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Subject: Board members forced to sign NDA is this legal?
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Author Messages
MelvinB
(South Carolina)

Posts:3


11/25/2018 11:53 AM  
NDA must be signed before you can become a candidate for an open position on the board.
BillH10
(Texas)

Posts:294


11/25/2018 1:24 PM  
Legal is a broad term. Is it common to do ask for an NDA, no. Is it very uncommon to ask a potential or actual candidate to execute an NDA, yes.

To run for an association position, I don't see any logical reason for an NDA unless privileged information is to be disclosed prior to being elected. By the way, if there is no information to be disclosed, signing an NDA is a moot point. In over 20 years of involvement with property owners associations, I cannot recall a single instance in which restricted or privileged information was provided a potential or actual candidate prior to the election.

As an elected director of the association, although it would be uncommon, I can understand why the NDA may be required to restrict improper disclosure of information which may be privileged or otherwise not to be made public.
AugustinD


Posts:1208


11/25/2018 1:41 PM  
I have seen this done by board members who may have made it through the fifth grade; maybe not. The main purpose is to avoid transparency. I suggest you asterisk the title page and write, "to the extent allowed by law" and be done with it.
GeorgeS21
(Florida)

Posts:796


11/25/2018 1:59 PM  
Sounds scary - I would not personally join a Board that required an NDA.

Also sounds like someone has convinced someone this is a good idea ... look for that person and ask them why - if they sound weird or scary, they may be infecting the remainder of the Board - and, perhaps they need to be removed.
MelissaP1
(Alabama)

Posts:7762


11/25/2018 4:16 PM  
Why an NDA? Doesn't sound right. My guess is someone is also convinced they need to run to a lawyer for everything. Can I assume your legal bills in your HOA is high?

It makes no sense as a HOA board is to be open. They are in that position to handle the everyday operations of the HOA on the behalf of the other members. The money they manage is NOT their money but EVERYONE's money. So it should be open to the membership on what is going on.


Now may need an NDA if your HOA is involved in a lawsuit. However, that should be rare and part of the process. Not a requirement prior.

Former HOA President
MarkM19
(Texas)

Posts:159


11/25/2018 6:32 PM  
So I am going to side with the board that is asking for the NDA for a second. If you have a very loose lipped person on a board who is Social with a large group of homeowners and who can't keep their mouth shut with board issues like who owes dues and is about to have a lien filed or who is about to sue the association. If they tell one person and that person tells the group before long the HOA has a liability issue because personal information is being leaked. Who will get the blame? My guess is the entire board. What is said and done in Executive session is confidential. Decisions made or discussed as a group and agreed upon with all of the facts presented and voted on by the board members. I have seen board members leave that executive meeting and not like the decision and then go spill the beans. It happens. Part of the Fiduciary duty is care for money and property. I think personal information is attached and should be included here.


If this board has had that happen to them the NDA may stop it in the future. That being said until elected I would never sign anything in advance. I would however make it a board decision that everyone on the board signs one once elected. I would also make it clear that when your term is over the information remains confidential for a predetermined amount of time.
GeorgeS21
(Florida)

Posts:796


11/25/2018 7:36 PM  
Mark,

Interesting points, but my sense is it would simply increase the likelihood of required court action ...

And, BTW - hard to prove in a he said-she said scenario ... look how successful government is with this approach ...
GenoS
(Florida)

Posts:2518


11/25/2018 8:54 PM  
I think that would be illegal in Florida for members who want to run for the board. If the governing documents allow for non-members of the association to serve on the board then maybe something like an NDA would be enforceable. The statute says, with a few exceptions, that ALL members are eligible. Imposing extra qualifications, such as the imperative agreement to an NDA would likely be unlawful (not an atty. etc).

A lot of association boards have a code of conduct or ethics that say board members should "support" all board decisions. So hypothetically, say I'm on a board of 5 and there's a vote to restrict rentals to people of a certain race or religion. I vote against it but am outvoted 4-1. Leaving aside that I wouldn't live in such a place, am I expected to "support" that decision? I can't go around telling everyone I know that the board's decision was wrong? How about the board votes 4-1 to let a contract for landscaping without getting any bids. The amount is over 25% of our annual budget. Am I not permitted to voice my opposition loud and clear to this board action?

"Listen, you told everyone that the last contract vote was improper and possibly illegal. Now you want to run for the board again? Here, sign this NDA first."

I don't think so.
MelissaP1
(Alabama)

Posts:7762


11/25/2018 10:53 PM  
I have to point out that it isn't a person running off with their mouth about these things. It actually is to be disclosed to the membership these things like if there are liens/foreclosures filed, Collection rate, expenditures, or if the HOA is involved in a lawsuit. Given that the actual details of the lawsuit should not be discussed openly IF there is a gag type order from a judge. The membership has the right to know they are being sued or suing.

So I don't consider someone disclosing this information "Running their mouth". I call them being honest and open with information that should be shared or is public. Personally, I don't care WHO the exact person's name is that is being liened/foreclosed. I care that my HOA board is taking those actions against those who owe money.

Even the biggest corporations in the world MUST disclose this type information to their own shareholders. If your a stockholder in a corporation, you should be getting a "Prospectus" each year. That contains a report on the health of the corporation. It has to disclose the positive and negative. Which means it has in it IF the corporation is involved in a lawsuit. A HOA is a corporation too. So it has to disclose the good/bad to it's membership.

So I don't see the need for a NDA but to keep the board running in secrecy. Something that doesn't bold well in a HOA. It doesn't offer a chance to change the culture of the HOA. Which is the hardest thing to change. If it were me, I'd demand to know where in the rules an NDA is required to be signed. If it can't be pointed out, then I say run for office anyways.

Former HOA President
SheliaH
(Indiana)

Posts:2311


11/26/2018 8:12 AM  
I don’t think you need one to run for the board – the candidate hasn’t been elected yet, so he/she doesn’t have access to privileged information that has to remain confidential, so what’s the point? Instead, if your association has some sort of meet the candidates meeting where people can ask questions, come up with a scenario or two and asking everyone how they’d address it. The ensuing response and follow up questions could be a good way to determine if that person understands there’s a time and place to speak and another time when one should STFU.

I like the idea of a code of conduct for the board, which could address confidential issues, noting that things discussed in executive session, legal matters concerning the Association, such as collection actions may not be disclosed to unauthorized persons – I would have an attorney help with that portion, but other things should be relatively simple to add. You can Google “HOA board of directors code of conduct” to find sample language.

I’d also have the newbies attend some sort of HOA board boot camp where these issues are often discussed. If there’s a community association institute chapter in your area, you could see if something’s coming up soon. Or check their website to see if there are webinars on the subject they can watch. In fact, the entire board should sit down and watch it together, as refreshers are always good.

One more thing - most folks here aren't attorneys, so if you want to know what is or isn't legal, go to a private attorney.
JohnC46
(South Carolina)

Posts:7865


11/26/2018 8:16 AM  
Posted By AugustinD on 11/25/2018 1:41 PM
I have seen this done by board members who may have made it through the fifth grade; maybe not. The main purpose is to avoid transparency. I suggest you asterisk the title page and write, "to the extent allowed by law" and be done with it.




I agree.
KerryL1
(California)

Posts:5950


11/26/2018 1:45 PM  
In my early years on my board, we took legal action against our developer for construction defects. Our board of 7 has a permeant seat on the board, pre our bylaws, for the commercial owner--owns about 5% of our HOA. That owner happens to be our developer. His rep on the board, a VP in the firm, was very buddy-buddy with many owners and a couple of board members-the HOA was 8 years old at the time and he'd always been on the board.

So, not only did the residential directors sign something like an NDA, we also formed an executive committee of three of us at the request of our defect attorneys to keep many details under wraps so as not to give the developer any heads up on the strategies of our attorneys. Our owners, of course, knew of the litigation, which is required by law in CA. But the strategy details, as with negotiating points of contracts in formation should not be revealed to the membership.
JohnC46
(South Carolina)

Posts:7865


11/26/2018 2:38 PM  
Mel

Kerry raised an interesting point. Are there legal actions pending?
KerryL1
(California)

Posts:5950


11/26/2018 4:07 PM  
Well, I can't seeing it being required of a candidate, but it might be of directors, so perhaps candidates should be alerted by the board that: due to certain highly confidential matters in progress, new directors will be required to sign a NDA.

In CA, we must vote to file liens in open meetings and we do it using the parcel #. We also may and do keep quiet the names of owners being disciplined by the board for violations or late assessments.
KerryL1
(California)

Posts:5950


11/26/2018 4:08 PM  
PS, per Sheila, we also have a Commitment Pledge, kinda like a Code of Ethics that we sign each year. confidentiality of executive session matters is a part of it.
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