What Are the New Rules for HOA and Condo Emergency Meetings?

 There are a number of new requirements for HOA boards in 2012. The
lawmakers have tightened up on meetings in an attempt to dictate more
 transparency. Some boards are doing a lot of business in secret.
Some boards make no attempt to circumvent laws and act appropriately,
 but members never attend any meetings or read any communications and
so “claim” the board is acting in secret when it is not. And then, of
course, there are boards that clearly “hide out” when conducting business.
 If you want to know why go to www.californiacondoguru.com and read the
free article on “Why Boards Hide.”

But the bottom line is that no more board decisions can be made by
email unless there is an emergency situation that came up in between
meetings that dictated quick action. In fact the law all but condemns
any email communication between board members that relates to business
of the association (whether current, future, or past) except in an
 emergency situation.
 So what is required if it is an emergency? The new law says:

“(A) Notwithstanding Section 7211 of the Corporations Code, the
board of directors shall not conduct a meeting via a series of electronic
transmissions, including, but not limited to, electronic mail, except as
specified in subparagraph (B).

 

(B) Electronic transmissions may be used as a method of conducting
an emergency meeting if all members of the board, individually or collectively,
consent in writing to that action, and if the written consent or consents are
filed with the minutes of the meeting of the board. Written consent to conduct
an emergency meeting may be transmitted electronically.”


 What does all this mean?
 1.       The old acceptable method of handling emergency or other items
by “Written Unanimous Consent” relates only to emergency matters (which is what I have 
been recommending as a limitation to HOA Boards and writing as a limitation in 
updated and amended governing documents for HOAs for years!).
If used in an emergency situation a “Written Uanimous Consent” form signed by all
board members would in my view be a just memorialization of the action, attaching the
email communications related to the item.

2.       The law says that each board member has to consent to holding the emergency “meeting
via email (seemingly to mean what it says) - in order for it to be a valid meeting.
I earlier explained in this blog that once a valid meeting is established through the new
unanimous “consent” to hold the meeting - at least a majority of board members can approve
the action once the quorum is established."
But I subsequently found out that the drafter of the law made a mistake. The unanimous
consent that is required is not for consent to hold the meeting via email - but relates to
approval of the action, meaning there must be unanimous consent to the action to
validate the emergency "meeting" via email. There is currently legislation to clean up this
inadvertence (mistake) in the wording.
 It remains that actions in an emergency situation can be taken via email communication
as long as all board members consent to the action.
      I also commented on the fact that some law firms and proactive managers are
presenting “pre-meeting consent forms” to board members. The consents would enable
all board members would be to agree to email meetings to handle emergency
matters. I assumed the form would be kept on record and when an emergency situation arises,
would be used and then filed with the minutes of the next open meeting along with
whatever action was taken by as few as a majority of quorum of board members.
 However, given that it takes unanimous consent to validate the action, I do not now see a purpose
to be served by signing a pre-consent form to hold a meeting. Other meetings do not require
unanimous consent for notices or for board actions.
Any form signed by a board member that constitutes a waiver of notice of board meetings
could be misused. If a board is not good about contacting all board members with notices
of meetings (yes, it does happen), then the members who did not receive the notice would
 be waiving their right to object to the meeting being held via email. Why is that
possible? Because Corporations Code Section 7211 says:

"(3) Notice of a meeting need not be given to a director who provided a waiver 
of notice or consent to holding the meeting or an approval of the minutes thereof 
in writing, whether before or after the meeting, or who attends the meeting without
 protesting, prior thereto or at its commencement, the lack of notice to that director.
 (My emphasis.)"

Some boards will be dealing with the new laws by delegating business decisions to
fewer than a majority of the Board or managers rather than by relying on properly
called meetings in between regularly scheduled meetings. There are special rules to
consider there as well and I will do a blog on that in the coming days. But one thing
that I see some commentators have failed to acknowledge is that decisions to record
liens on or foreclose on delinquent owners cannot be delegated to fewer than the 
full board. And so some boards may revert to approval of those actions by email 
calling the decision an emergency (although there is sure to be arguments about 
how something the board knew was coming up for months will qualify as an emergency.) 

Article © Beth A. Grimm, PLC