[After three previous articles addressing reader questions on this subject, this concludes the series]

Perhaps the most frequently abused HOA governance tool is the closed session. Boards justify overuse of closed sessions for various reasons, such as that their open meetings are too raucous and closed sessions are more productive. However, the Open Meeting Act (part of the Davis-Stirling Act) requires all board deliberations to be in open meetings with members able to listen except for the short list of topics listed in Civil Code Section 4935.

Closed session is intended for certain subjects in which harm could be inflicted upon the HOA or others if they were discussed in front of the community. The topics which may be addressed in closed session are: 

  1. Litigation. This also includes the risk or threat of litigation, and normally is why attorney discussions in closed meetings are considered permitted. Closed discussions are essential to protect attorney-client privilege.
  2. Formation of contracts. This is the most misinterpreted item regarding closed sessions. This does not mean ANYTHING to do with contracts but regards their FORMATION. Vendor selection is not formation of contract. Formation of contract is the negotiation strategy (counteroffer) and attorney advice regarding the contract’s legal terms, which all obviously need to be kept confidential and therefore discussed in closed session. 
  3. Hearings regarding member discipline (Civil Code Section 4935(a)) or regarding requiring a member to reimburse the HOA for common area damage (Civil Code Section 5855(b)). These statutes allow a member to request closed session for such hearings, but boards should routinely hold such hearings in closed sessions without waiting for a request. Closed sessions avoid embarrassing the member involved.
  4. Personnel matters. Managers are not “personnel” unless the manager receives their paycheck directly from the HOA. Vendors are not “personnel,” nor are directors or committee members. If someone is paid directly by the association as an employee, they are “personnel,” and discussions regarding them must be confidential to protect their privacy.
  5. Meeting with members regarding their proposed delinquent assessment repayment. Closed discussions protect the member from the revelation of personally embarrassing information.
  6. Votes to start foreclosure on a delinquent owner’s property. It is not clear to me why the statute requires a lien vote in open session but the foreclosure vote (the next step) in closed session. Nevertheless, Civil Code 4935(d) requires foreclosure votes in closed session and then (as all action items) noted generally in the minutes of the NEXT open session meeting.

One other topic may be best handled in closed session, even though the Open Meeting Act does not specifically authorize it. California Fair Housing Regulation 12176(b) requires that matters regarding resident requests for accommodation of a disability to be kept confidential. If the HOA obeys the Open Meeting Act, the board will violate this regulation (and could be sued or subject to DFEH discipline). Boards may wish to consult their legal counsel regarding how to address this conflict. I have alerted Kevin Kish, Director of California’s Department of Fair Employment and Housing, and hope this regulation can be adjusted soon to resolve the current conflict with board responsibilities under the Open Meeting Act.

Avoid overuse of the closed session function, which should be used sparingly, because misuse will create distrust in the board and ultimately harm community cohesion. 

 

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 Kelly@rodllp.com. Past columns at www.HOAHomefront.com. All rights reserved®.

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