Question: My homeowner association board holds annual meetings at a restaurant. The manager convinced our board that the association needs to buy dinner for its vendors that management hires. Dinner takes place at the restaurant where our annual meeting is held. Our manager says the reason for hosting these vendor dinners is that it's appropriate for the board to show its appreciation. When I arrived at this so-called "annual meeting," no waiters or restaurant staff knew a meeting was taking place. I scouted the entire restaurant to find a "meeting" with three board members, management representatives and vendors seated at a table. There was no room for homeowners to attend, and I wasn't asked to join them at the dinner table. It was clear they set this up so no homeowners would know where the meeting was, let alone show up. These activities are never reported in the minutes. I had to ask for a separate chair to be brought to the table. I want to know who paid for this "appreciation" dinner and why no other owners were given notice of this meeting. The meetings should take place where we live! Is this right?
Question: I live in an association with over 1,000 acres and over 19,000 residents in homes and condos. As there's no pool or other amenities, dues are about $50 a month. The board decided association monthly meetings will be held at a local pancake restaurant. When notices are to be distributed, signs announcing meetings are taped to light poles in obscure places along random streets throughout the development. As a result, no one knows where and when meetings take place. No agendas are posted or circulated. Instead, the management company controls our board and roped the directors into a system "forcing" owners to communicate by email through their company's website. Most owners don't use computers. We don't know what's going on here. Doesn't the board have to meet in our development? What is proper notice?
Answer: Both boards' actions are inappropriate and ostracize owners. Your association is not a smorgasbord — it's a business. Playing hide-and-seek with association meetings while dining out at association expense does nothing to instill trust in owners who fund these activities. Titleholders want to know what's on the agenda, not what's on the menu.
Annual meetings are supposed to serve a legitimate business purpose. If management is compelled to make a display of its appreciation for vendors who have been compensated to perform a job, then management can pay for it and the soirees can take place outside business hours.
Even with providing timely notice of meetings to all owners, boards holding private meetings before the actual meeting is called to order are violating the law. Scheduling a board meeting to occur after the board meets with vendors for a meal while they discuss association business is a transparent attempt to circumvent the scrutiny it would otherwise be subjected to.
Board and association meetings are open to owners. Meetings need to be conducted in a place that's accessible to all owners and noticed in a manner that encourages participation and the open discourse of matters relevant to association business.
Most bylaws, articles of incorporation, and covenants, conditions and restrictions (also called CC&Rs) specifically set the date and location for board and annual meetings. Corporations Code section 7151(c)(2) states in part, bylaws may contain the time, place and manner of calling, conducting and giving notice of member, director and committee meetings. Some governing documents mandate association-related meetings be held on the common-interest development's grounds so all owners can attend. In theory, every titleholder should be able to attend at the same time. Therefore, dates, times and locations should be selected for maximum attendance.
If a pancake restaurant board meeting cannot accommodate the majority of titleholders, then another location is needed. A notice must be issued of the annual meeting and its agenda 30 to 90 days before the meeting date. This notice must be given personally or by mail addressed to the address in association records for each owner, according to Corporations Code section 7511. Individual notice shall be delivered by e-mail, facsimile or other electronic means — but only if the recipient has consented in writing to that method of delivery, under Civil Code section 4040(a)(2).
Failing to give proper legal notice disenfranchises owners and prevents them from effectively managing their assets. If association governing documents provide for a recognized place to post notices, such as a communal bulletin board, that constitutes giving notice. Additional posting of meeting notices throughout the development merely supplements but does not replace statutory notice.
Board directors conducting business as described in the questions are a liability to the association, which could result in owners filing lawsuits, followed by the association's obligation to pay legal fees, penalties and damages.
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 firstname.lastname@example.org.