Ep. 27 | How To Keep From Getting Sued When Sharing Information (Non Disclosure Agreement)
On this episode of The Mobile Home Park Lawyer, Ferd discusses non-disclosure agreements (NDAs) and what they look like. This information will help you not to get into any legal trouble for sharing information under an NDA. Enjoy!
“Ultimately, these documents are about keeping sensitive information or confidential, proprietary information just quietly between the parties and as it is intended.”
0:00 – Intro
1:43 – Ferd likes to make NDAs mutually beneficial
2:22 – The essential baseline elements of an NDA are the parties, the date, and the categories of the agreement
2:58 – An NDA should outline that if you can prove you got access to information somewhere else you can legally have the information
3:52 – Another important category in the NDA defines the use of the information
5:05 – An NDA should outline if you are required to disclose information
5:57 – Another category is the return of the information if the deal falls through
7:07 – The next item is the termination, discussing how long you can’t speak about the information after the deal has ended
7:23 – Ferd goes through a few final provisions
Welcome back mobile home park nation. Here again today going to talk about some legal documents. I know those are really exciting to all of you, but for better or worse, the society we live in is very litigious and it’s important to have legal documents. And there’s a number of legal documents. We’re going to go over here in this little mini-series. Today I’m going to talk about non-disclosure agreements or also called confidentiality agreements.
These documents can help you not get sued, or it can help you maybe set somebody else up to sue if they violate them. Ultimately, these documents are about keeping sensitive information or confidential, proprietary information, just quietly between the parties and as it is intended. And this could come into play in the MHP space if you are trying to sell a property or you’re trying to assign or wholesale a property, this could be, you know, if you’re trying to just evaluate, you know, the market, as far as hey, maybe I’m thinking about selling it, let me talk to some potential buyers.
There’s a number of reasons you can have these documents. Those are pretty boilerplate. But I’m going to go over today kind of the key terms and what they mean and why you should be using them. And frankly, if you’re sharing information with other parties, you should be using them. But high level, I like to make these mutual. Sometimes an NDA will be from like the disclosing party to the receiving party. I think those terms and that structure is more appropriate in a non-circumvention agreement that we’ll cover in another episode. But as far as the non-disclosure slash confidentiality agreement, I make it mutually beneficial because the reality is both parties probably do share information back and forth. And then it’s kind of keeps both parties, honest and scares you a little bit to hey, don’t tell anybody what I offered. Don’t tell anybody what I countered at, you know, all that kind of stuff.
So first bullet point in your document, you got to have the parties, you know, who’s involved, you know, my company or your company me, okay, next, the date of the agreement. And then typically these categories like, Hey, category one disclosure of confidential information, just references this information is going to be proprietary to the disclosing party. You know, it’s secret, confidential, unique, you know, blah, blah, blah. There’s sometimes are things that are excluded in this could be things like that are in the public domain. And like, you know, if my website is referenced in our NDA between me and you, but I’ve got a public-facing website with my picture on it. That’s already out there. By rule, not secret. And then other times if you could demonstrate that you already had access to information, like, let’s say if we took out my cell phone number, I don’t think it’s out there in my website because I want everybody calling me all the time in my cell phone, but some of you guys already have it. So, if my NDA says, you’re not allowed to share my cell phone number, but you can prove that you’ve been texting me since the day before this agreement or for five years ago. Then obviously you would be allowed to share, or at least have, not really share actually, but have that confidential information in this example is my cell phone number.
And then sometimes there’s other stuff that’s, you know, that could be like independently derived, like you could independently derive my house address if you followed me home from a conference and watched me walk into my house. Don’t do that by the way, that would be really weird. But that would be something, you know, you didn’t get through this document. The next category is really the use of confidential information. Typically, this says, the receiving party. And again, because it’s mutual, either party could be the disclosing or receiving in these documents. If the receiving party says I’m not going to engage in discussions or negotiations about this potential relationship, potential property outside of the lines of this document. And the document, you know, the underlying substances, or we may be entering into a business relationship may be as adversarial, you know, buyer, seller parties, maybe assign or signee, or maybe it was a joint venture, whatever this, whatever we’re going to disclose and start to talk about this NDA is designed to govern those things.
And there’s going to be some exceptions kind of like on the, you know, disclosure of confidential information. There’s also exceptions to the use. You’re like, okay, I’m allowed to use the information and share it with people like my attorney, my accountant and my financial advisor, maybe my managers, directors, employees etc., affiliated entities, things like that. So that would be an exception to who you can share it with. But if you are the one sign on this document, you’re taking the responsibilities, we’re going to do that properly and not go outside the lines.
Other categories is just, you know, there’s generally an exception that is like, if you’re required to disclose, so the big one be like a subpoena or like the IRS audit somebody and they say, you got to tell us how much that got paid for that property. Okay. You get a kind of an out, but you can really tailor that in your document set to make it limited out. And then you have the right to fight it. Another form of that is it’s called injunctive relief where like, if something’s about to be like, if I have you promise into my document and not share my cell phone number, but you know, the city X, you know, subpoenas you and says, you have to do it in front of the city council, I can jump in and try to file an injunctive relief, which is kind of like a mini lawsuit or it’s a pleading with some sort of court or tribunal to stop your disclosure. And then I get to, you know, fight about it before you actually get to speak aloud on whether or not you can share my cell phone number.
Another term common in these documents is the return of information, basically just saying hey, if we don’t end up doing the deal, like we thought you have to either A, shred all the documents I gave you or B, send them back. And then just in general, we should reference publicity like this document, you know, like, let’s say for example, I’m going to, I’m looking to sell my mobile home park in X city. Not only can you not share the details that I give you, like my rent roll, my net operating income and my asking price, my counteroffer price. But you can’t even tell people that I’m potentially going to sell it. You can’t even make it known that we have this agreement. And then also I like to have in there to the acknowledgment of a receiving party saying like, there’s no warranty information. So, if I give you, if I give you my rent roll, you know, under this sort of document, I’m not going to warrant its validity. Now if I was actually selling the property to you, it would be very common for me to have the seller representations of warranties that would cover that.
So, these documents are typically more commonly used on things like, I’m a broker, I’m going to show you this property, but I’m the broker. Like I don’t even have the owner, you know, and I’m not the owner. I got this information of the owner, I think it’s accurate, but I’m not representing that it is. I’m just saying, here’s the information I got.
And then the next item is the termination. Like, how can we terminate this agreement? How long does it last before we can terminate or not? Is there a tail on it? Meaning, I mean, post-termination, does it last, you can’t speak about this stuff forever or for two months, etc. And then generally there’s like, then I got a bunch of just generic provisions that are boilerplate. Like, you know if I waiver provisions like I don’t waive my right once, I don’t waive it forever. State of governing, where the notices need to be sent to. And are they mail, email, etc., you know, reference to this, being the entire agreement, reference to the severability provision? That basically means if any one provision is deemed invalid or illegal, it doesn’t, you know, screw up the rest of the document and make it invalid.
And the assignment provision, which in these cases typically is an inability to assign rights responsibilities for either party. And then your typical kind of counterparts. We can sign separate documents and email back and forth. And then we both reference that we have and represent that we have the authority to sign this document. Like if I’m the vice president of Coca-Cola, you know, do I have the authorization to sign this. Well, I’m representing that I do. And then that means it doesn’t need the president or the chairman of the board or the whole board or 17 other people. And then you got your signature block.
So that’s pretty it, pretty common document. Not overly complex, but I feel very important to utilize this sort of document. The non-disclosure agreement, also known as the confidentiality agreement.