Executive Session

Would it be acceptable under California Civil Code 1363.05(Open Meeting Act) to invite the Finance Committee into Executive Session to discuss with the Board the upcoming years budget?

Thanks in advance for your comments

I don't know about CA, but in CT executive sessions are very specifically defined and limited to only a few instances. It would not be proper to do this in CT. Rather we hold open meetings to which the entire membership is called to work on the proposed budget. It also is possible for members of the board to attend the Financial Committee meetings. They, too, are open....

Richard,

As others have said, E.S should be reserved for legal and personnel matters. Budget discissions should be open to the members with those in attendence knowing that the meeting is not open to members input. That privledge should come to the members after the budget is PROPOSED. E.S should not be a meeting that is freqently used. That is for very special occasions. We hear it on the site, that Boards use E.S. often and according to State Statutes and HOA acts, that is a misuse of them.

Executive Sessions should be used only when required by the civil code in your state. The more transparent the actions of the Board and committees are, the better off the entire community is.

Rob

Thanks Susan and Rob,
True that! This should have been a ES and not a regular Board meeting. In a subsequent Board meeting they finally agreed to let me sit in and listen and they disclosed to me the information which I was entitle to know (as you mentioned). It turns out that we are in serious trouble and I insisted they alert the ownership of the situation. That was mid-December and I have had no further communication from the Board regarding the problem. Grrr.

The fundamental problem with delinquent membership fees is this:

The money that should have been collected - assuming the Association has a really tight and carefully wrought budget - still needs to be spent. How can the money be spent if it hasn't been collected? Well, there are only two possible answers to the question, neither of them pleasant: 1) some things that were planned don't get funded, or 2) the responsible homeowners have to pay an additional amount to cover the shortfall. Both of those outcomes are unfair, and if not dealt with in as expeditious and transparent a fashion as possible, will lead to frustration and discontent.

The unfairness of burdening the responsible members of the community with having to carry the irresponsible members of the community is so egregious that California now allows an HOA to publish the names of the scofflaws for all the homeowners to see. The theory is that peer pressure can be much more powerful than threats of liens, foreclosures and lawsuits, and although my HOA hasn't yet done this, we are moving in that direction.

That's why I say that transparency and disclosure, to the extent the law allows, is the best way to go. Get it all out in the open where everybody can deal with it.

Rob

Richard,

Ya'll got lost up there somewhere. My opinion is that NO, this is not E.S material. I wrote how we handle this in Florida and D.S.Act is really similar in it's explaination of E.S.

Hi Susan,

Keep in mind that this is California - others states may have different civil code restrictions. Apparently it does work to pressure homeowners to pay up, while other means may not. I agree it is a drastic measure in some ways, but the alternative: to burden the rest of the homeowners with making up for the shortfall caused by deadbeat homeowners - is, to me anyway, even more drastic.

Rob

PUBLISHING DELINQUENCIES (Frrom Davis-Stirling.com
QUESTION: The board wants to publish the names of delinquent owners in our newsletter. First is this legal and two is it a good idea?

ANSWER: Publishing the names of delinquent owners is an effective means of collecting monies owned to the association. Peer pressure works. Except for publishing the names of owners where the board voted to foreclose on their units (Civil Code §1367.4(c)(2)) there is nothing that prohibits publishing the names of delinquent owners. Moreover, the publication is privileged under Civil Code §47(b). That means the association is protected from potential liability for defamation even if the information turned out to be incorrect. Wilton v. Mountain Wood HOA.

Conservative Approach. However, in our litigious society, there is no guarantee a disgruntled owner won't claim defamation. For those who wish to take a conservative approach to the issue, we can look at how California handles the publishing of names of delinquent taxpayers. According to the state's website, California mails each person on its list a certified letter providing the person an opportunity to pay their taxes before the list is published. To avoid being published, taxpayers must do one of the following: (i) pay the liability in full, (ii) establish an installment agreement, (iii) enter into an offer in compromise, or (iv) substantiate a bankruptcy filing. With that in mind, associations could do the following:

1. Amend the governing documents to include publishing names as one of its collection policies.

2. Amend its collection policy to include sending a certified letter, return receipt requested, to the owner giving him/her an opportunity to pay before the list is published.

3. Distribute or mail the list to members only (not renters). Do not post the list in the common areas where visitors can see it.

4. Title the list "Delinquent Owners." Do not characterize owners as "Deadbeats of the Month" or any other pejorative term, and do not state whether foreclosure has commenced against their units.

5. Include a disclaimer such as: "This information was last updated on . Payments made after are not reflected."

6. Be consistent in publishing names (perhaps quarterly) and be even-handed by publishing all names (unless they have paid in full, worked out payment plan, or declared bankruptcy).

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