Condo HOA restricting information

[theveteran]

Hi all. I'm hoping someone can help with this little debacle. The facts are as follows:

* 6yr old condo experienced mass water leakage in a lot of units due to poor window installation
* HOA sued builder on behalf of unit owners
* Builder settles with HOA BOD out of court for undisclosed amount without HOA unit owners voting.
* HOA BOD refuses to disclose settlement sum to unit owners except individually AFTER each interested owner signs nondisclosure form.
* I'm having a rough time with the BOD's disbursement of settlement funds and requested to see settlement docs.
* HOA BOD refuses to let me see without signing non-disclosure.
* I inform BOD that under Maryland Condominium Act § 11B-111.3. Distribution of written information and materials, such information shouldn't be restricted.

Written information or materials. -- Except for reasonable restrictions to the time
of distribution, a recorded covenant or restriction, a provision in a declaration, or a
provision of the bylaws or rules of a homeowners association may not restrict a lot owner
from distributing written information or materials regarding the operation of or matters
relating to the operation of the homeowners association in any manner or place that the
governing body distributes written information or materials.

* HOA BOD still refuses to lift restriction and let me see documents without signing non-disclosure.

Do I have a case here?

 

[sourceforge]

Here are a few thoughts to consider.

A. It will be difficult for anyone in this list to provide accurate information because:
i. We do not have all of the facts; and
ii. We do not have all of your governing documents.

As an HOA Committee member, former President, and former board member, my experience tells me that there are probably other relevant facts related to the settlement that may be important for the purpose of giving good advice.

First, you could sue, however you will spend a lot of time and money, and will be dissatisfied at the end. If you do sue, set your expectations in order. Plan to spend $10-15,000, to be able to see what you will be able to see by signing, and have a long, bitter relationship with your neighbors.

Here are my suggestions for you to consider:
1. If you have not already done so, put your request in writing. Write what you want from the board, and make it something that the board has the authority to provide as a result of your governing documents. A verbal request can be ignored, and you cannot show your written request to other HOA members. A written request, in a pleasant and neighborly tone, stating what you want, why it should be given, and the authority of your governing documents saying that that the board must provide it.

2. If you have not, and will not, put a request in writing, please review your motivations.

3. If you put your request in writing, when the board responds, ask them very nicely (they will be your neighbors after this matter is resolved), to put their response in writing so you can make sure you understand their position.

4. Are you willing to be the HOA President for two years? If so, go to the monthly board meetings and protest, in front of your fellow members, about the secrecy and unwillingness to provide the information. If there is a problem with secrecy, and if you are persuasive, you will have additional homeowners join with you in your protest. If enough homeowners join with you can put enormous pressure on the board to provide the settlement. If the board will not relent, run for a position on the board opposing the board's secrecy. In my experience, a board that has secret settlements has lots of other secret side dealings and is untrustworthy. Your goal as President should be to change the tone of the HOA to make all of the documents open.

5. Arbitration. Many governing documents provide members with the right to arbitrate, and not to sue. Arbitration is much less expensive, quicker, and in this case will probably be very fair. Only go to arbitration if you have your request, the board's response, and at least five other homeowners who have written to you, in an email or letter, that they agree with you. If you cannot find at least five people in your HOA to join with you, please consider whether this is a folly.

6. Collateral Attacks.
A. Collateral Attack 1. I am a fan of attacking from the side, as opposed to head-on, and in this case, I would challenge the ethics of the opposing counsel and the Board's attorney under Maryland Lawyer's Rules of Professional Conduct, Rule 3.4 (f) which states

"A lawyer shall not:

(a) unlawfully obstruct another party's access to evidence or unlawfully alter, destroy or conceal a document or other material having potential evidentiary value. A lawyer shall not counsel or assist another person to do any such act;

(b) falsify evidence, counsel or assist a witness to testify falsely, or offer an inducement to a witness that is prohibited by law;

(c) knowingly disobey an obligation under the rules of a tribunal except for an open refusal based on an assertion that no valid obligation exists;

(d) in pretrial procedure, make a frivolous discovery request or fail to make reasonably diligent effort to comply with a legally proper discovery request by an opposing party;

(e) in trial, allude to any matter that the lawyer does not reasonably believe is relevant or that will not be supported by admissible evidence, assert personal knowledge of facts in issue except when testifying as a witness, or state a personal opinion as to the justness of a cause, the credibility of a witness, the culpability of a civil litigant or the guilt or innocence of an accused; or

(f) request a person other than a client to refrain from voluntarily giving relevant information to another party unless:

(1) the person is a relative or an employee or other agent of a client; and

(2) the lawyer reasonably believes that the person's interests will not be adversely affected by refraining from giving such information."


Secret settlements are a bad thing used by malicious people, which is why the Attorney Rules of Professional Conduct limit secret settlements. I do not know Maryland law, but many states require a compelling public interest reason to justify making a settlement private. Just because the defendant does not want others to know that the case is resolved, is not a reason to justify a secret settlement. If you know an attorney, you might ask them for a memorandum on the legality of secret settlements in Maryland.


6. B. Collateral Attack 2. Is the board breaching its fiduciary duty by entering into a secret settlement, that cannot be evaluated by HOA members. I am dubious about the motivations and willingness to protect the interests of the HOA of a board that is unwilling to share the information, and this may open the HOA to paying more for its Directors and Officers liability insurance to defend the HOA against these suits. If the board is unwilling to share this information, what other items is the board hiding that may be exposing the HOA to risk, and possible devaluation of the members investments. The board will respond that they are not hiding anything, and your reply will be "Prove it. Open up everything, including this settlement."

Without knowing the terms of the settlement, the HOA members have no way to determine if the board is truly representing the interests of the homeowoners, or their own interests.

For these collateral attacks, you will have to be willing to be HOA President for two years. If you protest, but are unwilling to run the HOA, nothing will change. You have to be the change you seek in the HOA.

Thanks for considering my suggestions, I hope they give you some ideas to resolve the matter with your colleagues.