An association client recently inquired whether the Board of Directors can publish a list of delinquent owners. The list would identify delinquent owners by name, address and the amount of the delinquency, and would be made available to other association owners. The idea is that adding an element of public embarrassment may serve as a deterrent to non-payment of assessments. While that might have the intended effect in some cases, the potential risks of publishing a delinquency list far outweigh the benefits.
Such a list would presumably draw no distinction between truly “deadbeat” owners who deliberately fail or refuse to pay assessments, and otherwise faithful owners who fall behind due to true and unavoidable hardships. Any attempt to draw that distinction by selectively choosing whose names appear on the delinquency list could actually exacerbate the problem by triggering claims of bad faith and breach of fiduciary duty by the individual board members. Moreover, depending on where and in whose hands the information ends up (e-mail and social media instantly remove all boundaries from the potential world of recipients), publication of a delinquency list may arguably violate certain federal and state statutes governing rights of privacy.
Even if such claims are ultimately defensible, there always remains the risk of liability – not to mention the potentially significant attorney fees and expenses involved in defending the claim. No less important is the bad blood that publication of a delinquency list could engender: neighborhood gossip, rumors, and embarrassment (often unwarranted) are all inherently toxic to the well-being of an association. An association’s bad reputation for unit owner relations can even have a negative effect on property values.
None of this means that owners must be kept in the dark about the financial affairs of the association. There are several legitimate avenues by which owners can be apprised about delinquencies. Both the Condominium Property Act and the Common Interest Community Association Act have provisions that allow owners to inspect, examine and copy the books and records of account for the association for a “proper purpose”. Additionally, any court filings related to the collection of delinquent accounts are public records and are available to anyone.
Actively publicizing delinquencies is not recommended. Diligent collection efforts and prompt turnover of delinquent accounts to the association’s attorney are always the best methods of achieving the association’s goal of minimizing delinquencies.