HOA Board Meeting Basics
One of the primary functions of Board meetings is decision making. For some boards, meeting minutes can be used to reflect that a decision has been made and that said decision was approved. However, in addition to making decisions, some of the most functional meetings involve delegating decisions to the membership as a whole (as opposed to the Board of Directors). Providing owners with an opportunity to have a voice (and a vote) on certain issues brings out a variety of opinions which can provide valuable insight, and sometimes, a more reasonable solution to an issue facing the community. While we don’t recommend this delegation become a habit (Board members were elected to make decisions, not the owners at large), delegating some decisions to the membership as a whole can be beneficial to the entire Association.
Another (often overlooked) function of Board meetings is financial oversight. Some people like to compare Board meetings to corporate board meetings where the Board is reviewing budgets, annual reports and performing oversight on a corporate level. If you run your Association like a business, you need to take issue with boards that do not provide adequate opportunities that allow the Board to oversee or review the Association’s business. Some questions that need to be asked at all Board meetings are: Have we reviewed our bank statement? Do we have enough funds to meet unexpected expenses? Have we reviewed our aging report? Are there are accounts 6 months or beyond that need to be turned over to collections? Are we on budget? Is there anything our Treasurers are worried about? Are we moving forward with the painting of our buildings? How about the landscaping project our Landscaping Committee recommended? These are just a few examples of Board oversight of the Association’s business . Any Board that does not allocate the time to provide oversight for the aforementioned matters will eventually find itself in deep trouble.
In addition to decision making and financial oversight, Board meetings, when performed correctly, serve as the main opportunity for residents to become involved in the management of their community. By providing an open forum, allowing homeowners to ask questions, voice concerns and become involved, residents will feel more compelled to look after the welfare of the community and will be very clear on where the community is headed. Whether through participation in Committees, serving on the Board or future candidacy for the Board, residents will develop a sense of pride and ownership of their community as they become intimately involved with their HOA. These meetings are the main opportunity to open up the lines of communication between the Board and residents, and create an environment where issues can be resolved when they are small—instead of letting them fester into large liabilities.
In the past, Board meetings were often run in a closed door environment where homeowners could only observe the actions of the Board. This is no longer the case. California Civil Code now requires that all Board Meetings (including Board Meetings 101) be open to all owners and guests unless a matter needs to be taken up in Executive Session.
California HOA Meeting Requirements
In addition to the formal rules outlined in your governing documents, the law also provides some legal requirements regarding association board meetings. These requirements can be found in California Civil Code Sections 5100 through 5145, and they provide clarity in our other three sections of this article.
Frequency:
The law requires associations to meet at least quarterly (once every three months) unless the members agree, by a two-thirds vote of those present at a meeting held pursuant to the open meeting rules, to only meet semi-annually.
Notice:
HOA boards must notify members of the time and place of their meetings, state whether it is open or closed, and include the agenda for regular board meetings. The minimum notice period is four days prior to the regular meeting. Notice may be given in writing, by personal delivery, first class mail, electronic transmission to the address of record, or any other means the member may designate in writing.
Minutes:
Boards must then document their meetings with minutes. Minutes must be made available to members within 30 days after the meeting or minutes are approved for regular board meetings or within 15 days after the meeting for special board meetings. These minutes must also be distributed to members in the same manner as the notice noted above.
HOA Meeting Notice and Agenda Rules
Notice Requirements for Board Meetings
The association is required to provide notice of the time and place of board meetings at least four days prior to the meeting, except in emergencies where the notice can be posted as soon as reasonably practicable prior to the meeting. Posting on a bulletin board in your project will suffice (if there is no bulletin board in the project, the notice can be given to each owner by e-mail, or personally delivered, or sent by first-class mail, or by general delivery). The agenda, which is set by the board, must be posted at least four days prior to the meeting unless it is an emergency, in which case it has to be posted as soon as reasonably practical prior to the meeting. The agenda is required to contain a general description of each item of business to be transacted or discussed at the meeting, including, for closed session matters, a general description of the subject matter of the proposed closed session.
Open Meeting Act Requirements
The Hope’s Gracious Law is that here in California, HOAs are required to comply with the Open Meeting Act. By complying with the Act, associations allow homeowners a voice in the governance of their community. It is only via open and honest meetings, that directors, officers, committee members and management can conduct association business without giving an appearance of impropriety. Equally important is that by complying with the law, each and every director can reduce the possibility of facing individual liability.
The law requires that if directors are going to talk about association business – they must do so at an open meeting of the board that homeowners can attend. Here is what compliance looks like:
The law further requires that before the board can take any action on a given item of association business discussed at a properly noticed meeting – it has to give every member a chance to speak about it. So, while the board has discretion over exactly how the open forum section of a meeting will be conducted, the law requires at a minimum that owners are given a reasonable opportunity to attend and speak. And while the board has discretion to set reasonable time limits, it must provide a chance for owners who wish to speak, to do so. I think the point is pretty obvious here that there really isn’t much point having an open forum if only the people whose comments you want to hear get to speak.
Closed Session Rules
While the general rule is that all meetings of the HOAs Board of Directors must be open to attendance by members, the Davis Stir Act provides for the following exceptions for which closed sessions are permissible:
- Legal Matters. When discussing (i) pending litigation, or (ii) matters which pose a potential threat of litigation – the board must meet with legal counsel present to obtain confidential legal advice. Obviously, when they need legal representation, legal counsel will be privy to the information. If you suspect that the association has been sued, and the board was advised by counsel not to disclose the existence of pending litigation, the association must still provide copies of the complaint upon request.
- Personnel Issues. When it is time to hold an employee position such as manager, maintenance personnel or security staff, the board may meet without the employees present.
- Member Discipline. If a member has committed a civil wrong against another owner or the association in the HOA common areas, and disciplinary action may be necessary – the board should meet in executive session.
- Assessments and Collection. When the board reviews assessment delinquencies or the method in which collections will be handled , the board is entitled to a closed session. For example, if the board instructs legal counsel to send a collection demand letter to a unit owner for failure to pay his or her assessment.
- Violations. When discussing a specific member violation, both of the members involved should be excluded. If you have a problem with a neighbor who is violating the CC&Rs and the neighbor comes to the board meeting to defend him or herself – the executive session should be opened and the other side excluded.
- Formation of Management Contracts. In considering manager contracts, the board must meet in a closed session.
- Review of Right to Purchase During Foreclosure. Under Civil Code § 4625, in summary, HOAs must include in their CC&Rs and bylaws a reserved right to purchase within 90 days of a sale, an REO property for amounts due the association or reduced market value, whichever is lower. HOAs are required to develop procedures for service of a notice of assessment on the first mortgage or junior lien holder and to have a "foreclosure alternative program" to assist owners at risk. In the course of evaluating an offer from an owner to pay off assessments to avoid foreclosure, the board may proceed in closed session.
Recording and Minutes
The rules governing HOA board meeting minutes are similar to those that pertain to regular assessments. These rules rest upon a foundation of disclosure. The bottom line is that minutes should be recorded, and made available to the membership at every level, from regular meetings and emergency meetings to committee meetings. Association members are entitled to the full disclosure of these minutes without delay, with certain exceptions. Common interest developments that are governed by the Davis-Stirling Act must provide their members with minutes within 30 days of recording them.
Minutes should fully and accurately document board activities. The record should note all decisions of the board of directors for which a vote was taken, including decisions reached during emergency meetings. If a decision required a vote, that vote must be officially recorded. In addition, decisions reached in writing prior to a meeting must be formally recorded in the minutes. There are exceptions that require close consideration when an emergency situation arises. These exceptions include matters that require immediate attention or action that could not wait for special membership notice requirements. To that end, the Date of Meeting Notice chart provided below is an important guide to the exceptions under the Act.
The Act also requires detailed records and accounts be kept. Included are the date records were created, the source of each record, and the documents pertaining to each account. The board or its manager should use the records to make sound business decisions, including screening vendors and monitoring proper payments and collections.
The management team should always keep minutes at an appropriate level. Generally speaking, individual board members need only the basics; larger HOAs and those with more frequent meetings may need additional detail. All members should have access to the record through electronic or paper media, including updates. If there is an error, the member requesting the change must be immediately sent a correction. Proper scheduling helps ensure that the record is precise and up to date.
Decisions are thus recorded and funds are secure.
Voting in HOA Board Meetings
In addition to certain procedural requirements, the acts and decisions of the board must be taken by a vote of the board. A majority vote of a quorum of the board is generally required (Civil Code § 4090(a)), unless a different vote requirement is specified in the governing documents or other applicable California statutes. Whether a motion or other act requires a majority of those present at a meeting, or a majority of the entire board depends on the board’s parliamentary procedures (e.g., Roberts’ Rules of Order). Members also have a right to submit their own nominations for election to the board.
What is "quorum"? Quorum is the minimum number of directors who are required to be present in order to conduct business. The board quorum requirement is specified in the corporation laws of California. Under the corporation laws, a majority of the number of directors in office before a meeting is deemed a quorum (Corp. Code § 7222). Unless otherwise specified in the governing documents, a majority of a director vacancy created by the removal of an officer is itself a quorum (Corp. Code § 7223).
A quorum of members is required for the transaction of business at members’ meetings. Under the corporation laws of California, a quorum for members’ meetings is based on the percentage of memberships, not the number of homeowners (Corp. Code § 7511). A quorum is the majority of the votes represented at a members’ meeting in person or by proxy (if proxies are permitted by the governing documents) (Corp. Code § 7511).
In cases where the quorum requirement cannot be met by owners in their periodic meetings, a second meeting may be called, and members attending this second meeting with the previously noticed time and place shall be deemed a quorum. As to the purpose of the meeting, these procedures become effective if the second meeting is held within 30 days after the original meeting date. In a homeowners association, the board may meet notwithstanding failure to establish a quorum, in order to set a new meeting date. If at any meeting a quorum is attended, supermajorities shall be based on the number of directors just before the meeting.
Proxies are not permitted in installments of the association. In condominiums, however, proxies are permitted only in the limited circumstance when a written ballot or electronic vote is to be counted in place of or in addition to an in-person ballot or vote (Civil Code § 4930).
Homeowners Speaking at Meetings
The HOA board meeting is designed to facilitate the open exchange of information, promoting transparency and participation in the association’s governance. Homeowners have the right to speak at the meeting and to raise questions or concerns regarding association matters. While board meetings are intended to encourage homeowner participation, there is a limit to the amount of time allocated to homeowner questions and concerns at each meeting. The board may establish an agenda to manage this portion of the meeting. For example, in an effort to encourage a fair exchange of information and opinions, a board may establish a policy allowing homeowners to speak for only three minutes at a time, or number their requests to speak so that all individuals with questions or comments have an opportunity to participate at least once before any member addresses the board a second time . In general, the board should endeavor to address as many homeowner concerns as possible. Homeowners may submit their questions to the board in writing before the meeting, allowing directors time to do their own research and prepare a prompt answer at the meeting. This also reduces the likelihood that questions or concerns will stem from misstatements or misinformation. Further, if time constraints or other circumstances preclude the board from answering all questions or addressing all concerns, the board should provide a written response or letter to the membership following the meeting that addresses all the remaining issues in question.