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REAL ESTATE
Q&A

What happens if board meeting minutes are 'scrubbed clean'?

HOA board member asks: What happens if board, on advice of management staff, scrubs all meeting minutes clean?

Question: How is a board meeting supposed to be structured? What does "prima facie" mean and is it affected if, on advice from management company personnel, our board scrubs all meeting minutes clean?

Answer: Prima facie translates as "at first sight," and it means a case or claim is supported by sufficient evidence and speaks for itself. Notices and minutes constitute the legal record of association business and are prima facie evidence of what transpired once they are certified to be true by the secretary, according to Corporations Code section 7215. It is a crime to falsify such records.

Agenda and meeting notice requirements for board meetings are located in Civil Code section 4920.

"Scrubbing" minutes or omitting facts creates both a false record and an incomplete one. In trial, admissibility of evidence is up to the judge. When testimony conflicts, differences often serve as a test of credibility. If the association's secretary certifies the minutes, the law leaves little room for evidence to the contrary.

Because titleholders have few opportunities to prove a conflict exists, this makes it easy for boards to fabricate minutes and deprive homeowners of rights that would otherwise be available to them but for the fact they live in deed-restricted developments.

If any motions are made, the motion should be quoted in the minutes as well as the motion maker's name and the person who seconded the motion. By name, each board director's vote "for" or "against" or "abstained" and even a "silent non-response" must be documented in the minutes. These are vital statistics that could make or break a board's defense, and affect indemnification protection, as generally, the failure of any board director to vote is considered a breach of fiduciary duty.

It is not enough to state that "the motion passed unanimously" or "the motion failed." Many insurers look to see director involvement and deliberation in the meetings. Who voted and how they voted might make the difference of being indemnified or having to pay for your own defense.

Generally, the structure of homeowner association board meetings, as recorded in the minutes, can consist of the following:

•The meeting is called to order, typically by the board president; the person who called the meeting to order needs to be named.

•Meeting date, time and type (e.g. regular, special, emergency) are noted.

•Roll call is conducted and attendance of all those who are physically present is documented.

•A quorum is established.

•An agenda is distributed to attendees containing a description of each item of business to be transacted or discussed at the meeting. If an executive session is scheduled, it must be noted.

•Preceding meeting minutes are read, then approved or rejected by motion, second and vote.

•The titleholders open forum is held. Under Civil Code section 5000(b), the board shall permit any member to speak at any meeting. A reasonable time limit for all owners at the meeting shall be established.

•Various board and committee reports are presented; the treasurer's report must be detailed.

•Unfinished or old business is discussed.

•New business is discussed.

•The next meeting date is documented for distribution in minutes.

•Date and time of the meeting's adjournment are documented.

•The meeting is adjourned. If the regular meeting is adjourned to an executive session, it must be noted in the agenda and the minutes.

There must be some modicum of formality to board and committee meetings. Pursuant to Civil Code section 5000(a), such meetings "shall be conducted in accordance with a recognized system of parliamentary procedure." Under Evidence Code section 11, "shall" means "mandatory."

If directors are ill-prepared, this reflects poorly on their abilities to conduct association business.

If directors fail to circulate an agenda to titleholders prior to meetings, this can cause dissension and distrust among owners and against the board. A minimal agenda that functions as nothing more than the same outline circulated from meeting to meeting raises suspicions about the board's activities and simultaneously disenfranchises homeowners.

Owners must attend meetings and take their own minutes, noting what motions and votes take place. This information can be effective when a board fails to act after a motion is approved or acts when a motion has been defeated. It is equally important if the board denies a motion was made when, in fact, it was.

When several owners contradict a board's version of minutes, a court may be persuaded to look unfavorably at those official minutes as well as actions of the board. If a board lies about the contents of minutes and breaks the law, those inconsistencies could be the turning point in a trial.

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 noexit@mindspring.com.

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