To know where you’re going, you have to know where you’ve been. This famous saying is all too applicable to HOAs where institutional memory can be as short as the terms of board members and boards can unwittingly address the same issues over and over again. This is one reason why minutes are so valuable. Unfortunately, a common problem we lawyers see is improperly prepared minutes, or worse, no minutes at all.
Perhaps the most important thing to understand about keeping proper minutes is that minutes are the record of the official actions taken by the board or the members and that an official action requires a vote.
What should minutes look like?
Anyone reading the minutes should be able to easily understand, at a minimum, what actions were taken and how they were approved. There is no hard and fast rule regarding the level of detail to be included in minutes, but minutes should reflect what was done, not what was said. Minutes should not record every detail or statement said at the meeting and they should not reflect conversations. However, there should be enough information to make the minutes useful when they are used for reference or offered as evidence that an action was properly taken or that directors fulfilled their fiduciary duties. Boards and secretaries tasked with recording or approving the minutes must understand the purpose and eventual use of minutes, and then use their best judgment about the degree of specificity provided in the minutes.
Boards should also be mindful of how they handle confidential or sensitive information. For example, if the board holds an executive session to discuss confidential or sensitive matters, the minutes of the meeting should indicate that the board met in executive session and the topic of the discussion, but the specifics would likely be confidential and appear only in a set of confidential-to-the-board minutes or other notes. A separate recordkeeping system should be established for such confidential information to easily distinguish it from records that a member would otherwise be entitled to view.
What should minutes not look like?
Minutes should not record discussions or contain owner comments and should never be a transcript of every statement made by directors and others. Doing so creates potential defamation claims, becomes evidence for other claims against the board and the association, and can dissuade potential purchasers and lenders who may believe that a negative issue is much more serious than it really is. Minutes should reflect decisions and reasons for those decisions, not discussions or specific conversations.
At a minimum, board meeting minutes should include:
- Name of the association (always use the exact legal name).
- Date, time, location and type of meeting (regular, special, emergency, executive session).
- Names of directors in attendance and directors not in attendance, including the office they hold, if any (president, secretary, etc.), and names of guests in attendance who were invited to speak to the Board (contractors, attorney, accountant, etc.). Members in attendance should not be listed.
- Whether a quorum was established.
- Any board actions (e.g., approvals, delegations of authority, directives). It’s not necessary to show the names of those voting in favor, abstaining and in opposition to a motion, but it’s sometimes not a bad idea, especially to show those dissenting, in order to limit personal liability for the consequences of an action they disagree with. Also include any actions (decisions, votes) taken between meetings and include details documenting that proper procedure was followed.
- General description of matters discussed in executive session.
- Once the minutes are approved by the board, they should include the signature of the secretary signifying that the minutes constitute the official record and minutes of the meeting
Once approved by the board, the minutes should be signed by the secretary or other person responsible for authenticating records of the association (See Utah Code 16-6a-818(3)). By signing the minutes, the secretary is signifying that the minutes constitute the official record and minutes of the meeting and the votes by the board occurred as recorded in the minutes. Minutes then become proof that a vote occurred as recorded.
The official minutes should be included in the minutes book and should also be scanned and kept as electronic files, as a form of backup, among other reasons.
- Include alternatives considered for important decisions to show diligence and reasonable care.
- Consider attaching reports given to the board (so long as they may not be misconstrued to be prejudicial to the organization or to the board).
- Record recusals from discussions and abstentions from voting;
- Prepare a list of action items separate from the minutes, what people commit to do.
- Include whether notice was given and/or attach the notice of the meeting or waivers of notice to the minutes. That way all the documents relevant to noticing the meeting are also in the minute book.
- Use a format that clearly indicates when a board action has been taken (e.g., “Resolved,” “Action”).
It’s crucial that minutes are prepared so as to document actions of the board now but without creating problems in the future. Additionally, with the turnover experienced in association boards, it is critical to have good, complete but concise minutes so that future boards do not find themselves “reinventing the wheel” on issues that have already been addressed.
You can find sample minutes here and a sample list of action items here.
I’m a little confused here. On the one hand you are saying :
“Minutes should not record discussions or contain owner comments and should never be a transcript of every statement made by directors and others. Doing so creates potential defamation claims, becomes evidence for other claims against the board and the association, and can dissuade potential purchasers and lenders who may believe that a negative issue is much more serious than it really is.”
Then you go on and state :
“Additionally, with the turnover experienced in association boards, it is critical to have good, complete but concise minutes so that future boards do not find themselves “reinventing the wheel” on issues that have already been addressed.”
When I say “issues that have already been addressed,” I mean actions (decisions, votes), but not smaller, less significant issues. Minutes should clearly reflect those actions and the reasons for the actions, but they shouldn’t be a transcript or a full length retelling of what was discussed.
So, if a board decides to take enforcement action against a particular homeowner, or adopt a schedule of fines, or terminate ABC Landscaping because they damage the stucco with their lawnmowers and leave clumps of grass and then refuse to take accountability, then those things should be noted in the minutes so the next board doesn’t start all over with the non-compliant homeowner, doesn’t know there is a schedule of fines in place, and doesn’t hire ABC Landscaping just because they come in with the lowest bid.
The key is to show the reasons for decisions (showing that the board made an informed decision, or providing guidance for future boards, or even the same board, on a particular issue) but not including specific statements or the verbatim conversations that lead to the decisions.
For instance, if the board decides not to accept the treasurer’s report because of errors or confusion about the numbers, don’t put in the minutes that “after the vice president stated that the treasurer was a thief and had embezzled several thousand dollars, the board decided not to accept the treasurer’s report.”
A lot of the not “reinventing the wheel” goes to good record keeping generally, and not just to keeping good minutes. Perhaps the topic of a future post.