Clients and Friends:
I wanted to follow up on a very well done blog entry by my law partner, Curtis Kimble, in which he discussed HOA minutes (please refer to our prior posts). This entry will go a bit “deeper” and explore the often used procedure of adjourning a Board meeting into “executive session.” Two topics will be briefly discussed below: (1) when is it appropriate to adjourn into executive session, and (2) should minutes be taken during executive session?
Our firm is working towards legislation that gives more guidance on executive session but that has yet to come to pass. In the meantime, we have to rely upon time-tested common law principles and rules of parlimentary procedure to answer the following questions:
1. When Should the Board Adjourn into Exective Session? The Board must not use executive session as a means to simply “excuse” members who have shown up at a Board meeting. Traditionally, there are only a limited number of issues that qualify you to adjourn into executive session:
(a) Discussions of threatened or pending litigation;
(b) Personnel matters, assuming you have employees, such as hiring and firing. This includes discussions about your managment company, attorney, accountant, etc.
(c) The formation of contracts with third parties (this is because you don’t want sensitive information about competiting bids to be out in the public just yet).
(d) Member discipline – such as putting someone into collections, or levying a fine against a particular homeowner for a specified violation.
(e) Other matters which you sense that by naming a homeowner or homeowners in front of non-Board members, that the information is too sensitive for general knowledge in the community (such as issues that are related to privacy of particular member(s)).
2. Should Minutes be Taken During Executive Session? I have a mixed response as to this question.
The minutes kept during your regular Board meeting should indicate that the Board adjourned into executive session. Typically, executive session works best if held at the end of the meeting so any homeowners in attendance can be excused. However, a debate rages over whether you should take separate minutes in executive session or not.
Prior to addressing this issue, however, after the executive session is over, the regular Board minutes should reflect which decisions were made in executive session (without any detail of the discussion that occurred) and which action will be taken. You should not, in your regular minutes or in any records kept during executive session, state any specific advice that your attorney gave you simply because you may lose your attorney-client privilege if you do so. Regardless of which minutes were kept, you simply note what decisions were made. Make sure the vote of the Board is clearly reflected in the regular Board minutes.
As for taking minutes or other notes during executive session, I do advise that you keep a record of your actions and disucssions made during executive session. However, remember (see Curtis’ prior blog entry), minutes should NOT be a verbatim re-creation of what was said and discussed. You should simply address the issue(s) at hand, indicate that discussion was held, and that a vote was taken. We maintain, as do many other state laws and general rules of procedure, that executive session minutes are privielged from access by the general membership. Though you have nothing to hide, please remember that a court of law could still require that you reveal anything kept in written or electronic format from an executive session. This concern should not chill your discussion, but should keep your focussed on the issue for which you have adjourned into executive session and help curtail and tendency to make any inflamantory, defamtory or otherwise insensitive comments that sometimes come out “behind closed doors.”
As always, please contact us for a follow up if you have any questions about executive session meetings and minutes. This entry is intended to give some general guidance only and each factual situation may result in more detailed advice.
Next time, I’d like to have a discussion about requring Board meetings to be open to the membership by announcing them in advance and encouraging attendance. Presently, in Utah, there is no express requirement for ‘open Board meetings’ but I have found, probably like many of you, that nothing creates more suspicion in a community than when members have no idea how their Board is acting, when they are meeting and what issues are being discussed. MORE TO COME!!!
Until then, best regards, John Richards. firstname.lastname@example.org