What Does the New Agenda Bill Require for HOAs?
SB 528 has been signed into law, effective January 1, 2008. For some Associations, it will not make a difference because the Boards already post copies of the meeting agendas with the meeting notices, ….. or will it? Even these forward-thinking Boards may run into a hitch because the new law not only requires posting or providing an agenda with the meeting notices, it prohibits the Board from taking action on anything that is not on the agenda, … or does it?
To be specific, first of all, it applies to board meetings, not membership meetings. The requirement for distributing the agenda is tacked on to the meeting notice requirements found in Civil Code Section 1365.05(f). That section says:
“Unless the time and place of the board meeting is fixed by the bylaws, or unless the bylaws provide for a longer period of notice, members shall be given notice of the time and place of a meeting as defined in subdivision (j), except for an emergency meeting, at least four days prior to the meeting. Notice shall be given by posting the notice in a prominent place or places within the common area and by mail to any owner who had requested notification of board meetings by mail, at the address requested by the owner. Notice may also be given by mail or delivery of the notice to each unit in the development or by newsletter or similar means of communication. The notice shall contain the agenda for the meeting.”
Key Point: The distribution requirements of the agenda are the same as for Board meeting notices.
Questions and Answers
Question: What if the notice of meetings is in the Bylaws or Association newsletter and that comes out before the agenda is set? Answer: Find a way to distribute or post the agenda at least 4 days before the meeting. That might be with the billing statements when they are mailed, in the newsletter if the timing works, or by posting in the common area. It would be a good idea to include another copy of the notice with it, even if it was already distributed. It may not be necessary, but it makes sense.
Question: What if the HOA does not have any common area to post in? Answer: That is a little more difficult. You can mail the agenda, post it by the mailboxes if there are any clusters, put a kiosk up somewhere near a street if there are streets, a parking area if there is any, on a street lamp, or anywhere there is space available, that you can get permission. Choose the place all owners are most likely to drive by. The makers of the notice “kiosks” and plastic encased frames are going to be busy. If you still cannot find a posting place, but you have a website, posting on the website and/or email notices might be found acceptable. Impossibility is a legally recognized defense that works in contract cases. And remember that any owner can ask for mailed notice.
Key Point: If posting the agenda is difficult to impossible, good faith could become a key element of the choice you make to find a way to let owners know how to view the agenda.
Now, as to the point that no action can be taken on any item not on the agenda – what are the exceptions? There are many:
The law applies to “non emergency” meetings only. So, if the Board is meeting in an emergency meeting, the agenda requirements do not apply.
The law does not prevent the Board or its staff or agents from talking to the members about something not on the agenda. It is not muzzled by this law. The statute says that management, the staff or the board of directors, may “briefly” respond to statements made or questions posed by a person speaking at the meeting, or ask a question for clarification, make a “brief” announcement, or make a “brief” report on the activities of a board member, management or staff, whether in response to questions posed by a member of the association or based upon his or her own initiative. What do you suppose that overuse of the word “brief” means? It could mean that the legislators have sympathy for HOA board members, and want meetings to be brief (hardly!), but more likely its a warning that if subjects come up that are not on the agenda, boards are supposed to avoid full discussions of the items and defer business until the owners can get fair notice of it.
The law allows Boards to communicate instructions to its management and staff. The limitation on action does not prevent the Board from (1) providing information to its managing agent or other agents or staff, (2) requesting the manager or staff to report back to the Board at a subsequent meeting concerning any matter, (3) directing the manager or staff to place a matter of business on a future agenda, or (4) from directing the manager or staff to perform administrative tasks that are necessary to satisfy its obligations under this law.
The new law allows action on items that come up before/at the meeting that are not on the agenda if certain findings are made. The Board may take action on an item on the agenda if any of the following conditions occurs:
- A majority of the board members present at the meeting determine that an emergency situation exists. [An emergency situation exists if there are circumstances that could not have been reasonably foreseen by the board, that require immediate attention and possible action by the board, and that, of necessity, make it impracticable to provide notice.]
- If the Board determines, by a vote of 2/3 of the members present at the meeting, or, if less than 2/3 of the total membership of the Board is present at the meeting, by a unanimous vote of the members present, that there is a need to take immediate action. The Board must also find that the “need to take action” arose after the agenda was prepared and posted or distributed, OR
- The item was on an agenda for a prior board meeting and did not get put on the agenda for the current meeting. The statute says on an agenda for a prior meeting that took place “not more than 30 days before”, and that the item “was continued to this subsequent meeting.” This language is confusing and undermines the point. If the prior meeting was 31 days prior, and/or the minutes from that meeting do not say that the matter was continued, does this apply? One could argue it practically does apply, given the apparent intent to tie two meetings together, without the understanding that they can easily occur 30-35 days or so apart, even when held monthly. It does not appear that Boards that meet quarterly can stretch things to tie in a prior meeting held the prior quarter.
There are other questions that have already been asked, like:
Question: What does # (2) above mean, is it the members or the board? #(2) is confusing in its wording. I believe it was intended to relate to members. However, there may be a debate over what (2) actually means.
Question: Is it sufficient to list ‘Old Business’ or ‘New Business’ as categories to cover any topics that might come up; or does this new law require that every subject be listed separately? Answer: General categories are not a sufficient “catchall” for any item that may fit within one of them.
Question: If something comes up before a scheduled board meeting that needs attention, and it is not on the agenda, can we simply call a separate emergency meeting, maybe even the hour before the scheduled meeting? Answer: It would seem so, if the Board members are willing to show up an hour earlier. The new law does not prevent this. The question is, given the facts and circumstances, does it make more sense to do that, all things considered, or simply count on one of the exceptions for handling the matter at the already scheduled meeting? Only you can answer that. It’s not a legal question.
Question: What can happen if the Board simply takes action on an item that is not on the agenda without making any findings? Answer: It is risking court invalidation of its decision if challenged, and maybe even a cause of action under Civil Code Section 1363.09(b) which provides for recovery of attorneys fees in any lawsuit over the violation, and/or a $500 fine for each violation.
It’s better to plan ahead. Don’t wait until January 1 when the law becomes effective to practice the new procedures with the agendas.
Beth A. Grimm is an attorney who serves homeowner associations and homeowners alike. She is a frequent contributor to the Echo Journal and other similar publications in the State of California and on a national level. She is provides several publications written in plain English to help people who information about California law as it relates to homeowner associations. She posts a wealth of information on her web site at californiacondoguru.com.