New Law Affects Board Operations for 2012

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Every year the California Legislature seems to take steps to make the operation of homeowner’s associations more costly and less efficient.  This year is no different.  SB563, which has been signed into law, made significant changes that affect Board operations beginning January 1st, 2012.  Baydaline & Jacobsen have provided an excellent summary of the new law which you should read before continuing.  This article addresses the impact on association operations and offers suggestions concerning how Boards might act to operate as effectively as possible inside the constraints imposed by this legislation.
Boards were already precluded from communicating (even by e-mail) between meetings concerning matters that require a Board decision.  This change makes it very clear, most likely because too many Boards were ignoring current law.  If the Board is going to decide on a matter in the future, that decision must be decided in a properly noticed meeting and the Board cannot discuss it, verbally or electronically, prior to that meeting. The intent is to allow the membership to view the decision making process.  This is a good thing.
The significant change is that executive sessions must now be noticed to the membership with an agenda, two days in advance.  Current law states that a summary of executive session meetings must be provided to the membership with the minutes of the next regularly scheduled Board meeting.  The fact that a waiting period is now required for noticing the meeting is not without negative impact.  Most executive session meetings have to do with maintenance, vendor contracts and work orders.  A typical scenario, for example, would involve major damage to an entryway vehicle gate where the cost is over the manager’s obligation authority.  Under current law, the manager could get the repair bids, notify the Board, and ask for approval from the Board and get the repair done – maybe in the same day.
Beginning January, 2012 the manager will still get the bids (or the designated member if the association is self-managed).  Then a notice of meeting and agenda will need to be prepared and properly posted.  Then, in no earlier than two days, the Board can meet in person or by teleconference and make the decision.  Obviously, that repair has now been slowed down by a minimum of two days.
Yes, there is a provision that the Board can take action without notice (and even by e-mail) if it is an emergency.  The law defines an emergency in part as anything that takes place between regular meetings that could not be anticipated – but I am sure that association attorneys will have different opinions on how to interpret this.  In my personal “non-legal” opinion a broken access gate is an annoyance and not an emergency.  The point, however, is that each Board should get a legal opinion on how closely to interpret “emergency”.   However, even if it is deemed an emergency, there has to be unanimous written consent of all the Board members to do the meeting without notice.  So, if even one Board member objects then the two-day notice and agenda requirement is still in effect.
Lastly, under current law if the Board is going to meet in executive session for a legitimate reason and within two days of the meeting another qualifying matter arises, the Board can deal with both matters in the same meeting.  Beginning January, they cannot and will have to notice and publish a separate agenda for another meeting.  Clearly, the result is that volunteer Board members will be meeting more often.
The bottom line – this law does nothing to raise member awareness, as current law already has requirements to keep the membership informed.  All this law does, in my opinion, is increase cost to the membership and slow down the association’s effectiveness.  That said, it is the law.  Here are some suggestions for Boards to consider to try and minimize the cost, delay, and inconvenience.
At your next regular Board Meeting, consider delegating to individual Board members, committees, and to management as much authority as the Board feels comfortable delegating.  Consider letting Board Member “A” have the authority to approve all maintenance expenditures under $5,000 – or as long as he or she stays in budget – or to some other constraint within which you are comfortable.  Let Board Member “B” (or “B” and “C” together) make reserve fund investments inside whatever constraints the Board is comfortable allowing.  Consider increasing management’s discretionary ability to the extent you are comfortable.  Do the same thing with committees if it makes sense.  Resolutions delegating others to act unilaterally within constraints reduce the number of meetings needed.
If you normally mail meeting agendas, consider resolving to only post the executive session notice and agenda in the common area.
I suspect that another large concern is in the minds of those Boards that ignore the current law, and feel there is no way they can do their job if they don’t communicate between meetings.  That issue will be the topic of a future article.
The above article copyrighted by The Helsing Group and reproduced with permission.
This article is provided by The Helsing Group, Inc.