Condo Board Must Juggle Privacy, Openness

Q: I own a condominium unit in the District, and I believe that our association is having financial problems. Recently, I sent a letter to our board of directors, asking for a copy of the most recent monthly financial report, as well as the names and mailing addresses of all co-owners. The board responded that privacy laws prevented the board from providing that information.

Have any such privacy laws been enacted? Don't I, as a former member of the board, have the right to know who is delinquent in our association?

A: Your board of directors is correct in not providing the names and address of your co-owners but absolutely wrong about the financial books and records.

Regarding the board's finances, the D.C. Condominium Act states that this information "shall be made available for examination by a unit owner or the unit owner's attorney, accountant or authorized agent during reasonable hours on business days."

The association may charge a nominal fee if you want copies of these records, but you absolutely have the right to know the financial condition of your condominium association. After all, you are entitled to know how your fees are being spent.

The fact that you once were on the board is irrelevant; any unit owner has that same right.

Some states have imposed restrictions by requiring that you explain the reason for your request. But even in those states, your reason is simple: You are a unit owner and want to know whether your board is squandering the assets of the association.

This is a hotly debated issue among community association professionals. There are some who say the members elected the board, so they should trust the board to handle the affairs of the association without interference from members.

Others, including me, take the opposite position: The board has a fiduciary duty to its members, and the only way to instill trust and respect is for the board to fully disclose its activities, which includes the financial affairs of the association.

The issue of disclosing the names of delinquent owners gets more complicated. If you were behind on the payment of your fees, you would not want your neighbors to know this. But other condominium owners do want to know who is delinquent and what action, if any, the board is taking to collect outstanding fees.

I think the board has the right to disclose the delinquency list to all owners. However, the board has to be careful not to make any mistakes. For example, if the board says John owes $325, and John pays before the publication is issued, the board could be in trouble. The way to report this is to say, "As of Aug. 1, 2007, John owes the association $325." This is a factual statement that cannot be legally challenged.

In 2006, a federal court in Minnesota was involved in a case, Cohen v. Beachside, in which a unit owner sued his board for publication of private facts regarding the owner's delinquency. The court dismissed the claim, holding that the publication that was mailed to members of the community was not a distribution "to the public at large."

So long as your board publicizes the delinquencies only to association members and the facts in that publication are correct, the board has the right to alert all owners as to who is delinquent. In fact, such disclosure often pressures the delinquent owners to pay up.

There are areas, however, in which privacy should trump disclosure. For example, if an owner has a serious illness or other hardship and is unable to pay his or her association fees, the owner should be able to discuss the situation privately with the board. The board may decide to defer payments for a few months and cancel late fees. This information should be confidential.

Another area where privacy is important relates to your second question. You want the names and addresses of all owners. Presumably some owners do not reside in the complex but are renting out their apartments. You would like to send all owners, including the investors, a letter explaining your position and asking everyone for assistance. You may be considering asking for a recall petition so that you can "throw the rascals out" of office.

However, the addresses of owners should not be a public record. We read too many horror stories regarding identity theft, and a person's mailing address can be an important piece of information that enables an unscrupulous person to compile a profile.

There is a solution. The board or its management company has a mailing list of all owners. If you want to circulate information to everyone, the board should be willing to mail your material to all association members, on the condition that you will pay for the cost of copying and mailing. This procedure has worked successfully in many associations. Privacy is protected, and the owner's concerns are fully circulated.

Balancing privacy concerns with an open government should not be limited to our federal government. It is equally important in community associations.

Benny L. Kass is a Washington lawyer. For a free copy of the booklet "A Guide to Settlement on Your New Home," send a self-addressed stamped envelope to Benny L. Kass, 1050 17th St. NW, Suite 1100, Washington, D.C. 20036. Readers may also send questions to him at that address or contact him through his Web site, http://www.kmklawyers.com.