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Want confidentiality? Better put that in writing

March 01, 2009|Stephen Glassman and Donie Vanitzian

Question: I saw an advertisement in a newspaper for a company that manages several associations boasting about the amount of money it collected in unpaid homeowners dues. The ad published the names of the associations -- including one of which I am a member -- along with the amounts collected.

I felt it was an inappropriate ad and believe it is causing negative effects on property values in my community. Should the company be terminated for breaching a confidence of the association by publishing our information in the paper? Should our board directors be sued for breaching their duty in failing to supervise the management company and allowing it to publish an ad that paints our association in a bad light?

Answer: There is always a risk for boards that allow management companies to help themselves to the association's confidential records and data with no safeguards in place. But don't confuse that data with information that is a part of the public record.

To be certain, association contract terms must be spelled out. If you want your association's information kept confidential, state it in the agreement and include a requirement that the management firm pay damages if it breaches that clause and any other association-related confidences.

A management agent owes loyalty to its principal, the association. If the management company has used your association's name for commercial purposes without board consent, you may be able to recover damages and stop it from using your association's name in the future. If the company benefited from the use of private information garnered from your association, that benefit should flow back to the association.

The mere fact that several owners in your association don't pay their dues in a timely manner does not necessarily paint your association in a bad light -- but advertising that fact may not be good for sales and property values.

The existence of a lien filed against a titleholder's property is in the public record. But the specifics justifying the lien are not necessarily public, in particular the amounts supporting the management company's claims of collecting unpaid dues.

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Send questions to Box 11843, Marina del Rey, CA 90295 or e-mail noexit@mindspring.com.

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