Data Privacy and Security: Protecting Your Winston-Salem HOA

As our ability to use technology has grown and the technology itself continues to evolve, there are ongoing concerns about security and privacy. 

Technology provides a lot of fantastic benefits, especially when it comes to effectively managing Homeowners Associations (HOAs). But with those benefits come risks. How secure is your payment information when you buy something online? What kind of data is being collected about you every time you engage with a social media site? 

It’s enough to drive anyone crazy. 

At Capstone Realty, we take data privacy and security very seriously. We know that our services only matter when transparency and trust are at the center of how we provide them. We take an intensive look at how to protect the communities we work with as well as their residents and all of the essential and private information that comes with our management of those communities. 

Nothing is without risk. But we do our best to minimize that risk. 

Increase in Data = Increase in the Need to Protect It

HOAs in Winston-Salem and across North Carolina are managing more data than ever before. From digital payment portals and maintenance requests to membership directories and internal emails, your HOA is responsible for handling sensitive information about residents and vendors. In today’s digitally connected world, that data can be a goldmine for cybercriminals if not properly secured.

We invest heavily in technology and as a result this is a priority for us, but we’ve noticed that many HOAs don’t recognize the scope of their responsibility when it comes to data privacy and security…until it’s too late. A data breach will compromise personal information. Even worse, it will erode trust, damage reputations, and could even result in legal consequences if the damage is extensive enough.

Whether you’re a board member at your HOA or a concerned homeowner who still feels more than a little nervous about your financial information and personal data and the way it’s used, this information can help you understand the importance of protecting your HOA’s data, what risks you face, and how to implement effective strategies for data privacy and cybersecurity.

What Kind of Data Does Your HOA Handle?

Most HOAs are small, nonprofit organizations, but that doesn’t make them immune to ongoing cyber threats, phishing scams, and other potential risks and liabilities. In fact, those potential problems can easily fly under the radar. If you don’t know what kind of threats to be looking for, you may not know that they’re on your front doorstep.

When small HOAs and community associations lack sophisticated security systems that businesses and large institutions have in place, the damage can be done after it’s too late to do anything about it.

As professional association management experts we know that HOAs handle a surprising amount of sensitive information, including:

Homeowner contact information Names, addresses, phone numbers, email addresses.	Financial records Payment histories, bank account information for dues, and budgeting data.	Vendor contracts and invoices All of the information on what your HOA is spending and who you use.
Meeting minutes and internal correspondence Minutes are shared with homeowners, but you don’t necessarily want them leaving the association.	Security codes, gate access credentials, and surveillance footage Personal and private information that should remain inside the community.

This data must be protected, not just to comply with legal and ethical obligations, but also to maintain trust and transparency within the community.

Full disclosure and total transparency can be especially important. When homeowners want to now what kind of information is being collected about them, be honest. When they ask how that information is protected, make sure you have a good answer ready.

Understanding the Risks: What Can Go Wrong?

Many HOA boards assume they’re too small to be a target, but cybercriminals often target small organizations precisely because they assume there are fewer safeguards in place.

Here are some common risks:

Phishing Scams Phishing scams are deceptive tactics used by cybercriminals to trick individuals into revealing sensitive personal or financial information, such as passwords, credit card numbers, or login credentials. These scams typically come in the form of emails, text messages, or websites that appear to be from legitimate sources. They can look like communication people have received before from banks, government agencies, or well-known companies. But, they are actually fraudulent. Phishing is a major threat to online data security because once a scammer gains access to this information, they can exploit it to commit identity theft, drain bank accounts, or gain unauthorized entry into secure systems. The growing sophistication of phishing attacks, including the use of personalized messages and realistic-looking websites, makes them increasingly difficult to detect, putting individuals, businesses, and even entire organizations at serious risk. Board members or vendors may receive fake emails asking for payment or sensitive information, which can result in compromised accounts or financial losses.

Unauthorized Access If login credentials are not properly managed and protected, unauthorized individuals can gain access to sensitive files or even financial systems. Strong passwords and strict user access protocols are essential safeguards in protecting sensitive data and preserving privacy in today’s digital landscape. Weak or reused passwords are one of the most common vulnerabilities exploited by cybercriminals to breach systems and gain unauthorized access to private information. A strong password is long, complex, and unique. It’s the best line of defense against brute-force attacks and credential stuffing. However, passwords alone are not enough. Implementing strict access controls, such as multi-factor authentication (MFA), user role restrictions, and regular access reviews, helps ensure that only authorized individuals can view or modify sensitive information. These protocols reduce the risk of internal threats, accidental data leaks, and external breaches by creating multiple layers of verification and accountability. Together, strong passwords and robust authentication measures form the foundation of a resilient data security strategy that protects both individual users and larger systems from unauthorized access and exploitation.

Unsecured Wi-Fi Networks If your HOA clubhouse or office uses unsecured internet, hackers can intercept communications or access databases. Using unsecured Wi-Fi networks poses significant risks to your data privacy and online security. These networks often lack proper encryption, making it easy for cybercriminals to intercept the data being transmitted between your device and the internet. This type of attack, known as a “man-in-the-middle” attack, allows hackers to eavesdrop on your activity, steal login credentials, capture sensitive information like credit card numbers, or even inject malware onto your device. Because unsecured networks typically do not require authentication to connect, they also make it easier for attackers to set up rogue access points which are Wi-Fi hotspots that mimic legitimate ones to trick users into connecting. Once connected, users may unknowingly hand over their personal data to criminals. For individuals and organizations alike, using unsecured Wi-Fi without precautions like a virtual private network (VPN) or encrypted communication tools can lead to severe breaches of privacy, identity theft, and financial loss.

Improper Data Disposal Simply deleting files or tossing paper records in the trash isn’t enough. Sensitive documents must be properly destroyed or permanently erased. Failing to properly dispose of online data can leave individuals and organizations vulnerable to a wide range of cybersecurity threats. When sensitive information, such as old emails, login credentials, financial records, or customer data, is not securely deleted or archived, it remains accessible to hackers who know where to look. Cybercriminals often target abandoned accounts, cloud storage, or outdated systems precisely because they are less likely to be monitored or protected. Inadequate data disposal can lead to identity theft, fraud, regulatory violations, and significant reputational damage, especially for businesses handling personal information. Simply deleting files or emails is not always enough, as data can often be recovered unless it’s securely wiped or encrypted. Proper data disposal practices, including the use of secure deletion tools and policies for retiring digital assets, are critical to maintaining privacy and protecting against long-term security risks.

There are also risks to outdated software. Failing to update or patch your software leaves your systems vulnerable to known exploits. If you don’t have a skilled IT professional serving on the board, or if you’re unable to contract with an IT team just to take care of your security and your software, a professional HOA management company will be essential. We bring all of these skills and resources to your association.

Legal Considerations: North Carolina Data Protection Laws

Protecting data and privacy is the right thing to do, and it’s also a legal requirement, especially as the custodian of personal and financial information belonging to your homeowners. 

While there’s no specific federal law that governs HOA data privacy, North Carolina has implemented data breach notification laws that apply to any organization maintaining personal information. Under the North Carolina Identity Theft Protection Act, organizations, including HOAs, must:

• Protect personal information from unauthorized access and disclosure
• Notify affected individuals and the state attorney general in the event of a breach
• Safely dispose of records containing personal data

Failure to comply can lead to penalties and legal liability. HOAs that contract with third-party vendors such as association management companies or IT service providers, are still responsible for ensuring that those vendors follow best practices for data protection.

The North Carolina Homeowners Association Act governs how HOAs operate, particularly in regards to the rights of homeowners and the responsibilities of the HOA board. While this law doesn’t directly deal with privacy or data security in the traditional sense (like personal data protection), it does outline the rights of homeowners to access certain records, like meeting minutes, financial reports, and architectural decisions. This means that an HOA may need to balance the right of homeowners to access certain records with privacy considerations for individuals, especially when it comes to personal information.

Under the NC HOA Act, homeowners generally have the right to inspect certain HOA records (like financial documents, contracts, and minutes of meetings). However, personal information such as Social Security numbers, financial details, or medical conditions, should be redacted or excluded from these documents to protect individuals’ privacy.

North Carolina’s public records law requires transparency, but it also permits the withholding of personal information that is not considered part of public record.

Key Takeaways

Transparency with Boundaries

HOAs are required to provide transparency to homeowners, but they must safeguard personal information and follow specific privacy protections for sensitive data.

Right to Access

Homeowners can access HOA records, but any personal data or sensitive information (like financial records, medical conditions) should be protected and not shared without consent.

Data Security

If personal data is collected, HOAs need to ensure it’s kept secure, especially regarding online communications and documents.

How to Protect Your HOA’s Data: Best Practices for Boards and Homeowners

Implementing strong cybersecurity practices can often feel overwhelming or expensive, especially when you are juggling multiple other priorities for your association. Start with these steps:

1. Create a Data Governance Policy

This policy outlines what types of data your HOA collects and why it’s necessary to keep. The policy will also establish who has access to specific types of data and how data is stored, encrypted, and eventually destroyed. Your governance policy should also include protocols for responding to data breaches or suspicious activity.

2. Use Secure, Centralized Systems

Avoid storing sensitive information on personal laptops or sharing documents through unsecured channels. Use secure, cloud-based platforms that offer encryption and audit trails. If your HOA works with a professional management company like ours, we will confirm that our professionals and systems include secure software with proper access controls.

3. Practice Strong Password Hygiene

Require unique, complex passwords for board logins, financial accounts, and management systems. Encourage the use of password managers and two-factor authentication for extra protection. Don’t use the same password for every platform and site.

4. Limit Access to Sensitive Data

Not every board member or volunteer needs access to all information. Implement role-based permissions so that individuals only see data relevant to their responsibilities. This does not have to become a power-play when board members and homeowners understand the purpose of strong controls.

5. Train Board Members and Residents

Offer annual cybersecurity training sessions for board members, committee members, and even homeowners if they are interested in learning more about how to protect themselves. Teach them how to recognize phishing emails, avoid unsafe links, and properly manage documents.

6. Secure Physical Records

If your HOA still maintains paper records, store them in locked cabinets and limit access. Shred documents before disposal to prevent dumpster diving for personal info. It’s often a good idea to keep both printed and digital records. If there’s physical damage to the paper files, you’ll be glad you have them digitally. If some kind of outage prevents you from accessing online files, it’s good to have them accessible within the HOA. 

7. Vet Your Vendors Carefully

Ensure any third-party vendors are properly insured and follow data security best practices. Get their policies in writing and ask how they handle cybersecurity threats. As your HOA management partner, this is part of what we’ll do as we establish a working relationship with your association.

8. Create a Breach Response Plan

Know in advance what steps to take if data is compromised. Your plan should include:

• Who is responsible for investigating and containing the breach
• When and how to notify homeowners and authorities
• How to recover lost or damaged data

Involving Homeowners: Transparency and Education

Data security is not just a board responsibility. Homeowners need to be aware of how their information is being used and protected. Build trust through transparency in the following ways:

Let residents know what personal information is collected and why.	Remind homeowners not to share login credentials or personal data via email.
Provide opt-in/opt-out options for directories or communications.	Include data security updates in your newsletters or annual meetings.

By keeping homeowners informed and engaged, your HOA creates a more cooperative and vigilant community.

Partnering with the Right Professionals

If managing cybersecurity feels overwhelming, consider hiring outside support. Many Winston-Salem property management companies offer integrated technology platforms that protect resident data with bank-level encryption. As professionals, we can also assist with compliance, vendor vetting, and breach response planning. This can take a lot of pressure off your board and help you feel more secure in the way information, especially sensitive information, is handled.

Legal counsel can help your board develop a data privacy policy that complies with North Carolina law, while cybersecurity consultants can audit your current systems and recommend improvements.

The cost of prevention is far less than the cost of damage control after a breach.

There’s no doubt that threats are on the rise as technology becomes more available and its purpose continues to evolve and expand. We love the technology we use, and we also recognize that it comes with risks. We’d be happy to show you more about how we manage those risks and keep your association’s information safe. Contact our team at Capstone Realty Consultants when you’re ready to make some changes to the level of security in your community. We’ll take a look at where you stand currently and make some customized recommendations for your Greensboro or Winston-Salem association.