HOA Management Company Contract NDA Clauses

I'm a new board member in Georgia.

Last year the board ended up signing a contract with a new management company. When I was going through our contract with the new company I noticed a clause stating that the board is under a 3 year NDA with the management company where they cannot reveal any information about the management companies Business Methods, practices, forms, documents, templates, data concerning the managements business, names of the managements suppliers and clients or nature of the relationships. They've also put a copyright on the Association Management Agreement.

I have some concerns about these provisions and would probably have tried to negotiate them out because:

1. They have the potential of preventing the owners from being able to review the contract terms which I think they should have a right be able to review.
2. If the HOA management company should not be sharing their confidential information with us, and whatever they do share with us, minus individual resident confidential information can and should be open for review etc. by any owner.

From what I've found, I don't think Georgia has any many protections for homeowners in associations as some other states so I think these are legal. How have other people dealt with these kinds of clauses in contracts etc.?

Lance, several years ago I thought as you did: That contracts should be a record that HOA members have a legal right to review. It turns out that this is not so. Contracts typically have "proprietary" information on them. Generally contracts are not records that HOA members have a legal right to review. I think the point of this is to prevent a member telling a competitor of the contractor details of the contract, resulting in unfair bidding.

I would hope that the Board and manager are at least willing to answer basic questions about what a contractor is obliged to do, pursuant to her or his contract.

Hence my descriptor "proprietary."

Richard, why do you have a problem with my responding to the above?

Richard, we disagree. A contract may have proprietary information. So far, I do not see that Georgia HOAs are required to provide members reviewing privileges of a contract or a copy of a contract. See http://ga.elaws.us/law/section14-3-1602 and https://law.justia.com/codes/georgia/2010/title-44/chapter-3/article-6 .

The bigger of my two concerns is the ability for any homeowner to be able to review this document. The confidentiality clause causes most of the issues because, beyond the fact that is it there, you really can't maintain it once homeowners get their hands on it. People can and will share these documents.

With contractors hired by the management company, instead of putting crazy language in the contract with the HOA, it would be more effective and customary to have a non-solicitation agreement between the MC and contractor. Also, ours has language stating that you can't hire one of their contractors for 3 years.

Ultimately, the thing that should allow a management company to stay in business and thrive is providing great service to the HOA which is a win/win, instead of crazy confidentiality clauses. Companies copy other companies business models etc. all the time, it creates healthy competition that benefits everybody.

They just don't want other management companies to know their rates or schedule A fees.

Is this a real problem or a theoretical problem? Do you have an owner asking to see the contract? Have you ever had an owner ask to see the contract?

That is what I found as well. Legally you are not required to let them review this in GA.....which the management company is fully taking advantage of here.

But that doesn't stop the HOA from adopting policies that would allow them to review these documents and offer better transparency than the minimum allowed by the law which is what I'm driving at. It allows better transparency and takes away some of the ammunition surrounding accusations of impropriety etc.. Those who have nothing to hide, hide nothing and the best defense against a false accusation/innuendo complaint for a homeowner about this is transparent truth.

IE: here are the fees the management company charges for various things, here are the terms of the contract etc., you're welcome to read it yourself. The secrecy is what leads to the lack of oversight and the HOA horror stories vs being as open as you can other than personally identifiable information about specific residents which this does not fall under.

Lance, your points are well taken by me. I have seen management companies pull this. I have kind of resented it. But the law seems to be on the side of the contractor where I am and in Georgia.

I think many boards would explain the situation; quote some legal authorities (like the HOA attorney, Georgia statutes, and the HOA insurer?); and do the best they can to answer questions about the contract to the extent the law allows. Maybe have the members provide their question in writing and inform them the Board will respond at the next meeting, explaining why there is a delay?

Your HOA does not need a lawsuit from the management company. Even if it is frivolous, with the insurance company necessarily involved, it will cost the HOA.

I really hate writing this. Opaqueness is the biggest problem at HOAs by far.

Those who have nothing to hide, hide nothing and the best defense against a false accusation/innuendo complaint for a homeowner about this is transparent truth. Kinda what I believe.

But for you to post some attorney's opinion that you shouldn't allow a member to review a, let's say, a management contract, because they might be a "troublemaker", is a load of crap. But then I expect you to be a person who would hide behind some attorney's opinion.

There are bad management companies, even worse attorney, BUT, don't place everyone in that category because of experience you might have had.

Just saying!

Again, is this an actual, tangible issue you are currently facing, or are you worried about the theoretical response of a theoretical owner who might theoretically ask to see the contract?

Because unless you have an owner who is right now demanding to see the contract, you are working yourself into a tizzy over nothing.

What you pay the management company is readily available in your financial statements.

What tasks the board delegates to the management company can be disclosed by the board.

This information is what the typical owner wants to know. If you someday get an owner who wants to know more you could - and bear with me, because this is going to be a totally radical idea - TALK to your management company, rather than assume they are engaging in "collusion".

This is language from one HOA in Georgia:

The Board of Directors shall keep correct and complete books and records of accounts and minutes of its proceedings and the same may be inspected by any member, his agent or attorney, for any proper purpose at any reasonable time.

So the attorney you posted is there to protect the Board and the management company. Didn't see anywhere about the owners, which is typical. Unless I am reading it wrong, it says records, which can include contracts, be inspected by any member, his agent or attorney for any proper purpose. The attorney you quote has his own spin. Kinda of like the president says one thing and someone else has to clean up the language.

What I would like for you to do is tell me based on any management contract you have read where there is confidential or proprietary information that someone can't see. The financials will tell be what the MC is charging, so that's can't be a secret. There are software and forms that I have developed over the years that I would want someone sharing, but would I go to court over, HELL NO.

All you have to do is construct an NDA for the association and get anyone who wants to review the documents to sign it.