Can You Disclose Who In Your Community Is Delinquent In Payment Of Their Assessments?
I’ve recently been following a blog that has been discussing how the paying members of a homeowners association can find out who is delinquent in paying their assessments. We’ve been asked many times over the years whether it is lawful, or wise, to publish the names of owners who are not current in the payment of their assessments. It is interesting, at least to me, the scope of opinions about this topic.
I take the position that any member in the association who is not paying his or her assessments is being subsidized by those who do pay. I believed that the member who is paying is entitled to know who they were subsidizing.
However, many people (including some of the attorneys in our office) believed that such information was private information, and should only be made available to the Board of Directors, and withheld from inquiring owners.
In conjunction with this disclosure question always came the question of whether the association should, or should not, publish the names of the delinquent members. The thought here is that publishing the names would shame or embarrass the delinquent members into paying.
I’ll address the easiest of these matters first. We strongly recommend against publishing delinquency lists. The risk of publishing incorrect information, including names, addresses, or other inaccurate information such as the amount due, is too great in comparison to the possible benefits of publishing. If any of the published information is inaccurate in any respect (for example, the amount of the delinquency was accurate as of a week ago, but as of the date of publication it was no longer accurate), the association is liable for defamation. This means that the association could have to pay damages, penalties and attorneys’ fees in a civil suit brought by the defamed member. In addition, if the inaccurate information is published, not by the association itself, but by a third person, for example its manager, its attorney, or some third party who is determined under various laws to be a “debt collector,” that third party could have liability under state and federal fair debt collection acts, which can include specified amounts of damages, penalties and attorneys’ fees awards.
So, now that we’ve got that out of the way, let’s address members’ entitlement to know who is delinquent. I’m not quite sure I buy the argument that such information is private to the delinquent member. However, one of the strongest arguments I’ve heard about not disclosing such information is in response to the question “what is the questioning member going to do with the information?” Generally, the member has no right to do anything with that information – no decision that the member is legally entitled to make would be affected one way or the other by having that information. Rather, it is solely within the discretion of the board of directors to determine what, if anything, to do with the information, and whether to pursue the delinquent owner or not. While some people point to the success in collecting delinquencies due to publishing the names of the delinquents (shaming does work sometimes), it has far greater potential to backfire, and can be much less effective than other measures to collect the delinquent assessments, not to mention that it can be very divisive in the community.
Finally, as many of you readers know, last year our legislature adopted a new records bill (part of CCIOA) that became effective on January 1 of this year. It specifically permits an association to withhold certain records from a member’s request for inspection and copying – the list includes records to the extent that they concern individual units other than those of the requesting owner. In other words, in Colorado, an association’s board of directors has the express authority to withhold from an inquiring owner any information about another owner or his or her unit. This would include information about status of payment of assessments.
While the right to withhold such information is not a duty to withhold, think about the purpose for the disclosure before doing so, and whether the disclosure will serve any legitimate purpose of the inquiring owner. Otherwise, keep the delinquency list private for the use of the board only.