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...
Boards Elections [Part 2]

Boards Elections [Part 2]

Dear Mr. Richardson, We cannot get people to volunteer to be on the board. I have been on the board and told the manager I didn’t want to run. She put my name on the ballot, and said I had to stay on the board until someone took my place. What happens if you don’t have people to serve on the board? Thanks, L.W., Encinitas Dear L.W., The usual cause for difficulty in finding volunteers is that homeowners are discouraged from volunteering by seeing directors working long hours for the HOA. The less common reason is HOAs in turmoil often have trouble filling seats with brave souls. A provisional director could be appointed by the court if the board cannot attain quorum, but this is very expensive (the director will charge hourly). You cannot be forced to serve as a director. A director can resign any time, and the board then can in an open meeting vote to fill the vacancy. The manager may be misapplying Corporations Code 7220(b), which says that a director serves until the term expires and a replacement is elected. Corporations Code 7224(c) provides that a director may resign upon giving written notice. I hope your board investigates the reasons why people are unwilling to serve, and things improve. Sincerely,Kelly Mr. Richardson, We have several candidates running for the board and one candidate is the spouse of an owner of record but she is not on title. Our board president announced in an open meeting that the candidate was not eligible to be a candidate based on the president’s interpretation of the Davis-Stirling Act. Your...
Keep the Lawyers at Bay [Ten Tips]

Keep the Lawyers at Bay [Ten Tips]

Serving as a volunteer director is often thankless, but it shouldn’t be risky. Here are ten ways to reduce if not prevent personal risk from your service. 1. Learn and follow the Business Judgment Rule Found at California Corporations Code 7231 and 7231.5 and contained in most bylaws, the Rule protects volunteers from liability while acting in good faith, for the association’s best interests, and upon reasonable inquiry. 2. Insurance is necessary Only serve if the association has directors and officers (“D&O”) insurance coverage. Civil Code 5800 protects directors from personal liability if the HOA with more than 100 memberships has $1,000,000 of D&O insurance or $500,00 if less members. 3. Refuse compensation Whether called a “stipend” or assessment reduction, reject any form of renumeration for board service. Upon receiving even one dollar of compensation the director is no longer a volunteer and loses all the immunities of volunteers. Reimbursement for a director’s time serving the HOA is not reimbursement – it is compensation. Reimbursements are repayments of out of pocket expenses. 4. Don’t get mad… or even “Good faith” doesn’t just mean a pure heart. However, it certainly does exclude any willful, malicious or retaliatory intent. The nastiest homeowner has the same rights as the saintly ones. Enforce the rules evenly. 5. Don’t take matters into your own hands HOA governance is a team sport, not an individual event. What you think is valid instruction may be viewed by the board (and the HOA’s attorney) as interference. A director (even the president) must use restraint and wait for the board to act. 6. Follow the corporate process Is...
Boards Barking About Dogs

Boards Barking About Dogs

Dear Mr. Richardson, Our CC&R’s limit the number of pets a homeowner can have to a “reasonable” number. City law states a resident outside of an HOA can have up to 4 dogs. Our association manager insists we have to abide by city law. Is that right? Thanks, F.D., San Pedro Dear F.D., Per Civil Code Section 4205, governing documents cannot conflict with state law. Unless your city in its ordinance exempts HOA residents, your association must, like any homeowner in that city, follow the law. The association could adopt a stricter standard, but it cannot be less strict than the city, as the public law sets the floor below which associations may not go. Also, it is the city’s job to enforce ordinances, so the board might not have to become involved (except for a call to the animal control department). Most homeowners do not research city ordinances, so if a pet limitation is important to your community, it is better to state it clearly in the governing documents. Pet limits are probably best placed in CC&Rs, so they are more permanent and cannot be changed from one board to the next. Thanks,Kelly Dear Kelly, Several residents used to take our dogs to an enclosed common area to play. The area was not designated for any specific purpose. One day the HOA president announced that dogs would no longer be allowed in that area. The board then invited residents with grandchildren to take advantage of that common area for play. Wouldn’t each resident who takes their dog to the area be covered through each individual homeowners insurance? D.S., Cherry...
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...