Members of condominium and co-op boards are often faced with conflicting interests and messages relating to matters of transparency and discretion. As a matter of good governance, transparency is always the preferred policy, whether you’re the president of your community board or the President of the United States.
That being said, in both cases there are times when good judgement means that discretion may be preferable to total candor and more critical than the membership’s or public’s right to know. The question for board members is how to recognize when discretion trumps transparency, and what the law requires with relation to both.
“Boards are elected as fiduciaries to manage their buildings,” says Mark Hakim, an attorney with the Manhattan-based law firm of Schwartz Sladkus Reich Greenberg Atlas. “While we always recommend that boards be as transparent as possible, we also recognize that there are both practical and legal reasons a board may not be as transparent as its residents want.” He explains that many circumstances warrant that boards be transparent and forthcoming with the owners or shareholders they have been elected to represent. If a large capital project is undertaken and problems arise, for example, the board should keep residents informed of the causes and ramifications. In this case, transparency is not only preferable; it’s necessary.
When it comes to proprietary information, though—things like the financial, personal, or health information of individual community members, for example—boards and board members must show the utmost discretion and respect for privacy. “Generally, boards can’t simply provide sensitive personal information on any of its residents to other residents,” Hakim says. “Personal and financial information must be protected. This is especially true in light of COVID-19, where boards should not be divulging medical information of a resident to the general public.”
“I believe transparency is the best policy,” says Scott Wolf, CEO of New England-based real estate management firm Brigs. “The more people know, the less they complain. COVID has actually increased transparency in some respects. We now have Zoom meetings for everything, so everyone can listen in. They can see and hear debate, and watch decisions being made. Boards are recording the meetings for full transparency.”