Board members are generally considered to be fiduciaries. The Board members will learn of sensitive information in the course of their duties. Disclosure or careless treatment of such information to third parties would be unwise, and in some cases, such as social security numbers, may lead to identity theft or have other injurious consequences.
The Board may consider a code of ethics which contains a confidentiality section as to sensitive information. The Board may also propose a confidentiality agreement to be signed by the Board members. This would be designed to prevent unauthorized disclosure of confidential and sensitive information. These may be good policy but unless the organizational documents specify that a board member must sign these type of agreements in order to qualify for election, which would be rare, then a confidentiality agreement could be deemed to be on a voluntary basis.
It is suggested that the Board members consult with counsel as to the proprietary of disclosure or non-disclosure of Board matters in general, and sensitive information in particular.
Levine & Montana
1019 Park Street – P.O. Box 668
Peekskill, New York 10566
(914) 737-3515The 1st Amendment of the U. S. Constitution guarantees the right of free speech. While a corporate entity can direct it’s board member’s as to how to speak “officially” as the corporate entity, they can’t restrict the right of individual board members to speak their minds as individuals on things impacting the corporate entity.
If the board is having an issue with a member, the by-laws will likely provide a process for removal by the Owners at a special meeting.Thrasher Buschmann & Voelkel PC
151 N. Delaware St.
Indianapolis IN 46204-2505
email@example.comNot really. Board meetings are open to the public and, as such, anything said is public. The only way to (attempt to) ensure confidentiality of Board discussions is to hold (a part of) the meeting in Executive Session. Only Board members and others invited to remain in the room are present; everyone else leaves during Executive Session. The Board can discuss the matter(s), but then comes out of Executive Session to take any votes. However, Executive Session is for limited purposes such as personnel and litigation matters, not just for any time the Board wants something to be kept confidential. A Board considering an Executive Session for the first time should consult its HOA counsel to ensure it is done properly.
Sara A. Austin
Austin Law Firm LLC
226 E. Market St.
York, PA 17403
firstname.lastname@example.orgWhile there is no New Jersey case law directly on point, the likely answer is that with respect to material that is confidential, the governing board of a common interest community may adopt a policy requiring that the right of a director or trustee to access confidential material will be conditioned upon the board member’s execution of a confidentiality agreement.The New Jersey Condominium Act and New Jersey Planned Real Estate Development Full Disclosure Act (PREDFDA), despite having vigorous open meeting requirements, recognize that certain discussions should be held in confidence. Specifically, the governing board, in the exercise of its powers and duties, may exclude or restrict attendance at those meetings, or those portion(s) of meetings, dealing with: (1) any matter, the disclosure of which, would constitute an unwarranted invasion of individual privacy; (2) any pending or anticipated litigation or contract negotiations; (3) any matters falling within the attorney-client privilege, to the extent that confidentiality is required in order for the attorney to exercise his ethical duties as a lawyer; or (4) any matter involving the employment, promotion, discipline or dismissal of a specific officer or employee of the association. SeeN.J.SA. 46:8B-13 and N.J.S.A 45:22A-46(a). It is very likely that the reason for such provisions in the Condominium Act and PREDFDA are in recognition of the fact that to act within the best interest of the association (i.e. maintain a duty of loyalty) requires members of the governing board to exclude and restrict attendance at certain meetings in order to maintain the required fiduciary level of confidentiality. Thus, a governing board would be justified in denying an board member access to such confidential information or materials where that board member refused to sign a confidentiality agreement with respect thereto.In fact, the Appellate Division in one New Jersey case did not appear to take issue with the association requiring its members to sign confidentiality agreements in order to obtain a list of all members of the association. Instead, the court held that a one thousand dollar liquidated damages clause in the confidentiality agreement was unreasonable and invalid, but did not otherwise appear to take issue with the confidentiality agreement or the board’s requirement that members sign same. SeeComm. for a Better Twin Rivers v. Twin Rivers Homeowners’ Ass’n, 383 N.J. Super.22, 60 (App. Div. 2006) rev’d on other grounds, 192 N.J. 344 (2007). Likewise, in a corporations cases from Delaware, the court there has held that the access to materials as a director may be conditioned on the execution of a confidentiality agreement. Seee.g.Hollinger Int’l, Inc. v. Black, 844 A.2d 1022, 1092 (Del. Ch. 2004); Stroud v. Grace, 606 A.2d 75, 89-90 (Del. 1992).In light of the aforementioned legal precedent, where a member refuses to sign a reasonable confidentiality agreement but continues to demand access to confidential information, the board of a common interest community would likely be justified in seeking a judgment declaring that the member’s access to materials be conditioned on his or her execution of a confidentiality agreement. In addition, while the board likely cannot remove the member from the board, as most governing documents require a vote of the unit owners, the board may also be justified in calling upon the unit owners for a vote to remove the obstinate board member.Martin C. Cabalar
Becker & Poliakoff
1776 on the Green
67 Park Place, Suite 702
Morristown, NJ 07960