Reviewing architectural applications is typically part of a community association manager’s bread and butter. However, the architectural review process can be fraught with stumbling blocks, and architectural disputes with homeowners can be drawn-out, expensive affairs. A few practice tips for processing architectural applications are listed below to help master the architectural review process:
1. The clock is ticking. An association’s declaration typically includes a deadline to respond to architectural applications, and may even provide that failing to respond by the deadline deems an application approved. Associations can consider calendaring response deadlines to ensure an application is timely processed.
Note that if an association’s declaration does not include a response deadline, that does not mean the association has unlimited time to respond. Civil Code section 4765 states an association’s architectural approval procedure “shall provide for prompt deadlines. The procedure shall state the maximum time for response to an application or a request for reconsideration by the board.” If an association’s declaration is silent on deadlines, boards can consider adopting architectural rules with that information.
2. Get familiar with Civil Code section 4765. Section 4765 includes other important standards, including the requirement to respond to an application in writing, and providing a written explanation as to why an application was disapproved, along with a description of the appeal process. The law also requires associations to make decisions on an application in good faith, and prohibits making unreasonable, arbitrary or capricious decisions. Further, associations must provide the membership with annual notice of the architectural review process.
3. Pay attention to the special cases. The Civil Code includes special standards for certain proposed improvements, including solar energy systems, electric vehicle (“EV”) charging stations, EV-dedicated TOU meters, accessory dwelling units (“ADUs”), and junior ADUs. Remember that the law prevails over an association’s governing documents in the event of conflict. Boards may want to consider adopting separate policies for processing these types of special applications to ensure compliance with the law.
4. Know thy governing documents. Associations must follow their own procedures, and may face liability for failing to do so. Adopting clear, concise procedures in the first place can help associations stay on the right side of the law. Boards can also consider asking their community association counsel for help drafting those procedures, and/or reviewing the procedures on a regular basis to ensure consistency with the law.
5. Keep a written record. Maintaining well-organized records of architectural decisions can help protect an association from liability in the event of a homeowner challenge. Relying on memory alone can lead to trouble. The members of a board or architectural committee can change, key witnesses can move away, memories fade, and managers can switch accounts.
When in doubt as to how to process an architectural application, remember that you can always consult your friendly community association counsel for assistance.
Generally, board members of common interest developments are volunteers dedicating their time, skills and energy to serve the communities within which they live. Indeed, without these director volunteers, community associations would be unable to properly function. Similarly, committee members are volunteers who work on specific projects within a community. Often, committee work is a valuable first experience which can entice a member to become more involved and to eventually run for the board. However, there is a steep learning curve upon entering the world of association governance.
In order to help board and committee members understand the association’s expectations for service, codes of conduct can be particularly helpful. Not only do codes of conduct codify association expectations, they can also serve to educate board and committee members and help minimize association liability. Boards might therefore consider adopting codes of conduct that cover the following topics, among others:
Prohibiting the acceptance of any gift, gratuity, favor, entertainment, loan, or any other item of monetary value by a board or committee member from a person who is seeking to obtain a contractual or other business or financial relationship with the association.
Clarifying that board and committee members may not engage in any writing, publishing, or speech that defames any other member of the board, committee, employee, or resident of the community.
Establishing that board and committee members may not knowingly misrepresent facts to the residents for the sole purpose of advancing a personal cause or influencing the residents.
Prohibiting board members from discussing sensitive and confidential matters discussed in executive session, outside of executive session, or with anyone who is not on the board (with the exception of management and association counsel).
Prohibiting board or committee members from seeking to have a contract implemented that has not been duly approved by the board.
Prohibiting board or committee member interference with an association contractor performing work.
Clarifying that board and committee members may not harass, threaten, or attempt through any means to control, instill fear or discriminate against any member of the Association, management company, service provider, or community resident.
Preventing interference by board and committee members with the system of management established by the board as a whole and the management company.
Reminding board members that they must operate as a board and do not have any individual authority unless it is specifically granted to them in writing by the board or the Association’s governing documents.
Often, codes of conduct may be adopted as rules of procedure by way of approval by the board at an open session meeting, rather than by following the rulemaking procedures spelled out in Civil Code section 4360. However, we encourage you to first speak with your association’s legal counsel to review your association’s governing documents and discuss your community’s particular needs prior to adopting such rules.
Enforceability of these codes of conduct is another important issue to consider when preparing draft rules. It is recommended that any code of conduct specifically list the consequences for a violation of the code of conduct. Reasonable penalties for violation might include: public or private censure by the board, removal of an officer title, and/or removal from committee service by the board. It is unlikely that violation of a code of conduct may result in unilateral removal of a board member by the board, but speak with your association counsel on this issue.
Pickleball is one of America’s fastest-growing sports.[1] This surge has, in turn, generated professional tournaments, corporate sponsors, and professional players. Many homeowners, eager for a new amenity and a new hobby, have asked their community associations to create pickleball courts. Pickleball courts are relatively easy and cheap to create, especially if an association has an existing tennis court.[2] But while many boards may leap at the chance to buy in to the pickleball craze and give residents a new way to exercise, associations should be wary of potential issues that can accompany the new game. Below are a few issues to consider.
Insurance. Pickleball related injuries are projected to cost Americans up to $500 million this year alone.[3] Given the potential for injuries related to the sport, associations should consider consulting with a qualified insurance expert to confirm they have adequate coverage in the event of any pickleball-related incidents.
Noise. Pickleball can be noisy, and can in turn generate complaints from nearby residents. Therefore, associations may want to consider establishing rules limiting play to certain hours of the day, and consulting with qualified experts regarding sound-mitigating measures.
Authority under the Governing Documents. Depending on the cost of the project, the exact changes to be made, and the terms of the association’s governing documents, creating a pickleball court may constitute a capital improvement requiring membership approval. Boards should confirm they have authority under their governing documents before altering the common area. When in doubt, consult with a qualified community association attorney.
Consider a Trial Run. Associations can consider adopting a rule allowing pickleball play at existing facilities for a set amount of time with a sunset provision – for example, for thirty days – as a trial run, to see how pickleball fits into the community. The board can then review any member feedback received, and decide how to proceed.
These are the top ten things I see landing community associations in hot water:
Conditional Approvals for Architectural Applications
Don’t give conditional approval. Either approve or deny an owner’s architectural application. If there are “conditions” that would make an application approvable, deny the application, but welcome the owner to resubmit with the conditions addressed. Conditional approvals create ambiguity that can later cause problems for the association.
Emailing Too Much
Cut back on emails? Sounds great! There are (at least) two good reasons to cut down on emails:
First, under the Open Meetings Act (found in Sections 4900 et seq. of the Davis-Stirling Act), association business must generally be conducted at a duly noticed meeting. Emails amongst directors and management can easily run afoul of the Act and cross the line to an impermissible and illegal board meeting.
Second, most emails are discoverable in litigation. The less emails there are, the less there is to be discovered by a would-be plaintiff. In short, try to save most discussions for board meetings.
Spilling the Beans
Many boards believe transparency is the touchstone of good governance. But that is not entirely true. The board, first and foremost, owes a duty to the association (the corporate entity). One of those duties is the duty of confidentiality. Certain information cannot and should not be shared with the membership. For example, confidential information discussed during executive session, attorney-client privileged information, information that compromises the privacy of owners (such as information related to assessments or member discipline), or information that can subject the association to liability should not be shared.
Not Reading/Following Governing Documents
You mean I have to read all those governing documents? Yes! As a director, your decisions must be made with reasonable diligence, and that includes being familiar with the association’s governing documents (e.g., the CC&Rs, Bylaws, Condominium Plan, and Rules and Regulations). If the board cannot understand the provisions (yes, sometimes they can be confusing or poorly drafted) it should consult with legal counsel to help interpret.
Overstepping Power/Authority
Powers and duties of the board can be found in the Davis-Stirling Act, other applicable laws, or the association’s governing documents. Boards are limited in the scope of their power and authority and need to ensure they stay within those boundaries. When in doubt, seek the advice of legal counsel, to determine whether the board has the authority to do what it is seeking to do.
Inconsistent Enforcement
“Well, we let those owners do it because we like them” is not a good answer! The association’s governing documents need to be enforced uniformly and consistently. If the board gets heartburn when enforcing a rule or it is difficult to enforce, the underlying rule probably needs to be amended or repealed.
Missing the Mark on Civil Rights or Fair Housing Issues
Discrimination and disability issues are majorpitfalls for associations. Federal and state laws are quite onerous and technical in this area. Consult with legal counsel early and often on these issues, even just allegations, because a false step can be very costly for an association.
Keeping Assessments Too Low
Often a director is heard saying: “I was voted to the board to keep assessments low.” Keeping assessments low is important to the membership, for sure, but too often this notion is taken too far such that the association’s operating and reserve funds are not adequately funded. This can lead to deferred maintenance, large special assessments, and other problems.
Responding to Online Posts
As a director, responding to online posts on social media is rarely, if ever, fruitful. A director or manager responding to social media posts can result in liability (defamation for example), be construed as speaking with the board’s authority, enflame the situation, or worse. So often, ignoring an online post or comment is the better move.
Acting Without Legal Advice
The list of laws and cases that govern associations is large, and ever growing and evolving. Add in the provisions and requirements of your governing documents, and it quickly can become overwhelming, even for seasoned community managers. A bit of timely legal advice can make all the difference in staying on the right track and avoiding pitfalls and liabilities.
It can be challenging to amend your CC&Rs, especially when owner approval requirements are high. Some documents can require approval of up to 75% of all members before the CC&Rs can be amended. Absentee owners and voter apathy can further compound the challenge of getting enough owners to vote.
If your association has tried to amend your CC&Rs but has not been able to obtain the requisite approval, fret not, as there may be a way forward. Under California Civil Code section 4275, associations can file a petition with the state superior court to seek relief when the votes aren’t there. There are few statutory prerequisites to keep in mind:
The association must have held a proper vote, meaning the vote was conducted in accordance with the association’s governing documents and applicable laws;
At least a majority (over 50%) of all owners must have voted “yes” on the amendment; and
The association must have made a “reasonably diligent effort” to solicit votes from owners and be able to make a showing to the court that it has.
If these threshold requirements are met, the association can move forward with petitioning the court to approve the amendment based on the affirmative votes actually received. The petition papers filed with the court require a large amount of information and supporting documents and should be prepared by the association’s legal counsel to ensure all statutory requirements are met. For example, the petition must demonstrate to the court’s satisfaction that the amendment is reasonable and that all owners (and any other parties entitled to notice under the CC&Rs) were provided sufficient notice of the court proceedings.
During the petition process, owners have an opportunity file opposition papers with the court. But granting the petition is ultimately within the judge’s discretion, and even in the face of owner opposition, judges are generally quite willing to grant such petitions if the statutory requirements are met.
The petition process can take anywhere from three to six months, or longer, depending on the court’s schedule.
PRACTICE TIP: Since the petition to amend is essentially a lawsuit, the association should involve its legal counsel in the discussion as early as possible.
Assuming the court grants the petition, then the association can proceed with recording the CC&R amendment.
Finally, the court petition process can also be used for other governing documents, such as bylaws or articles of incorporations, under California Corporations Code Section 7515, and a request to amend CC&Rs and other governing documents can be filed together with the court in one streamlined petition.
Two recent California cases, Takiguchi v. Venetian Condo. Maintenance Corp. and Lake Lindero HOA v. Barone, focus on the ever popular issue of achieving quorum.
Takiguchi v. Venetian Condo. Maintenance Corp.
In Takiguchi v. Venetian Condo. Maintenance Corp. (2023) 90 Cal.App.5th 880, a small group of owners held multiple units and had controlled the board with its nominees for many years. In January 2021, as the association moved toward its annual meeting to elect directors, there were opposition candidates lined up to change the complexion of the board. The existing board sent out statutorily-prescribed notices of meeting and ballots, and engaged a professional inspector of elections.
Then the fun began. The governing documents prescribed a quorum of 51% of the voting power, with a provision for a lower quorum for an adjourned meeting should the association fail to meet quorum at the initial meeting. The notice of meeting anticipated a failure to achieve quorum, and actually noticed a follow-up meeting to take advantage of the lower quorum requirement for an adjourned meeting. The notice stated that members could participate by mail in ballot, or by attending the meeting virtually, since COVID-19 restrictions were in effect. Ballots were duly mailed to homeowners by the inspector of elections, and the inspector of elections kept a log of which owners had returned their ballots. Ostensibly, to save money and given a long history of failures to achieve quorum, the inspector did not attend the first meeting.
On the date of the first meeting, there was confusion as to whether quorum had been achieved; in determining that quorum had not been met, management relied strictly on the number of written ballots which had been received by the inspector, and did not include persons who attended online.
The failure to count for purposes of quorum those who had not actually cast a written ballot but who appeared via internet did not sit well with the opposition. One homeowner took pictures of the participants who were only appearing virtually. Despite some of those images being identified only by screen names, the opposition was able to persuade the court of the identities of those participating virtually, and counting those as well as the received ballots, it was clear quorum had been achieved at the first meeting.
To compound its problems, the holdover board next voted against holding the (already noticed) subsequent meeting with its lower quorum.
The opposition filed a suit pursuant to Corporations Code Section 7510, which allows a court to order a meeting be held if the corporation’s board had failed or refused to do so. In granting relief to the owners, the court noted that, despite no minutes having been kept, there was sufficient evidence quorum had been achieved at the first meeting. The court accepted the identification of owners who had not submitted a written ballot but participated virtually, and counted those participants toward the quorum. In fashioning its remedy, the court ordered that a new meeting be held for the purpose of counting the ballots which had been received at that first meeting.
A dissenting opinion questioned whether the statute actually supported this type of relief, or whether instead the court should have ordered a new meeting to be held. While the dissent is well reasoned, the remedy prescribed by the court saved the association the not insignificant costs of conducting a second election.
Lake Lindero HOA v. Barone
The second case, Lake Lindero HOA v. Barone (2023) 89 Cal.App.5th 834, concerned a recall vote. Defendant was a former director of the association, who had resigned his position in order to take a paid position as the chief executive officer of the association.
Homeowners sought to recall the entire board pursuant to a petition by 5% of the members. Corporations Code Section 7511 requires an association, within 20 days of receipt of such a petition, to notice a member meeting to vote on the issue of recall. The board failed to do so, so the petitioning members sent out their own notice of meeting, and duly conducted the meeting. When this meeting failed to achieve quorum, as prescribed by the association’s bylaws, an adjourned meeting was convened by the same homeowners, resulting in a diminished quorum. The recall was successful, and a new board elected.
Unfortunately, the recalled board refused to leave, contesting the right of the new board to govern, including instructing management to disregard instructions from the new board. The new board and association then filed this suit, asking the court to declare the validity of the recall, and to validate the new board’s termination of Defendant’s contract.
Held: new board 1, old board 0. The trial court’s decision was affirmed on appeal.
The old board made the following arguments: (1) the bylaws required a majority of owners to vote for removal, despite a statute that allowed removal by a majority of a quorum,
(2) the statutes do not permit a reduced quorum, even if the bylaws do, and (3) the Corporations Code only allows a court to determine the validity of “elections”, not “recalls.” The court properly rejected all of these arguments. First, the statute which discusses the percentage vote required for recall (§ 7222) specifically states that it will override any contrary language in bylaws. Second, even though the recall statute doesn’t specifically authorize a lower quorum for adjourned meeting, another statute (§ 7512) specifically provides that bylaws may set a lower quorum for meetings. As to the third point, the court found that Corporations Code Section 7616, which allows a court to validate election results, should be read broadly to permit a court to review recall votes as well.
Takeaways from the two cases:
Achieving a quorum at annual meetings is always difficult. Keeping an accurate list of ballots cast is essential, and if a virtual meeting is going to play a part in the proceedings, protocols to establish the identity of participants is essential.
Minutes need to be kept. While the focus is often on board meeting minutes, annual meeting minutes are critical in determining quorum issues, notice issues, motions of adjournment, and the like.
Any communication between the board, management, and inspectors of election on quorum issues needs to be memorialized in a writing, such as an email.
Statutes and bylaws need to be read together. In some cases, statutes override contrary language in the bylaws. In other cases, statutes provide that bylaws may differ from the code. A firm knowledge of both the relevant statutes and the association’s specific bylaws (and election rules, though neither case referred to them) is essential in any election, whether the annual election of directors or a recall vote.
You can’t stop your analysis with the Davis-Stirling Act. Despite the increasingly complex election protections written into the Act, neither of these cases referenced the Davis-Stirling Act. Both were decided entirely by reference to the Corporations Code.
Throughout my entire career as a community association attorney, boards of directors and homeowners have asked me, ‘why can’t we invest association funds in the stock market or other uninsured cash investments?’ This is a particularly hot topic for those associations that have large sums of cash in the bank.
The answer is simple: the association’s money belongs to the non-profit organization, not to the individual directors. The board acts as a fiduciary when managing the association funds. While some debate the industry’s position in conservatively investing association cash accounts in certificates of deposits (CDs), the association’s fiduciary duty is to minimize the risk of loss of the funds and conserve principal. By placing the funds in insured (FDIC/NCUA/SIPC) or government backed securities, the accounts are backed by the U.S. Government. This investment strategy is low risk but oftentimes has low returns. California Civil Code section 5380 is not a model of clarity on investing and protecting the association’s deposits, but suggests that the standard of care or best practices is to place association cash in FDIC insured accounts or with a guarantee corporation.
There seems to be some confusion among boards and even financial advisors on what constitutes an insured FDIC deposit. The Federal Insurance Corporation states that deposits are insured up to a least $250,000 per depositor, per FDIC insured bank, per ownership category. Thus, the FDIC insures deposits according to the ownership category in which the funds are insured and how the accounts are titled. To obtain the full benefit of FDIC insurance, the association should only have one account at one bank with no more than $250,000 in the account.
Multiple accounts under the same association tax identification number at one bank do not afford additional insurance, as the insured cap is $250,000 per ownership category (different rules may apply to other types of deposits e.g., trusts). If your association has over $250,000 in any single financial institution, how do you protect the money? You have two options:
1) Open up accounts at different FDIC (or other insured) banks and maintain a balance of no more than $250,000 in each account; and/or
2) Contact your financial institution to explore establishing a “sweep account.”
With Option 1 above, for example, if the association has $1,000,000 it would open up bank accounts in at least four different FDIC insured banks, making the funds fully FDIC insured. Most associations that have large sums of money will maintain a balance under $250,000 in each bank to insure earned interest that accrues in the account is also protected.
What is a “sweep account?”
Generally speaking, it is a bank or brokerage account that automatically transfers amounts exceeding a certain level into an interest-earning account at the close of each business day. This may or may not be the right option for your association, but it is worth considering. We recommend you discuss this option with your financial advisor or tax preparer to confirm it is a good option for your association.
Consider these practice pointers:
1) Always check to make sure the financial institution(s) your association uses has insured deposits through the FDIC, NCUA or SIPC;
2) Consult with a financial advisor, banker and your management company for assistance in investing and protecting funds. Your attorney is not your financial advisor;
3) Consider “laddering” your CD accounts into different banks;
4) Review your governing documents to verify if there are any restrictions on investing in association funds; and
5) It is Not Your Money! The way you may invest your personal funds may not be suitable for a non-profit mutual benefit corporation to invest its funds.
Even a well-run association can find itself short on cash occasionally due to unexpected operating expenses or an unexpected shortfall in assessment income. Should this occur, a healthy reserve account can provide the solution – or at least the first step in the solution.
California Civil Code (“Civil Code”) section 5510(b) only permits a board to spend funds designated for reserves for maintaining, repairing, restoring and replacing major components the association is obligated to maintain, repair, restore or replace, for which the reserve fund was established; or litigation pertaining to the maintenance, repair, restoration and replacement of these components. However, Civil Code section 5515 allows reserve funds to be temporarily used for other purposes provided they are timely repaid.
The Benefits to Borrowing from Reserves
Because reserve funds can generally be quickly accessed, they can be used to meet the association’s cash shortfall until the Board can implement a financial plan to pay for the expense, such as increasing regular assessments, levying a special assessment, identifying budgeted expenses that can be deferred, reduced or eliminated, or obtaining a loan.
The board must vote to borrow from reserves at a duly noticed open session board meeting. Further, the board must vote on a financial plan to replace these funds within one year.
The fact that the board intends to consider a transfer from reserves must be included on the agenda for this meeting. The agenda must also state the reason or reasons the transfer is needed, whether the board will consider the imposition of a special assessment to repay reserves, and some of the other repayment options to be considered.
The minutes for the board meeting must include the board’s vote to approve the temporary transfer of funds from the reserve account, the reason or reasons the transfer was necessary, and when and how the reserve account will be repaid.
The funds borrowed from reserves must be repaid within one (1) year of the date of the transfer. If more than one transfer is needed, the funds must be repaid within one (1) year of the initial transfer.
Notwithstanding the one (1) year repayment requirement imposed by the Civil Code, it is possible to extend the repayment period if the board determines it is in the best interests of the association to do so. However, the same requirements for borrowing the funds apply. In other words, the board must vote at a duly noticed open session board meeting to extend the repayment period and on the new plan for repayment. The agenda for this meeting must clearly indicate that the Board will be considering a repayment extension and a new (or revised) plan for repayment, including a statement on whether a special assessment will be considered. The meeting minutes must reflect the board’s vote to extend the repayment period, the reasons the extension is necessary, and when and how the funds will now be repaid.
PRACTICE TIPS:
Borrowing from reserves is not an alternative to careful and considered budgeting. Nor is it an alternative to imposing the assessments needed to cover the association’s anticipated operating expenses. This tool should be used judiciously and infrequently in order to maintain the integrity of the reserve account.
A board cannot borrow what the association doesn’t have. A well-funded reserve account is important not just for fulfilling the association’s maintenance, repair and replacement responsibilities, but also for avoiding potential financial crisis in the event of an expected cash shortfall.
When meeting to vote on whether to borrow from reserves, don’t limit your options. Identify and duly consider all the ways the reserve funds can potentially be repaid. It may be the best option to combine methods of repayment.
The ability to extend the repayment period is not a license to use reserve funds to permanently fund purposes other than those authorized by the Civil Code. Any extension in the repayment period should not exceed a year at the most.
Please reach out to us if you would like further guidance on the board’s responsibilities when it comes to funding and borrowing from reserves, or assistance in implementing repayment plan.
Meetings are the primary mechanism for conducting business in common interest developments, so effective meetings are a key element in the health
Ineffective meetings in common interest developments, especially when addressing sensitive topics, can easily devolve into shouting matches, threats, and even news coverage. Fortunately, these meetings are rare. More common is apathy or frustration with how business is conducted, which results in very few homeowners attending association meetings, even when important topics are discussed. Whether the concern is a potentially volatile meeting or disinterest, there are ways to conduct meetings that are productive and beneficial for the community.
Community associations hold an annual membership meeting and board meetings at regular intervals throughout the year to conduct their business. Occasionally, special meetings of the members may be held to conduct a membership vote on matters other than the annual election of directors. California law and community association governing documents impose different requirements for board meetings and membership meetings, so it is important to be clear in the meeting notice and agenda about which type of meeting is being held.
For both board meetings and membership meetings, there are procedures and processes dictated by law and the community association’s governing documents related to notices and how to conduct business; these will be discussed below for each type of meeting. The primary sources of information for conducting meetings are in the association’s bylaws, the Common Interest Development Act beginning at Civil Code § 4900 for board meetings and § 5000 for member meetings, California Corporations Code beginning at § 7211 for board meetings and § 7510 for member meetings for incorporated associations, and California Corporations Code at § 18330 for unincorporated associations.
Beyond these requirements for meetings, there are some practices that can help make meetings more effective. Effective meetings can serve multiple purposes beyond just conducting business. They can create confidence in the board and a greater sense of community among the members. Ineffective meetings can lead to conflicts between the board members and the members of the community association.
Board Meetings
Board meetings are held for the purpose of conducting board business. The board president presides as the chairperson and is responsible for leading the board members through the agenda items and keeping the discussions focused on those agenda items. Board meetings are required to be open to attendance by the association members unless certain sensitive topics are to be discussed and statute allows for a closed-door conversation.
The first step in keeping board meetings productive and effective is to establish rules of order and decorum. Some of the rules will be different depending on whether one is a board member or an association member attending the meeting. Board meetings are for the board to conduct board business. Association members who are not on the board should be limited to observing the meetings, except during the designated association member comment periods.
While some of the rules should probably “go without saying,” they need to be said and should also be written down and read as a reminder to the attendees at the beginning of each meeting. The board may want to have copies of the rules readily available for board members and audience members. For an electronic meeting, the rules could be posted on a slide. These rules of decorum can include a reminder that members who are not on the board may only speak during the homeowner comment period unless specifically addressed by the board, that only one person may speak at a time, that all meeting attendees must refrain from interrupting speakers, and that speakers must stay on the topic of the agenda item being discussed. The chair of the meeting or another designated board member should enforce these rules so that all attendees maintain trust in the board and know that differing opinions may be presented and will be considered in a respectful, businesslike manner. Healthy associations are those that are open to new ideas and respectfully consider dissenting opinions.
The second step is to set the meeting agenda in advance. Common interest development board meetings must have an agenda per California Civil Code § 4920. The agenda must be posted with the meeting notice at least four days in advance of the board meeting, except in an emergency. For a meeting held solely in executive session, only two days’ notice is required. These timelines for notice of the meeting may be longer if required by the association’s governing documents.
The agenda can include time limits for each agenda item to keep the meeting moving, but flexibility should be allowed as long as the discussion remains productive and on topic. The board can adopt protocols for determining how a decision is made to extend a discussion beyond a designated time period. Options can include approval by a majority of a quorum of the board or approval by any two board members.
The third step is for the chair of the meeting to keep the meeting on topic and maintain the rules of order or decorum. The president usually acts as the chair of the meetings. As a side note, most bylaws define the roles of the board officers and list their duties. The bylaws also usually provide for the delegation of some of these duties to other board members or association management, as well as making provisions for assigning these duties to another officer in the absence of the assigned officer. It is very common for many of the administerial tasks (such as taking meeting minutes, posting meeting notices and agendas, creating financial documents, and other similar tasks) to be delegated to management representatives, with oversight by the officers and directors.
The chair of the meeting can keep the meeting moving forward by following the agenda and requiring that discussions remain focused on the agenda item being considered. A specific amount of time can be allotted to each agenda item and the time extended only by agreement of a majority of the directors’ present, to avoid “going in circles” on a topic without reaching a conclusion. If conversations tend to go on for longer than needed to adequately address agenda items, a motion can be made and approved by a majority of the board to discontinue discussion and call for a vote.
The chair of the meeting should also maintain decorum by ensuring that only one person at a time is speaking, that all speakers stay on the topic under discussion, and that any time limit for a topic is enforced unless extended by the board.
Board meetings are for conducting board business, and often owners/members not on the board will be limited to observing and making comments during one or more designated comment periods. At least one owner comment period is required by law at open session board meetings. The timing of this comment period can be designated by the board. The law does not address any time limits or set out any specific time during the meeting for owner comments.
Most commonly the comment period is at the beginning of the meeting, but some associations choose to allow comments for each agenda item as it arises on the agenda, and other associations only allow comments at the end of the meeting. The disadvantage of only allowing members to comment at the end of the meeting is that it does not allow the members to comment in advance of the board’s consideration of agenda items during the meeting. This seems to defeat one of the primary purposes of the owner comment period – namely, owner input on an agenda item prior to the board considering the item. So, a comment period should be allowed before the board conducts its business.
The board may set reasonable time limits for comments by individual owners as well as an overall time limit for owners’ comments. These time limits should be set by the board in advance of meetings and stated on the posted agenda for each meeting so members are informed of the time limits before the meeting. Typically, individual owner comments are limited to two to three minutes and the overall owner comment period to 15 minutes. These time limitations can vary depending on the size of the community and the number of owners who regularly attend board meetings.
The board may decide to extend these time limits for a particular meeting or topic if they believe that additional time is needed to allow individual owners sufficient opportunity to comment. This most commonly occurs when the board is considering a large project or a significant change in policies or procedures.
The board is not obligated to provide any response to owner comments, but it does promote community goodwill if easily answered questions are addressed and other comments, even negative ones, are acknowledged.
Membership Meetings
Membership meetings are not board meetings and are treated differently in the law than board meetings. Membership meetings are either annual meetings to hold the board election and conduct any other items of business set by the board in the notice and agenda for the meeting, or special meetings to address a specific topic.
Special meetings of the members can be called by the board or by a petition signed by association members. For incorporated associations, Corporations Code § 7510(e) provides that special meetings “for any lawful purpose” may be called by the board, by the board president or chairperson, by other persons specified in the bylaws (which is rare), or by 5 percent or more of the members. Some association bylaws set a higher percentage of the members required to call a special meeting. Legal counsel for the association should be consulted upon receipt of any member petition to determine if the meeting is properly called and whether the association’s governing documents may set a higher percentage of the members to call a special meeting than the 5 percent set by § 7510(e) noted above. The minimum requirements for members to call a special meeting for unincorporated associations should be set forth in the governing documents.
Membership meetings are held for the members to conduct business, primarily in the form of voting. The primary business conducted at most membership meetings is the election of directors at an annual membership meeting. Infrequently, special membership meetings are held for other types of votes, such as approval of capital improvement projects and document amendments.
Membership meetings are typically conducted by the board. The opportunity for members to speak at membership meetings is different than the opportunity to speak at board meetings as discussed above. Civil Code § 5000 requires that the board permit any member to speak at any membership meeting and allows the board to set a “reasonable time limit for all members to speak.” Section 5000 specifically references the overall time for members to speak and does not mention any per-person limitation, although a per-person time limit may be set in the meeting procedures. The agenda should include a designated time for homeowners’ comments.
Larger associations often ask members who wish to speak at a membership meeting to complete a form requesting to speak and identifying the agenda item or topic of the member’s comments, so the president or other chair of the meeting can call on those members who wish to speak in an orderly manner by topic. Smaller associations generally allow members to take turns speaking merely by raising their hand and being called on in turn by the chair of the meeting.
Civil Code § 5000 also requires that all membership meetings be conducted using some form of parliamentary procedure to maintain order and allow opinions to be voiced respectfully. This procedure should not be overly complicated and difficult to follow. The board does not need to adopt a one-hundred-page tome on parliamentary procedure. There are simplified forms of parliamentary procedure available that do not require interpretation by a professional parliamentarian. The goal of the procedure is to maintain decorum and ensure fairness to all members wishing to speak. The board should not censor statements (unless the statements are discriminatory, offensive, or inappropriate) or show favoritism or preferential treatment toward any individual members.
As with owner comments at board meetings, the board is not obligated to provide any response to owner comments, but it does promote community goodwill if easily answered questions are addressed and other comments, even negative ones, are acknowledged.
Conclusion
When association meetings are conducted in an orderly, calm manner, they are much more likely to be productive and create positive relationships in the community than if they are disorganized, unruly, and unproductive. Setting meeting procedures in advance and consistently enforcing the use of those procedures throughout the meeting will help set a positive tone for the interactions among the board members and association members. This positive tone can greatly benefit the community as a whole and lead to more productive, effective governance of the community.
