Question: Our board allows our manager, who is a vendor, to preside at the required annual meeting of our homeowners association. At one such meeting, the manager proposed a motion, and I arose to a point of order, saying that the manager was not qualified to make a motion. The chair accepted that point of view, and a board member made a near-identical motion. I thought the issue was settled. It is not. I just saw a copy of unapproved minutes of the 2013 annual meeting where the manager moved the adjournment of that annual meeting followed by the vote to adjourn. I said that an employee of the association does not have the authority to move any motion. The board and the manager should realize that this is a fundamental abrogation of accepted procedures. Now I understand that our board intends to invite the manager to preside, as happened on two prior occasions, or to accept illegal motions or other procedural matters from him. The directors do not understand the legal implications of having an association employee replace the duties and responsibilities of the board. It is obvious that the manager does not know better and lacks the abilities to do this job. This matter should be brought to the board's attention and the manager put on notice that he is totally out of line, but what do we say?
Answer: Board directors cannot delegate nondelegable duties such as conducting meetings and making motions. The Corporations Code does not state the activities and affairs of a corporation shall be conducted under the direction of a manager or management company. A manager has no legal authority to preside over any board meeting, nor can he motion a vote, let alone move to adjourn the annual meeting. There is no requirement that managers even attend board meetings, and it is generally better if they do not.
Corporate powers, activities and affairs shall be conducted and exercised by or under the ultimate direction of the board. There are many board directors' duties that are nondelegable, and as fiduciaries, board directors cannot delegate statutory duties to anyone. Although the board may delegate certain management activities to committees and management personnel, it cannot delegate authority to officiate at meetings, according to Corporations Code section 7210.
Activities and affairs of a homeowners association shall be conducted by, or at the direction of the board of directors. This hierarchy is reinforced by statute, in that, unless a titleholder serves on the board, his or her control in that development is limited to a vote as a member of the association, according to Business and Professions Code section 11018.1.
At the next board meeting, use your right to speak during the open forum and voice an objection on the record that the manager is "out of line" and request the admonition be entered into the official meeting minutes, as outlined in Civil Code section 5000(b). The manager's actions are not just a breach of protocol and parliamentary procedure; managers do not have legal authority to conduct board meetings and they are not to interfere with the business of the board and the association.
Because board meeting minutes are prima facie, if the manager is noted in the minutes as conducting the official business of the association this could have wide-reaching implications. If association interests were left in the hands of an unqualified vendor, indemnification may be negated, depending on the terms of insurance, business conducted during all those meetings may be void and, in the event of a lawsuit, the association would be at a disadvantage, if not handicapped, in proving the board members acted in good faith and in the best interests of the association and its titleholders.
Homeowner association meetings are required, and to some extent regulated, by statute and case law (Ostayan vs. Nordhoff Townhomes Homeowners Assn. Inc., 110 Cal.App.4th 120, 2003). Whether your board directors are merely lazy or do not understand how association meetings are required to take place does not abrogate them of their duties or otherwise allow an inept vendor to assume their obligations.
Association board meetings are a time for owners to witness how the business of their association is conducted and to discuss the governance, maintenance, and financial stability of their assets. Civil Code section 5000 requires association meetings be conducted in accordance with a recognized system of parliamentary procedure or any parliamentary procedures the association may adopt. This corporate meeting structure ensures an orderly and efficient proceeding. If there is confusion about the rules and logistics of these meetings the board's questions are better put to the association's counsel than the manager.
Zachary Levine, partner at Wolk & Levine, a business and intellectual property law firm, co-wrote this column. Vanitzian is an arbitrator and mediator. Send questions to Donie Vanitzian JD, P.O. Box 10490, Marina del Rey, CA 90295 or email@example.com.