Recording Meetings, Secret Budget Talks, and a Dictator President

Recording Meetings, Secret Budget Talks, and a Dictator President

Hello Mr. Richardson, Our board announced that audio recordings of meetings would no longer be allowed. What are your thoughts on this? Does this action by the board violate the Brown Act, the Davis-Stirling or some other statute?  Thank you, N.D., Rancho Santa Fe Dear N.D., As private organizations, common interest development associations (aka “HOAs”) are not controlled by the Brown Act (which applies to public bodies). The Davis-Stirling Act contains the “Open Meeting Act,” found at Civil Code 4900-4955. The Open Meeting Act does not require that HOA meetings be recorded electronically, but only that draft minutes of meetings be available no later than 30 days after the meeting. I generally recommend against audio or video recording of board proceedings, except in the rare occasion the association has the proper facilities to record and broadcast meetings (typically only in very large HOAs). Recording meetings often creates two negative problems – it intimidates some, and invites others to grandstand. So long as the policy is clearly stated, association boards can take either policy direction. Best,Kelly To Kelly G. Richardson, We have a question concerning our HOA president. The president is running a construction company that controls all maintenance and repairs throughout the community. She runs the community as a dictatorship and no one on the board is allowed to even speak. We have requested financial records – it won’t work. She told us this could no longer be discussed. M.L., Lake Forest Dear M.L., Some HOA presidents simply let the position get to their head. HOA presidents have very little power in most HOAs, aside from calling and chairing meetings. They have one...
Improve Your Board Meetings: Drafting a Code of Conduct for the Board of Directors

Improve Your Board Meetings: Drafting a Code of Conduct for the Board of Directors

A common frustration for managers and association boards of directors is dealing with issues that arise out of conflict with individual board members. At some point we have all heard of the board member who is hostile, disagreeable or the proverbial “loose cannon.” Other boards have struggled with how to rein in the director who consistently advances his or her own agenda without regard to the best interests of the association. Finally, there are directors elected, for whatever reason, who feel compelled to reveal confidential information about the association to third parties. Unfortunately, the Corporations Code does not yet contain a provision allowing the board to remove a director for behaving badly. The slap on the wrist that follows improper disclosure or misconduct does little to undo the damage already done. There are, however, viable options available to managers and boards to address misconduct. In most cases, the most direct option to control improper behavior is censure. There is no more effective method of controlling improper behavior than by confrontation by one’s own peers. Like any disciplinary hearing, the director should be advised of the improper conduct committed and be provided with an opportunity to explain his or her actions. The director should also be cautioned that continued misconduct will result in further disciplinary action by the board to protect the association and could include obtaining a court order seeking to enjoin their conduct detrimental to the association. If the conduct committed is improper disclosure of confidential information, the best option is to exclude that board member from executive session meetings, or from receiving executive session material or both....
We Don’t Like Non-Resident Directors, or Pot Farms, in Our HOA

We Don’t Like Non-Resident Directors, or Pot Farms, in Our HOA

Dear Kelly, Are board members required have to own and live on site to become a board member? I am not finding any information on this in my CC&Rs or rules and regulations, and was wondering if you could shed some light on this question for me. Thank you in advance, K.Y., Downey Dear K.Y., Board eligibility standards under the Corporations Code are minimal – a director cannot be a felon and cannot be declared legally incompetent by a court. HOA eligibility standards are usually found in bylaws but can also be found sometimes in the election rules. The Friars Village v. Hansing case from 2013 confirmed that eligibility standards can be placed in election rules, so long as they do not conflict with the bylaws or CC&Rs. Some associations amend their bylaws or rules to bar directors from running for the board or serving as director if they are non-residents, have missed several meetings, are suing the HOA, or have a spouse or co-owner already serving on the board, to give some examples. However, a bill pending in Sacramento may change all that. Senate Bill 1265, authored by Senator Wieckowski, would overturn the Friars Village v. Hansing decision. If SB 1265 becomes law, the only disqualifications for board service will be if the person is not a member, has committed a felony involving financial dishonesty, or is confirmed delinquent after an internal dispute resolution process. If the bill becomes law, all other bylaw provisions regarding board eligibility will be voided, basically amending all bylaws. SB 1265 passed the Senate on May 30 by 25 to 12, and is...
El Presidente Is Not El Jefe

El Presidente Is Not El Jefe

The office of HOA president is often misunderstood, and very serious disfunction for associations and their boards, as well as heartburn for the president, can be the outcome. At the outset, it is critical to understand that the role of the HOA president is dramatically different than the for-profit corporate president. The typical for-profit president is hired to be the boss, and can hire and fire, create or terminate contracts, and otherwise run the show. On the other hand, the HOA’s boss is not the president, but its board of directors. Corporations Code 7210 confirms the chain of command in the common interest development – “the activities and affairs of a [non-profit mutual benefit] corporation shall be conducted and all corporate powers shall be exercised by or under the direction of the board.” In a for-profit corporation, the day to day running of the business is typically the responsibility of the president, along with hiring and firing staff. In most associations, day to day execution of board decisions is executed by the association’s paid professional manager. The association president has just one vote on the board, and that vote is no more valuable than any other director. Directors who always automatically defer to the president are not fulfilling their responsibility to the association – which needs each director to contribute. A “super-director” does not exist in the HOA world – each director is just as important as the others. HOA presidents often feel that it is their responsibility to instruct the HOA’s manager, employees, or vendors on how they should perform their jobs. However, in doing so without express...