Category: Governance

New Davis-Stirling Act Signed into Law

AB 805 takes effect on January 1, 2014, and comprehensively reorganizes and recodifies the Davis-Stirling Common Interest Development Act. The bill also revises and recasts provisions regarding notices and their delivery, standardizes terminology, establish guidelines on the relative authority of governing documents, and establish a single procedure for amendment of a common interest declaration. The bill also establishes an express list of conflicts of interest that may disqualify members of a board of directors of an association that manages a common interest development from voting on certain matters.

Governor Brown recently signed AB 805 and AB 806 into law.

AB 805 takes effect on January 1, 2014, and comprehensively reorganizes and recodifies the Davis-Stirling Common Interest Development Act. The bill also revises and recasts provisions regarding notices and their delivery, standardizes terminology, establish guidelines on the relative authority of governing documents, and establish a single procedure for amendment of a common interest declaration. The bill also establishes an express list of conflicts of interest that may disqualify members of a board of directors of an association that manages a common interest development from voting on certain matters. The bill also, among other things, revises provisions related to elections and voting, establish standards for the retention of records, and broadens the requirement that liens recorded by the association in error be released.

AB 806 deletes all of the existing cross-references to the Davis- Stirling Act in other code sections and replaces them with the new code sections created by AB 805.

Stay tuned for more details on what specific new changes the new law brings for community associations. While we are sure the signing of the new bill will raise some questions, there are no earth shattering changes, and managers and boards can rest assured that the changes are manageable. We will be preparing a guide to the new Davis-Stirling Act to help managers and boards understand the new law. Make sure to stay tuned to HOABrief.com, or sign up for our email newsletters to stay current on laws impacting California community associations.

What Makes for a Good Set of Meeting Minutes?

Incorrectly kept minutes can get a board in trouble. They can invalidate proper board actions, lead to claims for defamation or support claims for breach of fiduciary duty. So how should minutes be taken? What should go into the minutes and what should you leave out?

Of all the various issues boards deal with, one of the issues that comes up time and again are meeting minutes. What are they? What should be in them?

Incorrectly kept minutes can get a board in trouble. They can invalidate proper board actions, lead to claims for defamation or support claims for breach of fiduciary duty. So how should minutes be taken? What should go into the minutes and what should you leave out?

First of all, it is important to understand the purpose of meeting minutes. Minutes are meant to be an outline of what happened in a meeting. They serve to ensure that the decisions and actions resulting from a meeting are not lost or forgotten. They should include not only reference to motions that passed, but also to motions that were proposed even if they were not ultimately adopted by the board.

Once you understand that minutes serve as a record of ACTION taken, it should become clear that minutes are not a verbatim transcript of what was said in a meeting. Minutes should be as concise as possible. What the board did should be included, such as it reviewed a report and then made a decision, but not the discussion that or debate that led to the decision. Keep in mind that the minutes can often be used as a tool against the board and association in litigation. Keep the minutes short and to the point.

What should you include in the minutes?

Continue reading “What Makes for a Good Set of Meeting Minutes?”

My Guest Post on CAI CLAC Blog regarding Newly Enacted Legislation Affecting Community Associations

I recently submitted a guest post on the CAI California Legislative Action Committee (CLAC) blog regarding AB 1720, and the new requirment it imposes on California gated communities to provide access to licensed private investigators for the limited purpose of effecting service of process. You can read the post and the analysis of the impact of AB 1720 here.

“YAY! I’m on the Board!” or, “OMG, What Did I Get Myself Into?”

Boards serve a necessary function in any corporation, and especially within a homeowners association. It would be impossible for an association to function without one. In an association, the buck ultimately stops with the board. The board is elected by the members of the association to accomplish the tasks required of an association by the governing documents. Volunteer board members are accountable to the association itself, as well as to the owners within the community. While the board can, and should, rely on opinions of experts and information presented by committees, decisions affecting the community are the ultimate responsibility of the board, and the board members will be held accountable for these decisions. While the position is voluntary, board members should take their fiduciary responsibility to the association and its members seriously.

Despite the important role the board plays in the association, board members must keep in mind that they have been elected by the members of the association to conduct the business and affairs of the association. Board members should not become power hungry or otherwise harass owners. Likewise, owners must respect the authority of the board to conduct the association’s business and enforce its documents.

Board members must remember that the owners must be kept informed of the board’s activities and make sure that proper communication with the other owners is maintained. In deciding what to communicate to members, board members should consider what they would like to know and how they would like to be treated as a non-board member owner, and strive to act in that manner as a board member.

Fiduciary Duty & Business Judgment Rule  

In addition to the duties set forth in the CC&Rs, Bylaws and Articles of Incorporation, board members have additional duties imposed by law. While all of the duties and obligations of a board member cannot reasonably be set forth in a short article, we will highlight some of the most important duties and obligations a new board member must understand: that of their fiduciary duty to the association and its members, the business judgment rule, and the duty to keep communications with the association’s attorney confidential.

Continue reading ““YAY! I’m on the Board!” or, “OMG, What Did I Get Myself Into?””

Running an Effective Board Meeting

What can a board do to conduct meetings in an efficient manner that allows all the appropriate discussion to take place and allow the board to consider its work in an orderly fashion? The first step in effectively running a board meeting is to adopt and utilize procedures that assist the board to efficiently run and control its meeting. A board meeting which is organized will run smoothly and conduct the business of the association and yet effectively communicate the position of the association on various matters to the membership.

A challenging aspect of community association board meetings is how to actually conduct the meeting. Generally speaking, there is little statutory guidance or document-specific provisions explaining how a board should run a meeting. As a result some boards struggle with this aspect of association management, either not meeting frequently enough, or allowing too much discussion (by both board members and homeowners) so that a meeting, convened to allow the board to conduct the business of the association, effectively turns into a town hall meeting which lasts far too long into the evening.

So what can a board do to conduct meetings in an efficient manner that allows all the appropriate discussion to take place and allow the board to consider its work in an orderly fashion? The first step in effectively running a board meeting is to adopt and utilize procedures that assist the board to efficiently run and control its meeting. A board meeting which is organized will run smoothly and conduct the business of the association and yet effectively communicate the position of the association on various matters to the membership. Here are some tips and suggestions to make board meetings run more smoothly and efficiently:

Continue reading “Running an Effective Board Meeting”