The business of operating a homeowners association is conducted by the H board of directors. While the day-to-day management may be conducted by employees or retained professional managers, the decision making process is made by the collective action of the HOA board of directors and those people who have been granted authority to engage in specified activities on behalf of the association pursuant to a properly adopted resolution of the board of directors. To properly conduct the associations business, the board of directors must hold meetings at which a quorum of the directors is present. A quorum is a majority of the required number of directors for the association (i.e. if the associations bylaws call for a five person board of directors, a quorum is three directors).
Common issues within homeowners associations involve the frequency of meetings that are being held by the HOA board of directors. A failure to hold meetings is indicative of a homeowners association that is not being properly managed and will generally be associated with operational problems within the association involving such things as: (i) lack of maintenance of common areas; (ii) failure to enforce rules; (iii) insufficient reserve funds; and (iv) misappropriation of funds.
How Often Should an Associations Directors Meet?
A homeowners associations board of directors is required by state laws and/or provisions contained in governing documents (generally the Bylaws) to hold a specific number of regular meetings of its directors, and special meetings as-needed. Additionally, directors can conduct limited association business in executive session meetings, and in emergency meetings.
Regular Board Meetings
Regular board meetings are meetings that are conducted at regularly scheduled intervals (i.e. monthly, quarterly, or annually). Some associations will have provisions contained in their governing documents that specify the actual day, time and place of regular meetings that are required. For example, an association may have a provision in its Bylaws which states that the directors shall conduct an annual meeting each year immediately following the annual membership meeting (at which a new board is elected), and monthly thereafter on the first Tuesday of each month, commencing at 6:00 P.M., at the office of the association. In the absence of specific language in the governing documents which fixes the times that the HOA board of directors must meet, the dates and specifics regarding regular board meetings are determined by the board of directors. Notwithstanding the fact that an associations bylaws may only require an annual meeting, association boards are generally required to hold quarterly meetings (at a minimum) in order to satisfy the directors responsibilities of conducting quarterly financial reviews that may be required by state statutes. In general, Association members are permitted to attend all regular meetings of the HOA board of directors.
Special Board Meetings
Separate and apart from the regular meetings, an associations board of directors can hold special meetings at various times between the regular meetings on an as-needed basis. The nature of the business that is conducted at special meetings of the associations directors generally requires more immediate action that cannot be delayed until the next regularly scheduled meeting. State statutes and the associations bylaws will specify the procedural requirements for calling a special meeting of an associations board of directors, which will include notice to the association members in order to give them an opportunity to attend the meeting.
Executive Session Board Meetings
Executive session board meetings are provided for in state statutes and association governing documents and they are not open to all of the associations non-director members. The executive session board meetings are to enable the directors to deal with limited confidential or privileged matters that should not be addressed in a meeting that is open to all association members. The types of matters that are handled in executive session meetings of a board consist of: (i) matters involving legal issues and litigation; (ii) matters relating to the formation of contracts with third parties; (iii) conducting disciplinary hearings (the member in question can attend the portion of an executive session meeting that concerns the imposition of a discipline on that member); (iv) matters involving personnel issues (i.e. hiring, firing, raises, performance reviews); (v) matters involving the structuring of payment plans for homeowners who are delinquent in payments that are owed to the association (the delinquent member can attend that portion of the executive session meeting); and (vi) matters involving decisions by the directors to commence foreclosure proceedings against a members separate interest).
In addition to the directors and the member involved in a matter under consideration, the executive session meetings can be attended by manager(s), the associations secretary and attorney, witnesses relative to disciplinary hearings, and third-parties, such as prospective vendors that are invited to the executive session meeting. State statutes and the associations bylaws will specify the procedural requirements for calling an executive session meeting of an associations board of directors and the required notice that must be given.
Emergency Board Meetings
State statutes and an associations governing documents will also allow for the associations board of directors to conduct emergency meetings relative to matters that require immediate attention of the directors, and possible board action. An emergency situation requires circumstances that could not have been reasonably foreseen and, because of the emergency situation, no advance notice to the associations members is required. State statutes and the associations bylaws will specify the procedural requirements for calling an emergency meeting of an associations board of directors.
Conducting meetings of an associations board of directors is a vital component of a homeowners associations business. It is thus critical that homeowners association members and management personnel are familiar with the provisions contained in their state statutes and in their associations governing documents (particularly the bylaws) relative to the required meetings that directors must conduct. If an associations board of directors is not conducting meetings, immediate action should be taken to replace the directors and/or to compel them to conduct necessary meetings. If such action becomes necessary, legal counsel should be consulted for proper guidance on the appropriate procedure.