WHAT IS (AND IS NOT) OK IN CLOSED SESSION

The Open Meeting Act (Civil Code Sections 4900-4955) is the HOA version of California’s Brown Act, requiring openness in governance meetings. However, the Brown Act (Government Code 54950-54963) generally applies to public agencies, commissions or private corporations created by a public agency. Since HOAs are private associations, the Brown Act does not apply to them, but the Open Meeting Act does apply.

One of the Open Meeting Act’s key features is the prohibition in Civil Code Section 4910 of a quorum of the board discussing any HOA business outside an open board meeting, whether in person, telephonically or electronically. The important exception to this requirement is executive session, in which the board discusses matters that for important reasons must be confidential and not discussed in front of the membership.

The Open Meeting Act provides at Civil Code Section 4935 for closed executive session but only permits a small list of permissible topics. Boards may in executive session discuss litigation (presumably including any attorney advice about potential litigation), personnel matters, member discipline or common area damage reimbursement hearings, assessment foreclosure votes, discussion with a delinquent member regarding their proposed repayment plan, and matters relating to formation of contracts with third parties.

A few of these permissible topics are frequently misinterpreted. By “personnel,” the law does not refer to the staffing of committees or filling board vacancies, but rather references association employees. Unless the association employs individuals who are paid directly by the association, there are no personnel to discuss in executive session.

Another very commonly misapplied topic is “formation of contracts.” Note the term “formation” is used, as opposed to anything at all regarding the subject of contracts. Keeping in mind that boards should be as transparent as possible, and also remembering that the purpose of closed session is to protect matters that if not kept confidential will cause damage to the HOA, the only parts of the contracting process that must be confidential are the negotiating/counter-offer strategy and attorney advice about the contract language. The best approach to hiring a new vendor is to discuss the proposals in open session, determine the vendor that the board prefers to hire, and then announce that the negotiation and any legal contract terms will be discussed in closed session.

One final topic for closed session is not yet listed in the Open Meeting Act, and that is the discussion of a resident’s request for accommodation of a disability. Under the Fair Housing Regulations, Title 2 California Code of Regulations Section 12176(b), such matters are required to be kept confidential. Since violating the rules could expose the HOA and its manager to liability, compliance with the regulation should compel boards to have such discussions in closed session.

Some boards succumb to the temptation to skirt the boundaries of the Open Meeting Act, either in the name of efficiency, or because open board meetings in the association are too unruly. Such boards hold “working sessions” or gather as “committee” to discuss HOA business. However, under Civil Code Section 4090, any time a quorum of the board is together discussing business, it is a “meeting,” which triggers the Open Meeting Act.

Preserving the trust of the community is everything, so avoid overuse of executive session.

Richardson, Esq., is a Fellow of the College of Community Association Lawyers and Partner of Richardson Ober DeNichilo LLP, a California law firm known for community association advice. Submit questions to kelly@rodllp.com. Past columns at HOAHomefront.com.