Is THAT OK in Closed Session?

By Kelly G. Richardson, Esq. CCAL, HOA Homefront Column 

Kelly: I've enjoyed and appreciated your articles in the paper. Wish more board members would read them and take your advice. Why do boards have closed sessions during our monthly meetings? What is it that the board members wish to hide? Owners should be able to address the board when matter(s) or issue(s) are discussed referencing our homes and properties. HOA closed meetings only are a cloak of secrets, that they do not wish the paid owners to hear or have knowledge of. The owners deserve to not be barred from any portion of the monthly meeting and be entitled to hear how the board & manager are spending our monies. J.H., Fullerton

Dear J.H.: There are certain matters, which if discussed openly, would harm either the HOA’s or a homeowner’s interests. So, Civil Code 4935 allows a very few specific topics to be discussed in closed session. In addition, the state Fair Housing regulations also require requests to accommodate a resident’s disability also be handled confidentially. J.H., I agree with you that boards should use closed session sparingly, and only in clear compliance with the statute. Unfortunately, some boards abuse closed session for convenience, which harms the board’s credibility and possibly opens those decisions to legal challenges. Thanks, Kelly

Mr. Richardson: A few years ago you said regarding Section 4935 of the Davis Stirling Act: "Many boards and even HOA attorneys overlook “formation,” and focus only on “contracts” and erroneously expand the use of closed session." My interpretation is that a board in closed session may negotiate contract terms but the final approval be voted in an open board meeting. I think the phrase “formation of contracts” was intended to apply to contract negotiations and should not be interpreted to allow boards to avoid discussing actions in an open meeting. Regards, N.D., Palm Desert.

N.D.: Many lawyers, managers, and boards conveniently overlook the term “formation” and allow HOA boards to handle all contract-related matters in closed session. This does not comply with the few topics allowed to be discussed in closed session and builds mistrust in the board. The selection of a vendor should be in open session. The discussion of negotiation strategy, counter-offers, or legal discussion of the contract terms obviously must be in closed session to protect the HOA’s interests. I encourage boards to ask themselves “must this be in closed, or can it be in open session?” Sincerely, Kelly

Mr. Richardson: While attending a board meeting, our board stated that they were discussing committee members and committee chairs in executive session. They said it was acceptable to discuss committee members in executive session since they are “personnel.” Can boards view committee volunteers as personnel, thus allowing discussion in executive session? Thank you, R.G., Mission Viejo.

Dear R.G.: “Personnel” discussion that is allowed in closed sessions per Civil Code 4935(a), is the discussion of the HOA’s paid employees – people who receive paychecks from the HOA. Vendors and HOA volunteers are not “personnel” and so those discussions must be in open session.
 

Some boards try to justify their overuse of closed sessions by saying that their meetings are disorderly or too long – I say then improve your meetings!

Best, Kelly.

Davis-Stirling Act official site: www.leginfo.legislature.ca.gov. All others are unofficial.