Advances in technology have made it easier and easier for people to instantly receive and respond to information electronically via email and text messaging. These methods of communicating have become so engrained in people’s personal and business lives that it is only natural that the practice of communicating via email and text messaging has carried over into their exchanges of information as members of the boards of directors of homeowners associations. Many board members assume that such exchanges of information promote their job performance and facilitate the operations of their homeowners association. While that may be true, depending on the nature of the information that is being exchanged, that practice may very well be prohibited by state laws and/or the association’s governing documents.
Not all states have the same laws regarding the use of electronic communications by homeowner association directors in connection with association business. Some state statutes may not contain any provisions on the subject and others, such as California, may have very restrictive provisions. In addition to provisions in state statutes, there should be provisions in an association’s governing documents, such as bylaws, that conform to and supplement the applicable state laws.
Because the actions taken by HOA boards should be transparent and taken in properly noticed meetings that are open to all the members (not including executive session business), with the exception of emergency situations, it is inappropriate to conduct a board meeting through a series of electronic transmissions between the various members of the board. Emergency action would generally involve an unforeseen circumstance that requires immediate attention. A “meeting” of an association’s board of directors is defined in California Civil Code 4090(a) as:
A congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business that is within the authority of the board.
Permissible electronic exchanges of information between an association’s directors would include items that involve administrative and oversight tasks which are delegated to less than a majority of board members and do not involve official board business. Non-official board business that could be conducted via electronic transmissions would include items such as: (i) communicating about possible dates, times and availability for meetings; (ii) circulating information relative to meetings; (iii) requesting items for inclusion in a meeting agenda; (iv) distributing HOA reports and financial information; and (v) circulating general information.
Association board members should also understand that the content of electronic communications between board members can be discovered in connection with litigation involving issues that are related to the subject of the communication unless they are protected as a privileged attorney-client communication. As people frequently exchange sensitive information that they intend to be private through electronic email and text transmissions and, it is important for them to know that the disclosure of items that they intended to be confidential in connection with litigation proceedings can be very damaging to a party’s case.
As violations of state statutes and/or the provisions contained in an association’s governing documents concerning actions taken by directors through electronic transmissions can have serious ramifications, it is important for association directors and management personnel to have a clear understanding about the nature and extent of association business that can be properly conducted by exchanges of information through electronic transmissions.