Confidentially speaking, all ‘meetings’ are not created equal
Question: My homeowners association allows the management company’s portfolio manager to brief the board during executive sessions. A lawyer friend told me that if a management company representative attends the board’s executive session, “expectations of confidentiality” are waived. The portfolio manager briefs the board on third-party contracts and presents information on homeowner hearings regarding violations of the covenants, conditions and restrictions (CC&Rs;), or rules and regulations, and when it’s necessary to hire or fire personnel. The manager does all the background checks. Because the manager is present, is the confidentiality of the executive session waived?
Answer: The purpose of an executive session is to provide a limited forum for discussion pursuant to Civil Code Section 1363.05(b), and only those topics set forth in that section qualify for executive session.
A board may say a matter is a subject for executive session discussion, but that does not make it so. When the board adjourns to executive session from a duly convened board meeting, it must first announce the reasons for the session and generally report the session discussion in the board meeting minutes. Although meeting minutes are available to owners, verbatim executive-session minutes usually are not, as the Davis-Stirling Act requires a “general” rather than “detailed” disclosure
Although the statute may give an “appearance” of confidentiality, it does not mandate a “presumption” of confidentiality during an executive session. When people other than board members are present at an executive session, there is no expectation of confidentiality.
Civil Code Section 1365.2(d) seems to indicate that the association may, but is not required to, withhold information from inspection when it relates to the “agendas, minutes, and other information from executive sessions of the board of directors as described in Section 1363.05, except for executed contracts not otherwise privileged. Privileged contracts shall not include contracts for maintenance, management or legal services.”
Both the authority and burden to keep records confidential rests with the board. Permitting any person other than a board member -- such as in this case-- to participate in the session can be interpreted as waiving any expectation of confidentiality.
As for background checks, both federal and state laws have stringent requirements on how such checks can be performed, and anyone with hiring authority must be properly trained. The board is responsible for having policies in place to safeguard the investigation process and information obtained from such checks. Given the potential for serious liability regarding the manager’s access to personal information, it is presumed the board’s due diligence includes a comprehensive background check on both the management company and the portfolio manager before hiring and periodic background checks during their employment.
Depending on the type of background checks performed on private individuals, those individuals might need to provide written consent. The public disclosure of an individual’s private facts could violate privacy rights and subject those making the disclosure to liability, so care must be exercised to ensure the information obtained is accurate and any decision based on that information is not discriminatory. Investigations or screenings must not run afoul of Government Code Section 12940 and California Administrative Code Sections 7286.0 to 7297.11.
Titleholders alleged to have violated the CC&Rs; or association rules must be given ample notice and have the right to attend any meeting where allegations are discussed. The titleholder, not the board, decides whether such discussions take place in executive session. A titleholder may demand that only board members attend and exclude all others. Nothing prevents the titleholder who is subject to an executive session with or without third-party presence from requiring that everyone present, including the association’s attorney, sign a nondisclosure agreement before any discussion takes place.
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