Major Changes in the Open Meeting Act, and Board Procedure

The Open Meeting Act (Civil §1363.05) is an Act within an Act; found in the middle of the Davis Stirling Act. The changes now in effect from 2011’s SB 563 are the most sweeping for California common interest developments since the Act was passed in 1995. Many boards may need to change longstanding practices so as to comply.

Elimination of action without a meeting

The core of SB 563 was its ban of board decisions by unanimous written consent. This method of decision-making was previously permitted by the Corporations Code, but no longer.

Agenda notice of executive session meetings

Although the Act requires agendas and notice to be posted four days before an open board meeting, it was not previously clear if notice was required for a meeting solely to be in executive session. Now, two days minimum notice is required for meetings which are solely in closed session.

No e-mail deliberation (except emergencies)

The law now bans boards from making normal decisions by e-mail. This is a growing problem in associations, as almost everyone uses e-mail. E-mail can be a useful way of exchanging information, but also can be used to circumvent the healthy deliberation process of open board meetings. That not only now violates the law, but also harms the board’s credibility with the members.

Emergency e-mail decisions

The board can make an emergency decision using e-mail if the board unanimously agrees on the action. The e-mails must be made part of the minutes.

Note – the term “emergency” is already defined in the Open Meeting Act: “…if there are circumstances that could not have been reasonably foreseen which require immediate attention and possible action…”

Director telephonic attendance

A telephone conference between a majority of the directors is a “board meeting”. A director may participate by telephone, so long as there is a location where homeowners can listen. Cellphones on “speaker” mode are not recommended, because all in the room must be able to hear and be heard.

New definition of “meeting”

By far the most significant and problematic change is the new, very broad definition of what considered a meeting. Previously, a “meeting” meant a gathering of a majority of directors to discuss an item “scheduled to be heard”. Now, a meeting is “a 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 that is within the authority of the board.”

The impact

This means that a majority of a member board cannot simultaneously tour the property, serve on the same committee, or discuss anything about the association, except in a formal meeting.

Bluntly, many boards without the benefit of legal counsel, management or CAI education will frequently violate this new law, unaware they are subject to a state-imposed gag order outside of meetings. While it is important for directors to deliberate in board meetings and not in the hallway, this law goes too far. However, it is the law, and boards must comply.

Compliance tips

No committee should include a majority of the directors. Educate directors on proper corporate process. Delegate reasonably limited and specified authority to a committee, director, or manager. If a procedural violation of this law is found, ratify the decision at the next open board meeting, promptly disclosing the circumstances in which the violation occurred.

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.