
Breaches of confidentiality can have a ripple effect, leading to the gradual destruction of your association.
A board that discloses confidential information can tarnish the reputation of your community. No one wants to be associated with an association that has a negative image.
Personal Liability of Board Members
When a board member reveals confidential information without board approval, they are essentially exceeding their authority. As a result, they can be held personally liable for their actions. They may face legal consequences, such as invasion of privacy, defamation, negligence, and violations of statutes.
Additionally, the association's D&O insurance is unlikely to cover the damages associated with such a lawsuit.
It's crucial to address confidentiality breaches promptly and take appropriate action to protect the association and its members.
After Your Term Ends:
Continuing Responsibilities as a Former Board Member
As members of the HOA board, it is crucial for us to fulfill our fiduciary duties throughout our tenure. While these responsibilities are limited to the duration of our term, the duty of confidentiality extends beyond that. Even after your term ends, it is essential to maintain the confidentiality of any privileged information you acquired during your time as a board member.
The only caveat?
When the private information in question is shared on FaceBook by anyone other than a board member or discussed in person at the public board meeting or personally to others in the village, and as such has already been made public by the plaintiff or party involved, then the information is now in the public domain and no longer has an expectation of privacy.