Board Meeting Agendas

Source: Adrian J. Adams Esq. 

QUESTION:

Section 4930 of the Civil Code provides for an agenda to be included with notices but it does not provide a definition of agenda or what the bare bones requirements for one are. I hope your firm will be able to expound an answer.

ANSWER: There are two statutes that refer to agendas:

Notice of a board meeting shall contain the agenda for the meeting. (Civ. Code §4920(d).)

[T]he board may not discuss or take action on any item at a nonemergency meeting unless the item was placed on the agenda included in the notice that was distributed…” (Civ. Code §4930(a).)

Legislators often leave a lot unsaid when they enact laws. They either assume we know what they are talking about or they misjudged things. If nobody can agree on what a statute means, the courts sometimes weigh in. In this case, I don’t think we need a judge to tell us what an agenda means.

Definition. Black’s Law Dictionary defines “agenda” as “items of business or discussion to be brought up at a meeting.” I checked Robert’s Rules of Order but didn’t find anything useful. I then checked the Complete Idiot’s Guide to Parliamentary Procedure and found the following:

If you really want to manage your meeting, you need an agenda. With an agenda, the specific items that are expected to come up at a meeting are placed into the order of business.

How detailed should an open meeting agenda be? It needs to contain enough information so members can easily understand what will be discussed at the board meeting.

Maintenance Issues. For example, if the board intends to discuss installation of a new landscape sprinkler system, reroofing a building, and repainting the clubhouse, a generic agenda item called “Maintenance” is not enough. No one reading the posted agenda will have any idea what that means. The agenda should list each item of business. That way, members can decide if they want to attend and give their opinions during open forum. See sample agenda for open meetings.

Executive Session. Notice of executive session meetings must also contain an agenda. (Civ. Code §4920(d).) Because executive sessions are confidential and topics are generally noted in open meeting minutes (Civ. Code §4935(e)), agenda descriptions are more circumspect. See sample agenda for executive sessions.

RECOMMENDATION. To learn more about parliamentary procedure, I don’t recommend buying the unabridged Robert’s Rules of Order. All you need is a simplified version that covers the basics. Amazon.com has a variety of materials you can purchase.

Election Apathy & Quorum Requirements

Source: Adrian J. Adams Esq.

QUESTION:

We have spent a countless amount of money in the election process trying to meet quorum. How many attempts does the HOA need to make before the current board just continues/rolls over as the board?

ANSWER: There is no required number of attempts to meet quorum. If it is clear the membership is not interested in participating, the board can stop. For example, if you have 100 units and only 9 send in their ballots, it’s pretty clear no one is interested, which means reaching a 50% or even 30% quorum may not be achievable.

I had a large association with a 15% quorum requirement that could not get more that 12% participation no matter how hard they tried. We sought and received court approval of the 12% so they could open and count ballots.

If quorum is within striking distance, directors should put in the effort to round up more votes. If not, the board does not need to waste time, money, and energy trying to get members to participate. The existing board can continue in office and appoint replacements if they are anxious to step down.

RECOMMENDATION: Associations should amend their bylaws to eliminate cumulative voting and quorum requirements for the election of directors. Apathy will make it difficult to get the amendment passed but it’s worth the effort. 

Illegal & Unethical

Source: Adrian J. Adams Esq.

QUESTION:

Our association recently recovered funds from a lawsuit which the homeowners were charged a special assessment. The board opted to place the funds in the reserve account rather than reimburse the homeowners for their payments. Is this ethical or legal?

ANSWER: Unless the board promised to reimburse owners or somehow made it a condition of the special assessment, it is neither illegal nor unethical to put the money in the reserve account.

Reserve Funding. In fact, not doing so may be imprudent if your reserves are badly underfunded. Failing to fund the reserve account now could result in special assessments later when large repairs are needed and reserves are insufficient. Then everyone would rail against the board for not funding the reserves.

Who Gets the Money? Also, for those units sold after the special assessment but before the recovery, who gets the money? Does it go to the ones who paid it but no longer have a legal interest in the association or the ones who bought units and lay claim to the reimbursement? That could get messy.

RECOMMENDATION: Prudent fiscal management is one of the duties of the board. If you disagree with how they are handling the association’s money, you should consider running for the board.

Seating Arrangement

Source: Adrian J. Adams Esq.

QUESTION: Is there a seating protocol for board members on the dais? Is it appropriate for the manager and attorney to be seated on the dais? What is common practice?

ANSWER: There is no seating protocol that I’m aware of. I checked Robert’s Rules of Order and found nothing on the subject.

Seating Arrangements. I’ve been in meetings where the board, manager and attorney were (i) on an elevated dais with everyone facing the audience, (ii) seated at tables in a “u” shape (common with larger boards), (iii) seated at a round table with the backs of some directors to the audience, (iv)  seated randomly in comfy chairs in someone’s living room, and (v) seated in folding chairs on one side of a pool and the audience on the other side (a quasi separation of church and state–if you could walk on water, you could join the board). My favorite is where the board met in the alley next to a dumpster and everyone stood (it made for very short meetings).

On A Dais. When the board meets on a dais facing the audience, the most common position for the manager and attorney is at the end of the table. The second most common is for the attorney to be seated next to the president so he/she can consult with the attorney as-needed during the course of the meeting.

RECOMMENDATION: Generally, the larger the association, the more formal the seating arrangements. Boards should pick one that is comfortable for them.

Election Confidential

Source: Adrian J. Adams Esq.

QUESTION:For Christmas, I gave out gag gifts to my fellow board members–a condom for the men and an early pregnancy test kit for the ladies. The recipients are all over 65; most are in their 70s. A week later I received a letter from our HOA attorney accusing me of sexual harassment. At a meet the candidates forum, a shareholder asked a question that referenced the content of the letter. Do I have any protection from this confidential letter being shared?

ANSWER: If there is one thing I’ve learned, it’s that people like to talk–especially when directors behave badly. Your options are quite limited. No court is going to order people to stop talking about you. Can you sue for defamation? If members truthfully describe what you did, you would spend a lot of money and lose. Moreover, your litigation would alienate everyone and they would talk about you, your prank, and your lawsuit endlessly.

RECOMMENDATION: If you want to run for the board and win, you should own-up to your gag and apologize for it. If members believe your apology is sincere, you have a better chance of winning their votes.

Absentee Half-Owner on the Board

Source: Adrian J. Adams Es

QUESTION: Does a member have to hold 100% title in the unit to be eligible for the

board of directors? If the candidate shares 50% title with another and does not reside in the unit but leases it, is the member eligible to run for board?

ANSWER: Unless your governing documents state otherwise, directors do not need to be members. That means someone not on title can serve on the board.

Ownership Interest. If your governing documents require directors to be members but don’t set an percentage ownership interest, someone with a 1% interest can serve on the board. When I restate documents for associations, I set a minimum ownership interest of 10%. That way, directors have more of a stake in keeping the development in good shape.

Residency Requirement. If your governing documents are silent, then residency is not a requirement for someone to serve on the board. I include this as an option when restating bylaws. Some associations want it. For others, it may be an impossible requirement if the development is a resort with few if any permanent residents.

RECOMMENDATION: Most associations lack sufficient director qualifications and need to update their bylaws to meet current Davis-Stirling election requirements. Contact me if you need assistance.

Commercial CID Rule Change

Source: Adrian J. Adams Esq.
QUESTION: If the board of a commercial CID changes their collection policy, does it require 30-day review and comment period like residential associations?

ANSWER: For commercial and industrial common interest developments there is no notice or 30-day review requirement for adopting and revising operating rules.

In the Commercial CID Act, the procedure for adopting rules is determined by the development’s governing documents. If your documents require advance notice to the membership and a 30-day review period, then you must do so. If your governing documents are silent, the board may adopt rules by a motion at a board meeting. The rules immediately become effective upon notice to the membership.

RECOMMENDATION: Even if not required by your governing documents, it is still a good idea to notify the membership of any proposed rule change. Members like to stay informed and it gives the board a chance to find out if there are any serious problems with the rule change.

Thank you to attorney Wayne D. Louvier for researching this issue. Wayne works out of our Orange County office.