Frozen Out Directors

Frozen Out Directors

Kelly, Our board established an executive committee consisting of three board members, excluding the two remaining board members, under Corporations Code Section 7212. Later, one of the non-executive committee board members sold their condominium and the executive committee appointed a replacement board member. There are four remaining board members; three on the executive committee and one who is not on the executive committee. Since the Corporations Code prohibits the executive committee from “filling of vacancies on the board or in any committee which has the authority of the board” per Section 7212(a)(2), can the action be reversed, changed or modified, or nullified? What is the appropriate venue for resolution, short of filing an action in court? Best Regards, R.D., Palm Desert Dear R.D., I am skeptical of so-called “executive committees.” In your situation, it appears the majority is freezing out the other two directors and doing business in secret. If a board majority meets on HOA business, whether calling it an executive committee, “working meeting,” or coffee klatch, Civil Code 4090 says it is a “board meeting” and its activities must be in the open, with advance agenda notice to members. The committee’s decisions made in violation of the Open Meeting Act could be considered illegal and outside the association’s corporate process. Yes, under Corporations Code 7212, the executive committee is exceeding its power. However, and more importantly, the majority approach violates the Open Meeting Act, rendering all of its actions subject to challenge. Rather than expensive legal action to challenge this exclusive group of directors, perhaps the homeowners would rather elect directors who will properly serve and who...
Executive Session Misused?

Executive Session Misused?

Mr. Richardson, Members of our board mention discussions in executive session when they are discussing agenda items at board meetings. For instance, at a recent meeting the board tabled a matter relating to rules. The president said the matter would be discussed further in executive session. Also, three board members attend committee meetings. Two directors will be designated to participate with the committee and the third will not participate but just listen. What subjects are allowed under Davis-Stirling in executive session? Also, should a majority of the board be attending committee meetings, even if one of them does not participate? T.M., Canyon Lake Dear T.M., Closed session is only permissible under Civil Code 4935(a) to discuss a very few items: litigation, paid personnel, contract negotiations, disciplinary and common area damage hearings, hearings re delinquency payment plans, lien foreclosures (Civil Code 5705(c)) and requests for accommodation of disabilities (required by Fair Housing law to be kept confidential). Anything else must be handled in open session – period. When a board handles other topics in closed session it not only violates the Open Meeting Act (Civil 4900-4955) but also violates the members’ trust. As to committees, if a board majority attends a gathering in which association topics are discussed, that is a “board meeting” under Civil 4090(a). Even if the third director is silent, that committee meeting has become a board meeting and the Open Meeting Act applies. If a board majority needs to attend a committee’s meetings, why have the committee? Committees should support the board by helping share the load. When a majority of the board is attending anyway, then...
Open Forum: When Do WE Speak?

Open Forum: When Do WE Speak?

Hi Kelly, Thank you for helping people understand HOA laws! Civil Code 4925(b) states “The board shall permit any member to speak at any meeting…” (executive sessions excluded). You wrote in a past column that “members may observe board deliberation, but the law does not give members the right to participate.” This appears contradictory to 4925(b). Which law were you referring to that disallows member participation at the board meeting? I.S., San Diego Dear I.S., There is a big difference between addressing the board during open forum and participating in the board’s deliberations of agenda items. Nothing in the Open Meeting Act supports the notion that members participate in board discussions. If homeowners had the right to participate in board discussions, why would open forum be necessary? Open forum is important because members do not have the right to interrupt board deliberations, and the open forum statute guarantees that members can always have a time to speak to the board about issues important to that member. I often see meetings in which members are allowed to talk during deliberations. When homeowners are allowed to interject, question and even argue with the board, the result usually is chaotic and longer meetings. To argue with the directors, get on the board! Best regards, Kelly Dear Mr. Richardson, Our board won’t let us defer our open forum to another homeowner knowing that they have something of value to say. They absolutely said “you can’t do that.” Is this true? C.S., Anaheim Hills Dear C.S., Civil Code 4925(b) gives any member the right to speak, subject to reasonable time limit. If the board...
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...

New Year’s Resolutions [Part 2] – The HOA Member

I, the HOA member, resolve to: Number one: Follow the Golden Rule: treat others as you would like to be treated. My attitude: Not refer to the HOA or board as “they,” since it is all “us.” The directors are also members who pay assessments and give their time to benefit us all. Be neighborly, because shared ownership fails without cooperation. Assume our directors are doing their best as volunteers, and give them the benefit of the doubt. Not first assume the board is incompetent or dishonest when I believe it is overspending. Avoid the “my home, my castle” attitude. We share the benefits of common interest ownership, which means we also agree to share the control of our property. Ask questions before making statements, criticizing, or even accusing. Acknowledge the board may have more information than me. This doesn’t mean the board is right, but it does mean my opinion might not be fully informed. Take the long view of our association property, supporting growth of our capital reserves fund and maintaining our buildings. Be knowledgeable: Read the information the HOA sends to me. Be familiar with the CC&R’s, bylaws, and rules. I will reduce confusion and disputes by understanding the use restrictions and rules. Read the association budget and reserve study. I will ask informed questions, particularly about deviations from budget. If I ask to review financial documents, I will not ask for “everything,” and request only documents which I really need, acknowledging my manager is not a librarian. Help board meetings: Insist the board follow the Open Meeting Act, and only handle in closed session the...