What is the Purpose of a BOD meeting?

Hoping that you will be able to help.

I just spoke with one of our directors who told me that not all BOD business needs to be discussed in BOD meetings. We amicably agreed to disagree for the time being.

The director informed me that they work within their individual budgets and they don't need to discuss or disclose all improvement projects to owners prior to commencement as long as they stay within budget. According to him, as long as they stay within their budgets, they don't need approval. The directors do stay within their budgets since 3 experienced BOD members were elected last year (total BOD members is 7). Money and budgets are not the issues in this inquiry. The issues are disclosure and transparency.

I understand that we elect our BOD to take care of association business which does not require owner notice for each and every routine (weekly or monthly) task such as paying association insurance, utility bills, payroll for employees, filing taxes, collecting assessments, maintenance such as painting interior walls or cutting lawns, etc. I am not challenging the corporate powers provided by CA laws that a BOD has.

I am concerned that 'upgrades and improvements' are consistently being done without informing the owners.
* Several 'improvements, upgrades and changes' to common areas are not /have not been discussed in the BOD meetings.
* Improvements, upgrades, additions or major changes to the common areas are not disclosed in the director's reports (one director each for: Buildings, Swimming Pool & Golf Course).
* The projects have not been placed on the current or previous month's agendas and there has been no indication that the work will be done.
* Owners find out that an improvement or addition has been made AFTER the fact. Owners become aware when they walk or drive by the improvement. We hear about it in the following month's meeting or the rumor mill.
* Owners are informed when 'maintenance' is scheduled such as waxing the clubhouse floors, draining the pool or pesticides/fertilizer on the golf course but not informed of improvements, etc. Maintenance is a given; improvements, upgrades and enhancements are unexpected from an owner's viewpoint. IMHO, improvements should be given the same notice or courtesy as maintenance.

Our Bylaws indicate that the BOD may conduct business provided that they have a quorum (for meetings) or they can use an action without a meeting (no meeting, unanimous written consent).

What is the purpose of BOD meetings? What disclosures need to be done by the Board of Directors BEFORE work is started? Have I misunderstood or misinterpreted Davis Stirling, Open Meeting Act, laws, etc?

Thanks in advance.

Barbara,

I am not clear if you are asking about proper decisions and discussions at a Board Meeting or what notices must be given to members for work that is being done.

"... not all BOD business needs to be discussed in BOD meetings" - this doesn't makes sense to me. Where does it need to be discussed if not at a meeting? In fact effective Jan 1, 2012 a new law goes into effect making it illegal for any board to discuss any business outside of a duly noted meeting.

"... director informed me that they work within their individual budgets and they don't need to discuss or disclose all improvement projects to owners prior to commencement as long as they stay within budget" - what does this mean? Does every director have their own budget assigned to them? how is it being determined what it's being spent on.

I would argue that without a board resolution any work done by a director is outside of this responsibility and could be challenged. Exception from this would obvious repair decisions that can't wait. If a pipe brakes your director may have authority (granted to him/her in some prior meeting) to authorize repairs. Same for other similar task.

Any major maintenance would have to be discussed. For example if your roof needs repair I would say that there needs to be a board meeting with a decision to repair it and what company to use and how much money to spend.

As for owner notification - maintenance/repair probably doesn't warrant a notification, but it might be a good idea. Even if it means posting a note on bulletin board. Any improvements would require membership approval so a proper notice must be given.

Owners become suspicions of board activity when things are done in secret. Transparency will help you get member's buy in and support.

Barbara, our management company covers maintenance and repairs in the management agreement. I consider these to be part of the operating budget. I consider upgrades to be a capital expenditure to be paid from the reserve budget. We recommend both the annual operating budget and the annual reserve budget be approved by the Board and ratified by the members present at the annual meeting. I believe that a capital expenditure should be approved at a Board meeting after presentation of the bids and discussion by the Board members. Only when it is an emergency should major expenditures be approved outside of a Board meeting. And if this occurs the action should be read into the minutes of the next Board meeting.

The purpose of Board meetings is to bring the Board members together to make decisions and to record minutes which document all decisions made by the Board. A good Board will be transparent and will notify the members of the actions they take in a timely manner. An yes they should follow all governing documents, including any state requirements, which require prior notification to all members.

Thank you all for your replies. I really appreciate it.


Roger,

What you posted is my understanding of how a board should conduct business in a meeting.

I am at my wits end. I regret that I am not able to get through to them.

Barbara,

It's hard to know where to begin. First, Cal. Civil Code 1363.05 is known as the Common Interest Development Open Meeting Act, and it defines what is considered a "meeting" of the directors. The "members shall be given notice of the time and place of a meeting as defined in subdivision (f), except for an emergency meeting, at least four days prior to the meeting." - sec. 1363.05(f). This law was passed to deal with situations like you're experiencing. Whether or not someone is staying "within budget" has nothing to do with it, legally speaking. Oh, and "meeting" simply means "any congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business scheduled to be heard by the board." A board doesn't even have to be voting for it to be considered a meeting. I'm the president of a 5 member HOA board, and I can tell you that when 3 of us get together we can't discuss board business because that would be a "meeting" and would violate the Open Meeting Act, even if we're just talking an not voting.

In doing "upgrades" or other such work to your property, I would assume that contractors (e.g., cement, landscaping, etc.) are being hired to do such work. If so, I don't see how this is being done apart from a discussion and vote of the board. Because a quorum is required to discuss and vote, that by definition means a "meeting" is taking place and the law requires that meeting to be open to members. The time/place of the meeting, along with an agenda, is to be posted openly four days prior to the meeting. As a member, you are entitled to request a copy of the meeting minutes of any board meetings, so any out-of-meeting voting would become plainly evident and things were suddenly happening that didn't appear in any meeting minutes.

The state of California is passing ever more suffocating laws that regulate HOA's, including boards. It's non-transparent boards like the one you describe that are the reason that these laws need to be in place. Sadly, most HOA members don't know their rights under the law, and the renegade boards (the reason for the laws in the first place) often don't care what the law says anyway. As a now-former president in our HOA used to say, "Boards will do what boards will do." As a member, you may need to seek the advice of an HOA attorney. In doing so, he/she can fire off a letter to your board, which would hopefully go to your HOA's attorney and then the board might get a much-needed correction on their behavior as it relates to the Common Interest Development Open Meeting Act.

Finally, if you really want to get involved, run for the board!

>>>I have no intentions to run this year but remain open to the possibility of being appointed if the need arises. <<<

Well - that is silly - if someone resigns and the board can no longer sign an 'action without a meeting' after Jan 1, 2012, how would the board replace a board member?

Thanks Jeff. I was asleep at the wheel when I posted. ;-)