HOA Homefront – Closed sessions often misunderstood – The San Diego Union-Tribune

Closed session is a common point of contention in HOAs. This week begins a multipart series of reader questions on this important and often misunderstood HOA governance issue.

Q: Is there a difference between Executive Session and Executive Meeting?

— J.B., Vista

A: Civil Code Section 4935 is part of the Open Meeting Act within the Davis-Stirling Act and provides for “Executive Session,” which is a closed board meeting to discuss certain specific subjects permitted by the statute. Sometimes executive session is referred to as closed session, and the limits of executive or closed session are found in Section 4935.

Some boards will occasionally create “executive committees” consisting of less than a board majority to address certain issues. However, if the committee consists of a quorum (majority) of the board, it is still a “board meeting” under Civil Code Section 4090 triggering the requirement of Open Meeting Act compliance.

Q: Can a board handle approximately 90 percent of their business (including the annual budget) in executive session by classifying the items as contractual matters, even though the items are also on the agenda to be approved in the meeting immediately following the Executive Session. So there are certainly no negotiation matters to be discussed.

— S.S., Mission Viejo

A: The “contracts” subject is the most misused executive session topic. Civil Code Section 4935(a) permits executive session discussions of “matters relating to the formation of contracts with third parties.” Many boards and even HOA attorneys overlook “formation,” and focusing only on “contracts” they erroneously expand the use of closed session. “Formation” means the negotiation of the contract, not the decision identifying the vendor with which the HOA intends to form a contract. The selection of the preferred vendor should be in open session and then the discussion of the contract terms (including counter-offer and negotiation strategy) should be in executive session. Finally, budgets are not contracts.

Q: My HOA does not release the individual votes of directors for voting taking place in executive session. Is this common practice?

— E.M., Oceanside.

A: Civil Code Section 4935(e) requires the matters discussed in executive session to be “generally noted” in the next board open session minutes. A listing of each motion and each roll call vote on each motion goes beyond a “general note” of the actions taken. It is not required nor common practice to disclose how each director voted on each closed session motion.

Q: Our HOA board seems to be conducting much of our association’s business via email or in executive session. I’ve expressed my concerns in open forum but nothing has changed. What course of action could you suggest?

— L.R., San Diego

A: The Open Meeting Act is quite clear that all board deliberations must occur in meetings open to members, except for the specific and narrow topics listed in Civil Code Section 4935. Civil Code Section 4910(b) bars boards from discussing HOA business in emails or other electronic format (such as texts) except in case of actual emergency. If the board does not trust the members to quietly observe the board’s decision-making process, why should the members trust that board’s governance? If the board refuses to obey the law, the members should elect directors who will.

Kelly G. Richardson CCAL is Partner of Richardson Ober DeNichilo LLP, a California law firm known for community association advice. Send potential column questions to Kelly@rodllp.com. Past columns – www.HOAHomefront.com.