Homeowners associations are required by state laws and by their own governing documents to maintain proper minutes of their board meetings. Those minutes constitute the official record of the actions that were taken, or not taken, by an association’s board of directors. When there is litigation involving a homeowners association, the minutes that were maintained during the period in question will almost always become relevant in order to determine how the association, acting through its board of directors, handled a particular matter. Was the matter properly brought to the attention of the board? What did the board do concerning the matter? Was certain action properly authorized by the board of directors? Did the board exercise good business judgment? Did the board obtain appropriate input from legal counsel? Did a majority of a quorum make decisions? The minutes generally provide valuable information that can either make or break a legal action involving the association.
Minutes are also very important when homeowners sell their separate interests in a common interest development. A review of the most recent 12 months of the minutes of the directors’ HOA board meetings will provide potential buyers with important information concerning such things as: the association’s finances; defective conditions and maintenance issues; neighbor and neighborhood issues. While there are legal obligations for sellers to make disclosures to prospective buyers, frequently they do not for various reasons. Thus, it is important for prospective buyers of a separate interest to diligently review an association’s minutes in order to make an informed decision concerning their purchase.
Minutes are the Record of Official Action by an Association’s Board of Directors
Minutes are the official record of the actions that are taken by a homeowners association’s board of directors. Because an association’s board of directors can only take action at a proper meeting at which a quorum is present, there should not be minutes taken at a meeting where there is not a quorum as it is not a legal meeting of the board of directors. If a HOA board meetings cannot be conducted because there is not a quorum, the meeting should be canceled or continued and a page noting that no HOA board meetings took place because of lack of a quorum should be included in the association’s minute book attached to the notice of that meeting and any written waivers of notice.
Items to be Included in Minutes
The following items should be covered in the association’s minutes of a HOA board meetings:
- The association’s correct legal name.
- The date, time, location and type of meeting — regular, special, emergency, or executive session.
- Names of directors in attendance and directors not in attendance, including the office they hold, if any (president, secretary, etc.).
- Names of guests in attendance who were invited to speak to the board (contractors, attorney, accountant, etc.). Whether a quorum was established.
- Action on minutes of prior HOA board meetings (discussion, approval or disapproval).
- Reports of officers and committee members. Description of matters acted upon (items discussed, approvals, delegations of authority, directives).
- Motions acted upon and votes taken -including details documenting that proper procedure was followed. General description of matters discussed in executive session.
- Adjournment of the meeting.
- Secretary’s signature.
Motions and Voting by the Directors
Motions that were made, whether or not they were approved should be documented in the minutes by including:
- What the motion was.
- The name of the director who made the motion.
- The action taken on the motion (discussion, vote, table).
- The names of abstaining & dissenting board members.
Executive Session Information
An association’s board of directors typically conducts a portion of its business in executive session. State laws and an association’s bylaws generally cover what may and may not be the subject of executive session meetings of the board of directors. Typically, those matter include: (i) litigation; (ii) matters relating to the formation of contracts with third parties; (iii) member discipline and decisions to foreclose on a lien; and (iv) personnel matters. Because the specifics of the business conducted in executive session is confidential and not open to all members of the association, the minutes of the meeting should reflect that the board met in executive session and the topic of the discussion, but the specifics of the business conducted in executive sessions must be kept confidential and be documented in a separate set of notes or confidential minutes that are not available for member review. The association should maintain separate records of confidential notes and minutes in order to distinguish them from other records that a member is entitled to review and receive copies of.
Approval of Minutes
To become official, the minutes must be approved by the board of directors at the next meeting where a quorum is present. A copy of the proposed minutes of the prior meeting should be read to the board by the secretary or, alternatively, copies presented to each board member for their review. After the minutes have been read or reviewed, the board should vote to either approve or disapprove them. If the minutes are approved by the board, the secretary should sign the minutes to make them official and indicate that they were approved by the board. The approval or disapproval should also be noted in the minutes of the current meeting.
An association’s minutes are always scrutinized when there are issues involving actions (or inaction) by the board of directors. Frequently minutes are not taken, or are lacking in required content, and they are routinely approved without them being properly evaluated to confirm that they are a complete and accurate record of what transpired at the meeting. If the minutes are not complete and accurate, the deficiencies should be discussed and appropriate revisions made. Only when the minutes are complete and accurate should they be approved.
Retention of Minutes
The official approved minutes of the association’s meetings should be maintained in chronological order in the association’s minute book. Included with the minutes should be copies of notice of the meeting and any signed waivers of notice. To facilitate future use and distribution of the minutes, copies of these items should also be scanned and stored as electronic files in the association’s records.
- Minutes are not a transcript of everything that was said at the meeting “ie” they are a reflection of what was done, not what was said.
- Make sure the minutes accurately reflect considerations and reasons a particular action was taken in order to support sound business judgment and actions that are believed to be in the best interest of the association.
- Minutes should reflect alternatives considered for important decisions to document that the board was diligent and exercised due care in its decision making.
- Make certain that the minutes accurately reflect the board’s decisions, directors that were recused from discussions and abstentions from voting.
- If contracts or other documents are being discussed, ratified or approved by the directors, they should be either attached as exhibits to the minutes or properly described in the minutes and resolutions so there is no confusion about what was acted upon by the directors.
- The minutes should be organized, easy to understand, and clearly indicate what actions were taken by the board of directors.
Statutes, Forms, or Guides related to this Article:
Use these to fulfill the action steps from this Article. Click the + and – icons to show and hide product details [pt_view id=”5e37e4euyc”]