Real Estate & Property Law

Should Directors Report Individually to the Members of an HOA?

What happens when Directors decide on their own to communicate with owners in a newsletter without any effort to coordinate communications in a way that is comfortable for the Board? The following question (from a reader) is what happens:

?Is it appropriate or even legal for 2 of the board members (out of 7) to send out a "newsletter" to homeowners discussing the details of the board meeting? The minutes have not even been approved yet.?

In this situation, the reader sent me a sample of the newsletter. Two directors reported in detail what took place at a board meeting. There is no way for me to determine whether what they reported is biased, one-sided, accurate or whether there are any omissions that might sway recipients in their thinking. But there are some obvious concerns. The two joined in criticizing decisions of the board. They set out a detailed synopsis, from their viewpoint, of what happened at the meeting and also reported confrontation of another board member on what they believed was improper behavior. In this newsletter the authors also pointed out opposing views of the directors on matters before the board and invited owner input on these differences. The most glaring differences related to whether the minutes of meetings should be mailed to members and also what level of detail should be recorded in the minutes. The clear implication was that these two directors felt a decision to stop mailing out minutes (which had apparently been approved at the meeting by a majority of board members ? cost being the stated concern according to the ?newsletter?) and minimizing the level of detail in reporting minutes was unfair to the membership.

Is this appropriate? What I will say is this ? without discounting the fact that board members are entitled to disagree and debate options ? and without taking sides on whether minutes should be sent out to members. Taking initiative to report what went on at a meeting as a director, without the board?s blessing or authorization, can be damaging and harmful to the association. Why?

? It is contrary to the idea that the minutes are the official record of the board meeting.
? It is likely to confuse members, especially of the name of the Association is used in the title of the newsletter.
? In this case the communication suggests a board member was doing something wrong when that may or may not be the case ? these issues are better suited to executive session (appropriate for personnel or disciplinary actions) so no board member is accused without the opportunity to be properly heard.
? It is very likely the communications will be biased if the reporting is done by any board member or members which are on opposite sides of arguments ? and especially if the communications are drafted by Directors who are in the minority and don?t like the final decisions of the majority on action items.

Minutes are the official record of board meetings and should be used for reporting attendance/ quorum, business considered at the meeting, decisions and actions approved or disapproved, and reports of officers and, if appropriate, association vendors. They are usually drafted by the Secretary and recorded as final once approved. Members have a right to ask for copies of minutes, even when they are in draft form before approved, if they are not approved within 30 days of the meeting.

Newsletters are for reporting news, engaging the owners, pointing out important rules and regulations, possibly promoting social interaction, possibly conducting surveys, and definitely promoting good relations and communication with owners. If the association is going to distribute a newsletter, the board should agree on an editor who is unbiased and will assure the reporting is straightforward and does not contain statements showing a clear bias or which are inflammatory or which could lead to unrest or evidence illegal acts which could get the association into legal hot water.

If board members want to communicate with their fellow members and tout their own personal views it can be done of course (free speech and all) but they should remember they have a fiduciary duty to the association and fellow association members to refrain from producing communications that are inflammatory and undermine majority decisions of the board. There are lots of ways to say something useful if you have something useful to say.

Full post as published by California Condo & HOA Law on February 07, 2011 (boomark / email).