Pre-meeting actions risk a lawsuit

Question: This is my first time on a board, and I sense impropriety by my fellow board members. The management company owner forces our board to meet with one of its employees before conducting any homeowner association board meeting.

This meeting takes place before the on-the-record meeting. We’re told the purpose of this pre-board meeting is to determine what will and will not be discussed at the actual association meeting that homeowners attend. It’s as if we are putting on a show for the homeowners.

The manager advises us not to discuss certain issues during the actual meetings in order not to alarm owners. We’re told our goal is to impress owners that everything is fine and running smoothly, even though it isn’t.

The company’s owner told us we are “not allowed” to let homeowners air their complaints at a board meeting. He told us to make it as difficult as possible for homeowners to lodge complaints. He said since homeowners don’t send letters “signed return receipt” we should just throw them away because there’s no proof the letters were ever sent or received.

We were told: “If homeowner comments and complaints are not presented at board meetings, the board doesn’t have to document it in the minutes where owners will read about it.” The reasoning is that once owners learn of one complaint, they’ll all start complaining.

Management instructed our board to discourage complaining homeowners from staying for meetings. The manager arranges for complaining homeowners to show up before board meetings to discuss problems.

I feel as if I’m part of a conspiracy to mislead homeowners and am uncomfortable with this routine because it’s deceitful. Is the manager’s advice worth paying attention to or should I risk speaking up and have the other board members mad at me?

Answer: Management companies and their personnel are contracted vendors who are supervised by the board. A board cannot delegate its “fiduciary” duties to a management company. A fiduciary is the highest standard of duty the law imposes in any relationship. This relationship is founded on trust placed by one person in the integrity and fidelity of another.

If the management company is advising your association to circumvent the law, it is opening the door to liability no board wants. The manager is giving legal advice without a license to practice law, and it has the potential of negating indemnification clauses in your association’s insurance that might otherwise protect board decisions.

All pre-, post- and fireside-chat types of board gatherings are still meetings under the Davis-Stirling Act, and truthful minutes are required.

Homeowners by law have a right to attend board meetings. The act mandates that boards allow homeowners to speak at board meetings without limiting the topic. Road-blocking homeowner communications in an attempt to paint a rosy picture of your association amounts to misrepresentation by those who partake in the exercise.

Destroying homeowner letters is dishonest, and actions like this can be construed as bad faith. Worse, the law presumes delivery of mail if properly addressed and with postage prepaid.

Discarding homeowner letters without reading them can place a board and the association in jeopardy and, depending on the contents of the letter, expose the association to liability.

As a board member it is your responsibility to avoid all impropriety and complicity. Instructing boards how to circumvent laws enacted to protect the property of deed-restricted titleholders is serious enough to terminate any agreement your association may have with that company.

While the law allows boards to make decisions for day-to-day operations of the association, if those decisions cause injury or damage and the minutes are falsified or nonexistent, the association would be liable to pay those damages. It is also possible the association’s insurance will not pay those damages because the board’s actions are in violation of the law.

In that case, any damages would have to be paid by all the homeowners. That outcome should be serious enough to convince your board to change the way it does business.

Please send questions to: P.O. Box 451278, Los Angeles, CA 90045 or e-mail your queries to: NoExit@mindspring.com.