posted 10/28/07 |
SB528 Has Been Signed into Law
What Role Will Agendas Play in Board Meetings?
by Beth A. Grimm, Esq.
SB 528 has been signed into law, effective January 1, 2008. For some Associations, it will not make a difference because the Boards already post copies of the meeting agendas with the meeting notices, ..... or will it? Even these forward-thinking Boards may run into a hitch because the new law not only requires posting or providing an agenda with the meeting notices, it prohibits the Board from taking action on anything that is not on the agenda, ... or does it?
To be specific, first of all, the new law applies to board meetings, not membership meetings. The requirement for distributing the agenda is the same as for the meeting notice requirements found in Civil Code Section 1365.05(f), 4 days before the meetings, distribution by posting, newsletter, etc. And the concept is that Boards cannot conduct business on items that come up before or at the meeting but are not listed on the agenda. But there are exceptions.
HERE ARE SOME ALREADY-ASKED QUESTIONS and ANSWERS:
Question: What if the notice of meetings is in the Bylaws or Association newsletter and that comes out before the agenda is set?
Answer: Find a way to distribute or post the agenda at least 4 days before the meeting. That might be with the billing statements when they are mailed, in the newsletter if the timing works, or by posting in the common area. It would be a good idea to include another copy of the notice with it, even if it was already distributed. It may not be necessary, but it makes sense.
Question: What if the HOA does not have any common area to post in?
Answer: That is a little more difficult. You can mail the agenda, post it by the mailboxes if there are any clusters, put a kiosk up somewhere near a street if there are streets, a parking area if there is any, on a street lamp, or anywhere there is space available, that you can get permission. Choose the place all owners are most likely to drive by. The makers of the notice "kiosks" and plastic encased frames are going to be busy. If you still cannot find a posting place, but you have a website, posting on the website and/or email notices might be found acceptable. Impossibility is a legally recognized defense that works in contract cases. And remember that any owner can ask for mailed notice. Note: If posting the agenda is difficult to impossible, good faith could become a key element of the choice you make to find a way to let owners know how to view the agenda.
What are the exceptions?
Answer: There are many:
The law applies to "nonemergency" meetings only.
The law does not prevent the Board or its staff or agents from talking to the members about something not on the agenda. It is not muzzled by this law. The statute says that management, the staff or the board of directors, may "briefly" respond to statements made or questions posed by a person speaking at the meeting, or ask a question for clarification, make a "brief" announcement, or make a "brief" report on the activities of a board member, management or staff, whether in response to questions posed by a member of the association or based upon his or her own initiative. What do you suppose that overuse of the word "brief" means? It could mean that the legislators have sympathy for HOA board members, and want meetings to be brief (hardly!), but more likely its a warning that if subjects come up that are not on the agenda, boards are supposed to avoid full discussions of the items and defer business until the owners can get fair notice of it.
The law allows Boards to communicate instructions to its management and staff. The limitation on action does not prevent the Board from (1) providing information to its managing agent or other agents or staff, (2) requesting the manager or staff to report back to the Board at a subsequent meeting concerning any matter, (3) directing the manager or staff to place a matter of business on a future agenda, or (4) from directing the manager or staff to perform administrative tasks that are necessary to satisfy its obligations under this law.
The new law allows action on items that come up before/at the meeting that are not on the agenda if certain findings are made, specifically, one of the following:
(1) A majority of the board members present at the meeting determines that an emergency situation exists.
(2) Two-thirds of the board members present at the meeting, or, if fewer than two-thirds are present, by unanimous consent of those present, determine there is a need to take immediate action and that the "need" arose after the agenda was prepared and posted or distributed.
(3) The item was on an agenda for a prior board meeting and did not get put on the agenda for the current meeting. The statute says on an agenda for a prior meeting that took place "not more than 30 days before", and that the item "was continued to this subsequent meeting." This language is confusing and undermines the point. If the prior meeting was 31 days prior, and/or the minutes from that meeting do not say that the matter was continued, does this apply? One could argue it practically does apply, given the apparent intent to tie two meetings together, without the understanding that they can easily occur 30-35 days or so apart, even when held monthly. It does not appear that Boards that meet quarterly can stretch things to tie in a prior meeting held the prior quarter..
There are other questions that have already been asked, like:
Question: What does # (2) above mean, is it the members or the board?
Answer: #(2) is confusing in its wording. I believe it was intended to relate to members. However, there may be a debate over what (2) actually means.
Question: Is it sufficient to list 'Old Business' or 'New Business' as categories to cover any topics that might come up; or does this new law require that every subject be listed separately?".
Answer: General categories are not a sufficient "catchall" for any item that may fit within one of them.
Question: If something comes up the day of or day before a scheduled board meeting that needs attention but is not on the agenda, can we simply call a separate emergency meeting, maybe even the hour before the scheduled meeting?"
Answer: It would seem so, if the Board members are willing to show up an hour earlier. The new law does not prevent this. And if it came up at any other time during the month, I assume if it is an emergency the Board would call an emergency meeting. The question is, given the facts and circumstances, does it make more sense to do that, all things considered, or simply count on one of the exceptions for handling the matter at the already scheduled meeting? Only you can answer that. It's not a legal question.
Question: What can happen if the Board simply takes action on an item that is not on the agenda without making any findings?
Answer: It is risking court invalidation of its decision if challenged, and maybe even a cause of action under Civil Code Section 1363.09(b) which provides for recovery of attorneys fees in any lawsuit over the violation, and/or a $500 fine for each violation.
It's better to plan a.h..e...a....d...... ... don't wait until January 1 when the law becomes effective to prepare for this.
By Beth A. Grimm, Attorney. A "service oriented" attorney and member of ECHO and CAI and various other industry organizations in California and nationally, host of the website www.californiacondoguru.com; two Blogs: California Condominium & HOA Law Blog, and Condolawguru.com Blog, and author of many helpful community association publications which can be found in the webstore on her site.