Pros and Cons on releasing individual financial records to the membership.

All,

A recent thread on this forum brought up the age old question should an Association release individual members financial records or not. This thread isn't to discuss should the information be released or not. Lets leave that discussion in the other thread

This thread is to discuss the pros and cons a Board might consider when making the decision to release that information or not.

What to you perceive to be the pros and/or cons in knowing if your neighbor is paying their assessments on time or not or for them to know if you are paying yours or not?

Pros:

Cons:

Please Note: I am just listing some pros and cons. This is not an indication that I support any of them. It's just a deminstartion of the different views on the issue.

Pros:

It may cause enough embarrassment that the individual will pay the assessment

By listing the lots that are delinquent in payments, it demonstrates why those who can pay must pay more in order to keep the same level of services thereby deflecting anger away from the board and onto the individuals responsible for higher assessments.

Cons:

It may cause the relations I have with my neighbor to change

Saying x number of lots are behind in assessments provides the same information for the need of higher assessments as listing the individual lot owners without causing social issues within the community.

Being behind because I was layed off from work or paying for an unexpected illness or situation is not the same as habitual offenders who never pay on time as I always paid my bills on time before and will again.

Let me sum it all up...How would you feel if you owed the HOA money because of personal private issue but ALL your neighbors can access the information on you? They won't know the personal reason. They will just know you owe the HOA. Of course, they will then want to place liens or threaten foreclosure on you for it. What would your reaction be and how would you feel about it?

That is the OTHER side of the coin when people demand knowing who owes money to the HOA...Demanding to know who owes and it's you, don't you think you don't want people to know that information? When you know someone owes money to the HOA and your NOT a board member, do you think you should just know this information without the right to do anything about it?

These are the reasons why our board did NOT handout the collection reports to the general membership. We kept a copy to ourselves and discussed only lot numbers. We did discuss the situations OPENLY so the members knew what the situation was and why we hadn't collected yet or if we were in the process of collecting. It doesn't take the brightest lightbulb in the room to know who we may be talking about. However, it did give some professionalism and decorum to the privacy of this information.

Allowing the general "Collect in/Expenditure out" information is okay. Just don't ever say "Joe Blow hasn't paid his dues and owes us XX amount of money". It's better "Lot 3 is in the books for XX amount. We have a policy of lien at 6 months. They have/have not reached this point. A lien has/will be filed". This restates the policy and allows others to know what our policy is to pass the word. Which has helped us in the past.

We have found that we don't have to go that far. Any member who is two months in arrears has their access card for the clubhouse and swimming pool deactivated. Rather than send it to the attorney for legal action at that point, we have instructed the management agent to forward that information to the board. The board then contact the member to discuss a payment plan.

Under this approach, we have kept our delinquencies under 3%. At each board meeting, as part of my report as Finance committee chairman, I provide the total amount in arrears, the change in that amount from the prior month, and the number of homes with more than $1000 owed.

There have been no demands from the other association members to have further details. It appears that, as long as the amounts remain minor relative to the overall budget and they perceive that we are monitoring it carefully, the members are content.

Here are some items for the "pro" column, cross-posted from another thread:

1. Knowing who is delinquent will allow members to enforce the automatic provision in our Bylaws that allows only members in good standing to use the common areas. This should not come to calling the police to report trespassing -- the delinquent owners will hopefully stay away knowing that they will be recognized.

2. The expectation that delinquent homeowners will be identified to their neighbors will be an incentive to stay current and not fall behind in paying dues. The knowledge here does translate to specific action, except for other members to have sympathy for their non-paying neighbor.

3. The knowledge that someone is delinquent will have their neighbors become more aware of the offending homeowner. If the family buys a new car, or new TV, or takes an Hawaiian vacation, then there is a reason to be suspicious of the situation. The board cannot watch every homeowner to see who may warrant some allowance -- it is good to have all members looking out for the community interests.

4. Knowing who is delinquent allows homeowners collecting signatures on a petition or proxies for a meeting to avoid those homeowners who are prohibited to vote. Our bylaws say that delinquent homeowners are automatically deprived of the ability to vote.

These are all things that apply to our particular POA in Georgia, and will not be universally applicable.

Our common areas include a pool, tennis courts, playground, and a club house. Members who do not pay their dues cannot use these facilities. It's a matter of simple fairness -- if you don't help pay for it you can't use it. Delinquents are still members but they are barred from the common areas.


The reason for being behind in paying dues is not revealed even if the Board has that knowledge. But the fact that a member is behind actually is anyone's business. As another post pointed out, you can look on the county web site and see who has paid their property taxes and who has not. There is no reason given if someone has not paid, but the data is available, since all tax payers have a right to know who is not holding up their end. Making this information public is a powerful incentive to stay current.


When a member is delinquent the board has to make tough decisions. Do we move toward foreclosure or forgive some of the debt? It's not easy to be fair. We had a homeowner who was behind 4 years on dues and owed over $5,000. At the same time this person bought a new car, traveled on expensive vacations, and was paying a lawn service rather than mowing their own grass. Based on the totality of the evidence, provided to us by the homeowner's neighbors, we decided that this person had no good reason not to be paying dues, and we moved toward foreclosure.


Delinquent members get notices like everyone else and can attend meetings like everyone else. They can keep aware of the issues. However, if a homeowner mounts a petition drive, any signatures from delinquent homeowners are invalid. Also, any proxy brought to a meeting signed by a delinquent homeowner is similarly invalid. Before I was on the board I canvassed the neighborhood to force calling a Special Meeting. What I thought was enough votes turned out to be one short since several signatures were from delinquent homeowners.

No one is asking you to change your policies. But making this information available has worked in our neighborhood. After years of being secret about financial dealings and having problems collecting dues, we embarked on a policy of open records and transparent operations. We have had 100% payment of dues for two years now, partly because all homeowners know what is going on, and also know that their account status is out there for all members to see.

Melissa,

You may have missed a key point here. In Georgia the information must be made available to all association members.

You may have missed my point. What actual good does it do for YOU or anyone else to know it? Sounds like an excuse to know who put how much in the collection plate on sunday so you can tell the reverend and the congregration to be the judge...Privacy exists for a reason. Unfornately, it's not your reason. I agree to disagree that one should have this information on another individual. As a former President and member of the HOA, this is one thing I did appreciate the most. Respect for my and other members privacy and consideration. It's NEED TO KNOW information, and not everyone is need to know. That's it.

Charles,

What about something in the middle ground between these two extremes? Such as including delinquency information in the Treasurer's report at board meetings, and including it in the minutes that are published to the community file sharing area?

My personal experience has been , that most of our members do not care about the who or why as much as how much as a whole.
What I mean by this is, most members want to know the dollar amount that is owed to the association and what avenue(s) we are perusing to collect this money.
We disclose the amount that is owed to the association in past due dues / fees and how much we have collected.
By using the tools we have, we have drastically increased our collection rate by merely filing liens, which seems to be the biggest motivator, and filing foreclosures.
When I took over, we did not have the proper software to allow us to self manage and our MC (CAB) was merely draining our funds. I want to share some actual #s with you here, so you can see what we have accomplished with the software and becoming self managed.

03/15/05 - 03/14/06 collections were $9,335.64

03/15/02 - 03/14/03 collections were $338.93

03/15/03 - 03/14/04 collections were $1,991.48

03/15/04 - 03/14/05 collections were $1,018.68

After this time, I became a member on the BODs

03/15/05 - 03/14/06 collections were $9,335.64

Booted our MC and obtained the software

03/15/06 - 03/14/07 collections were $48,768.70

03/15/07 - 03/14/08 collections were $78,588.36

03/15/08 - 03/14/09 collections were $103,789.73

03/15/09 - 03/14/10 collections were $69,813.87

03/15/10 - 03/14/11 collections were $158,550.48

We contribute most of the increase in collections to having the software and the automation along with a dedicated group on the BODs.
So, now we disclose the numbers owed and collected along with the budget. We post to the website monthly the meeting minutes, the budget, and expenditures to date, and the secretary's report. Everyone has the majority of the info available 24 / 7. But, we have had 2 people that wanted to see more and we have met with them and disclosed the info they requested. We did not and do not broadcast information freely with out regard to the member(s), the association, morals, and the law.

Our association's position is that we would rather error on the side of safety, than negligence. It is not whether you win or lose a law suit. Either way, the cost of legal representation is costly. We would rather not explore that avenue. We have been advised by our legal representative, that it is best to disclose the financials and not the specifics. It works for us, our community has grown closer and we intend to respect everyone.
I personally do not think distributing individual account status information to the members creates a harmonious environment. We feel, perusing collections in the spirit and intent of the law is our in our best interest and works for us.

"We run our HOA similar to a local town. Everything is public. - SteveM9"

I do not think the city discloses everything in the local paper. Public records are public, as in if I go to the clerks' office and request to see a document. Which is what we do.
The only reason the county publishes in the local paper who has not paid their taxes is not with the intent to embarrass them into paying, but that legally to sell the tax deed to the public they are requires to do so.
and this is different in that a HOA can not sell the past due fees to someone, even though that would be a great idea, and then allow that person to use the adverse possession law to take possession of the property.
But, to each his own. As I have been taught, let your conscience be your guide.

pro - attempt to embarrass and coerce some one to pay their dues. Sort of like extortion.
con - create hostility in the community. Promote vigilantism, non productive. Creates a potential law suite, could create a legal battle and potential loss of revenue. Discourages someone from buying in the community.

I believe, most people do not care enough to bother to go to the court house to see I have filed a Durable power of attorney with the clerk. And most do not care to go to the clerks office to see if I have paid my taxes. But, the records are there if they care to go request and view them. And that, I believe, is the intent of the law and the spirit.
If someone makes a request to view the record of their neighbor, then we allow them to view it.
I do not read in the paper where John Doe at 101 OK Coral Street hasn't paid the water bill, telephone bill, electric bill, or cable bill or hasn't paid for the automobile tag on his car, or the insurance on the automobile. All of those issues should concern me because I have an increase in my services due to them not paying. Or that my neighbor doesn't have insurance so I should call the law every time I see him / her leave the drive in their automobile. The people allow the powers to be to handle that situation.
we are very transparent. And we have a certified audit done annually by an independent entity. Our association members are made aware of that information, but we do not send newsletters out and place it in the local paper. If they wish to review it, they can log on to the website or can request and schedule a day and time and we will make it available to them to review.
One last thought. If someone sued your association for slander, because there was a record keeping error, would you have gained enough to cover the financial loss? Doesn't matter if you win or loss.

The point is not what is or isn't public. Or what is or isn't available to the public. My point to my post is / was simple. You have to make an effort to view the information. It isn't like someone publishing all your information out to the world with out the world requesting the information.
If I care to investigate, and that is the key to what I am saying, If I investigate, I can find an enormous amount of information on any one. But, I have to make the effort to search it out. It is not like I can googlr Lawrence into the PC and presto, all your skeletons are displayed on my screen, Even then I made a request to Google for those records. They don't just magically get displayed on my monitor.I think there are more cons, than pros.

Pro - zero
Cons - numerous

I take that personally!
Does that include your opinions which really do not amount to much? Then why post?

Lawrence,
Perhaps I am missing the point. If it was a survey that would be OK. But Pros and Cons on this issue? What does it mean? Please note that someone even told you and I cite ‘Your the exact reason why I would NEVER EVER allow someone to see what an individual owed the HOA? Let me assure you that I have not learned anything from that discussion.

Lawrence,

being a treasurer for several years in the Association damaged by three hurricanes and thousands of dollars of special assessments later gave me a little understanding of the difficulties collecting money. Actually, it is not a pleasant task at all.
That however does not have anything to do with ‘pros’ and ‘cons’ of releasing individual financial records to the membership. There are laws and procedures and perhaps some common sense one should follow while the problem is internal. Florida says every member has the right to view the finacial records and see who is delinquent. No doubt about that. But, posting a list of delinquent owners on the web or in the newsletter is something else altogether. I would never do that. Once a lien is filed, yes it is all a matter of public record the whole world can see. If we were to learn what different states require that could be useful but I truly do not understand the point of this discussion at all am sorry to say.

Many threads discussed the legal aspects of releasing such information. From reading those threads and looking at various laws - Depending on YOUR State Law a Board needs to do one of the following when they receive a request to review the finances:

1) Release the information (like GA)
2) Has the option to withhold the information (like VA)

Since, some States do provide the option - I thought asking for pros and cons would help those Board members who have this option see things from a different perspective than their own (which is always a good thing for a board or individual to do no matter what the issue).

I thought that everyone would respected the others persons perspective and opinion expressed.

There is no right or wrong answer when deciding to release this info. There may be unintended consequences based on the decision made. By viewing any issue from another persons perspective you may be able to prevent problems you didn't anticipate. Perhaps you will see a flaw in your perspective. At the very least you will have tried to look at the issue from all sides and make an informed decision. Good decisions tend to have good consequences and bad decisions tend to have bad consequences. I believe that if your decision is an informed one it is more likely to produce good consequences.

Lets be honest, some Boards do have these discussions and must make the decision. The best a board member can do is try to get all the information available and look at the issue from all perspectives (which includes the legal perspective) before making their personal decision and casting a vote.

My only purpose in starting this thread was to provide some different perspectives.

Personally, I learned a few things from this discussion. I hope others will as well.

One thing that was made clear to me is that it appears that no one wants to keep information from the membership. It appears everyone wants the membership to be informed of the status of assessment payments but differ on how to present it. Some suggest it should be released by percentages (x % are behind), some suggest by number of lots ( x lots are 30 days, x are 60, etc.), others suggest by the actual lot number (lot #s are behind) and others by name and/or address.

I believe that this demonstrates that everyone has the same goal of keeping the membership informed. Methodology differs but not the intent of achieving the goal.

Thank you to everyone who participated.

PLEASE CONSIDER THIS THREAD CLOSED

Based on this thread I've created a (paraphrased) summary of the pros and cons. If you sit on your Board of Directors in a State that provides the board the option of not releasing this info, perhaps this will help you make an informed decision.

Pros (reasons to release info):

1)May encourage some to pay due to peer pressure or the threat of exposure.
2)May help ensure denial of amenities if that is part of the penalty for non-payment.
3)May assist members when collecting petition signatures from getting signatures that don't count.
4)May provide input from members who know the individuals situation which may allow the Board to make an informed decision on waiving any fees or penalties.
5)May increase trust in the Board due to transparency
6)May prevent legal action from members who believe it's their right to know.

Cons (reasons not to release info):

1) May cause division, discontent, vigilantism, ill will, neighbor dynamics and/or harmonious relations to change, within the membership/development.
2) May cause mistrust toward the board (what else might the board be hiding - type of thing).
3) May prevent legal action from members who believe that releasing the info is an invasion of privacy.
4) May cause others to think they don't have to pay if so and so isn't paying.

'May encourage some to pay due to peer pressure or the threat of exposure.'

This is exactly what is NOT 'pro' reason. There may be other laws in your state you may have to consider before you pressure anyone thru embarrassment.

I cite:

‘Posting identifying information regarding those who are allegedly delinquent to the association in the payment of assessments is a potentially dangerous practice. Among other things, the Florida Consumer Protection Practices Act, found at Section 559.55 of the Florida Statutes, generally prohibits the collection of debts through means designed to embarrass a debtor, including the posting of “deadbeat lists” and the disclosure of debts to third persons when there is no legitimate business need for the information. Owners in your community are entitled to delinquency information about other owners through inspection of official records. I would strongly recommend against postings of this nature. ‘(J. Adams, Attorney)

Petunka,

The “Florida Consumer Collection Practices Act” like the federal "Fair Debt Collection Practices Act" deals with debt collection agencies and not the original creditor. Moreover, both laws prohibit the general release of personal information, not the release of information about one member to other members of the same association.

I would be skeptical anyway of advice from a lawyer who can't even get the name of the statute correct. (Check out the Florida Statutes On Line to see the correct name and all details about the law.)

Lawrence,

I think it was a typo and the "1" was dropped. The correct statute number is 559.551

Yes, its true. Section 559 refers to debt collectors, lawyers, or anyone in the business of running a debt collection company, etc. This section shall not apply to any original creditor, like an HOA.

A HOA's primary business is managing common areas, not debt collection. Therefore section 559 has nothing to do with HOA's and does not apply.

Petunka,

Before anyone tells the attorney that he is "wrong" they would need to see the context of his comment.

He could have been giving advice to debt collectors.

Please post a link to the entire article rather than just your excerpt.

AND, here is the link to ALL his opinions should anyone be interested.

http://www.becker-poliakoff.com/pubs/articles_adams_2011.html

Lawrence,

For heaven’s sake, what are you saying? Florida Chapter 720 is HOA. This attorney does not talk about anything else but HOAs and Condos and Mobile Home statutes. Please appologize.

Lawrence,

I give up.. either we are talking about the same thing and agree or you are twisting the meaning which seems to be the case. I am really getting tired of discussing this. You know my position on this issue, I posted it. End of story.