It’s 10 a.m. on the day of the monthly open meeting of the board. The agenda has been set.
Notice has been posted. Board packets have been distributed. Out of the blue comes an
email from a homeowner demanding reimbursement for damage from leaks, claiming they
have hired a lawyer, and threatening legal action against the association. Quickly, you
forward the email to the association’s counsel, who is available to meet with the board in
executive session tonight. Perfect timing! Or so it seems… tonight’s meeting has been
noticed as an open meeting of the board. Counsel advises that it is too late to notice the
executive session meeting. Alas, the board, management, and counsel will need to meet
later this week to discuss the homeowner’s threatened litigation. The directors grumble.
Another meeting?!
The above scenario may be familiar, but there is a way to avoid this frustration and to allow
the board to efficiently pivot to unexpected executive session business. But first, let’s
discuss some executive session basics.
Executive Session Topics
In general, boards must conduct association business at open board meetings. However,
California law recognizes that certain discussions are not intended for the members’ ears.
Pursuant to Civil Code section 4935, the board may meet in executive session to consider:
litigation; formation of contracts; member discipline; personnel matters; and collection
matters, including payment plans and foreclosure. In addition, the board may meet in
executive session to discuss other topics that it is required or allowed by law to keep
confidential, such as attorney-client privileged communications (Evidence Code section
954) and reasonable accommodation requests based on disability (Cal. Code Regs. Tit. 2,
section 12176(e)(1)).
Boards must be careful to guard the confidential nature of these issues which may be
necessary to, among other things, protect members’ privacy interests or the association in
the event of litigation. Boards should also resist the temptation to construe executive
session topics too narrowly. Rather, the safer course is to interpret the permissible grounds
for executive session liberally. For example, if a homeowner requests reimbursement for
property damage, threatens to hire a lawyer for any reason, or disagrees with election
results, those issues should be discussed in executive session under the category of
litigation even though a lawsuit has not yet been filed. Discussing the above topics at an open
board meeting (or elsewhere) could jeopardize the association’s position in any potential
lawsuit.
Agendas are Required
Pursuant to Civil Code section 4920(d), a board meeting notice must include the agenda;
i.e., notice of both open and executive session board meetings require notices which must
contain agendas. In addition, pursuant to Civil Code section 4930, the board generally may
not discuss or act on an item at a nonemergency meeting unless it was placed on the agenda
that was distributed with the notice, subject to emergencies and other narrow exceptions.
The Davis-Stirling Act does not specify how much detail must be provided on any agenda –
executive sessions, included. However, in order to protect the confidential nature of the
matters to be discussed, agendas for executive sessions should be very general. For
example, the topic to be discussed in executive session can simply be, “litigation”, rather
than providing a description of the nature of the legal issue to be discussed. Additional non-
confidential descriptors are also acceptable; however, when in doubt, the safer course is to
err on the side of generalities. Boards can inadvertently compromise confidentiality by
creating an agenda that is more descriptive than necessary.
Add a Recurring Notice of Potential Executive Session Topics to All Open Board Meeting Agendas
It may also be a good idea to preserve the Board’s option of adjourning to executive session
by including the following statement in all notices of open board meetings:
The Board may adjourn to executive session to consider: litigation; formation
of contracts; member discipline; personnel matters; and collection matters,
including payment plans and foreclosure.
By including this statement in every open board meeting notice, boards can avoid the
frustrating scenario described above. Had such language appeared in the notice for that
monthly open meeting, the board would have been able to adjourn to executive session that
same evening to discuss the homeowner’s new threats of litigation with counsel. When an
unexpected issue arises on the day of the meeting, inclusion of the above language ensures
that the board will not be caught flat-footed; it can simply adjourn to executive session and
address the matter promptly and confidentially.
Similarly, it may be a good idea for notices of stand-alone executive session meetings to
always contain all the topics that are permissible for discussion at executive session
pursuant to Civil Code section 4935. Doing so allows the board the ability to discuss last
minute items by listing the above potential topics in every agenda.
Please note that posting an executive session agenda that includes all allowable topics
does not mean directors should be left guessing about what will be discussed in executive
session. Rather, management or the director who has called the meeting can send the board
a confidential email and/or a confidential “board packet,” including any relevant background
material in advance, so the directors have enough context to prepare.
Time of Notice
Notice of open board meetings must be provided at least four days in advance of the
meeting, subject to limited exceptions for emergencies (Civil Code section 4920(a)). Notice
of board meetings to be held solely in executive session must be provided at least two days
in advance of the meeting (Civil Code section 4920(b)(2)). Note that, when an executive
session is held as an adjournment from an open board meeting (as being suggested above),
the four-day advance notice period would apply – not the two-day period. Note also that if
the governing documents require longer notice for either type of meeting, the time period
specified in the governing documents would apply (Civil Code section 4920(b)(3)).
Method of Notice
Regardless of whether the board is meeting in an open meeting or an executive session, the
board must provide “general notice” of the meeting (Civil Code section 4920(c)) to the
members. Among other methods, general notice may be accomplished by posting the
notice in a location that has been designated for the posting of general notices in the annual
policy statement (Civil Code section 4920(a)(3)-(5)).
Recap
Executive session agendas should be prepared so they are broad enough to preserve
confidentiality; however, they should also be prepared to maximize flexibility. This balance
can be accomplished by always listing all the executive session topics permitted by Civil
Code section 4935, as set forth above. In addition, boards can include a recurring statement
in their open board meeting notices allowing Board adjournment to executive session to
discuss those permissible topics which, again, should be specifically listed on the agenda.
If you have questions about executive session requirements or notice practices for your
association, please contact your favorite HGCT attorney.