Executive Session material or not?

All,

I've just about finished my review of my Associations governing documents the determination if the Association has the authority to use monetary penalties as an enforcement method (per my layman's analysis if we continue the use it likely wouldn't survive a legal challenge). Once the written report is finished, I plan to provide copies and discuss the options with the board. I would like to do this in executive session.

VA has an open meeting law. In that statute it specifies that executive sessions are to be used for:

1) to consider personnel matters;
2) consult with legal counsel;
3) discuss and consider contracts,
4) discuss and consider pending or probable litigation
5) discuss and consider the personal liability of members to the association
6) discuss and consider matters involving violations of the declaration or rules and regulations adopted pursuant thereto for which a member, his family members, tenants, guests or other invitees are responsible;

Under this statute, does anyone see a motion I could use to recess to executive session?

Thanks,

Tim

The court cases I'm citing are non binding. Therefore, it is possible (might not be likely but possible) that a different interpretation could be made. Hence, one option for our board is to continue as we have been doing (which in the very few cases to impose the penalties but waive them once the issue was brought into compliance).

Lets face it, there are individuals who will only respond if the issue affects their wallet or pocket book through the use of monetary penalties or legal action. I know for sure that at least two of them live within my development.

If the Association no longer has the authority to implement monetary penalties as an enforcement method for violations, the only other available action if warnings do not work would be legal action. Obviously it is unrealistic for the Association to use legal action for every violation. This is because the minor violations would likely have been corrected by the time a court case was heard and currently our governing documents provide zero authority to collect legal fees associated with such cases and the law only authorizes it if the Association goes to court and wins. There would also be unintended consequences for bringing every violation to the courts (bad reputation with the courts, bad reputation with Realtors, increased assessments to cover legal expenses, to name a few).

Therefore, I believe that the Board should hammer out a course of action prior to bringing this report to the entire membership. Lets face it, once I bring it up the info will slowly get out there anyway. I don't mind the info going out as much as I'd like it to go out with options and a solid course plotted by the board. Otherwise, the information could cause other issues we are not ready to deal with at this time.

You basically don't want to let the cat out of the bag that your HOA can not legally enforce fines onto members in violation. If you do that, then the ones that have been fined in the past may want to sue. The ones who are in violation, may not correct the violation if they know they can't get fined. Classic Catch-22 situation for a HOA.

This is why I say that fines work much like "Speeding tickets" in a HOA. They can't be part of the HOA's budget because they are not reliable collection form. The fines are punitive in nature to make one compliant to the rules. It would be hard to call them too much of a monetary gain for the HOA as they could be subject to different taxation issues as well.

Right now your HOA is in a pickle because it would be like if your city took down all it's speed limit signs. The law is still on the books you are speeding but you wouldn't know by how much. So I would approach this on what you think the ramifications would be on "speeding tickets" if the city no longer could enforce them or did actually take the signs down. If you apply a different situation to the same problem, it may give you an idea how to handle the issue. This what I often do when I try to resolve an issue.

It should be in executive session and discussed so the board members understand the situation. It still applies that suing your HOA is suing yourself and your neighbors. However, fining your neighbors/members is a different story. You are actually punishing them for not being part of the whole. This is why a defined fining schedule is needed and agreement of the membership to allow fines for violations need to be agreed upon and in place. Hence why we also never insituted fines....

John,

Thanks for the advice. #2 is out as we have not talked with council about this and didn't want to until we learned more ourselves and the right question/s to ask them. Otherwise we figured we would get a lot of maybe's, possible's and perhaps.

I agree with you that #5 would be a reach and had already ruled it out as that sections intent (in my opinion) is for members who are delinquent in paying assessments.

#4 is a possibility. However, since we must state the reason why we recessed to executive session in our open meeting minutes (also VA law) I didn't want the membership or potential buyers (as minutes are provided as part of the disclosure package - again VA law) thinking the Association had potential litigation in the future.

If it could be phrased differently, that might help but I'm not sure how to phrase it so it works.

Remember in most HOA's the HOA can come in and fix the violation and send the owner/member the bill. So it is not the same as fining but is stronger in a way. That action can be taken to court in a form of a lien or lawsuit. Even though you may send a letter stating "You left the garbage can out for 3 days and we will fine you $10 a day for that violation" that may not fly in a fining situation. Instead the option is "You left the garbage can out for 3 days and the HOA will charge you a fee of $25 for it's removal fee". The HOA then hires someone to go remove the garbage can and pays them the $25 to do so. This cost is what is passed onto the owner to pay or be liened for it. The court system would look more favorably to this kind of system as it can only make people "Whole" and NOT a "Profit".

So a small change can hold much more legal weight for you without actually fining. Something the other member who may spread the rumor of fines hold no power may not like spreading the one about how the HOA can correct the issue and send them the bill for it...

John,

What the Belhaven, Shadowood and even the 1982 Unit Owners Association v. Gilman case said was that the Association may not overstep it's authority. That the Authority comes from the CC&Rs and State statutes and that the CC&Rs says what it says. If something was excluded (like monetary penalties) then that exclusion shows an intent to exclude.

As you said, I left a lot out because I do not want this discussion to go into the case or my report. I'm certainly willing to share my opinions once they are fully formed and I can provided references for my opinion. There are a lot of nuances to my CC&Rs that, depending on the violation, allows additional enforcement options other than court.

I simply wanted to know how others were interpreting the VA statute about open meetings and executive session to see if they saw something I did not in my desire to discuss this issue in executive session.

Please lets keep this discussion on topic and discuss the background and case history in my my other thread on the topic.

No. I think you are stretching to try to discuss this in executive session.

If you are concerned about how a couple of homeowners might react if this were to be discussed in open session, then how do you think they might react if they discover it was discussed in executive session?

Suppose they decide to sue for violation of the open meeting law? Then you would have to justify your reason for an executive session to a judge instead of only to the membership.

Tim:

I think your hesitation to discuss this matter in open session is well founded. As you might just be informing those present and in time the entire property the Board cannot issue fines. Some can of worms that might end up being.

But I also have a problem with YOU issuing a "legal" opinion as to whether the property's right to fine would hold up to a challenge as you are NOT a lawyer. So in fact you would be asking the Board to take action based on your "opinion" rather than that of a qualified law professional. I would hesitate to do so.

I would feel more comfortable running this by a lawyer for THEIR opinion and advice. And in doing so with the lawyer present this could be moved to executive session satisfying all the rules and regulations set forth in the Va. state law.

My basic rule is what is best for the property? Holding an open meeting in which you share YOUR opinion as to the meaning and application of the law and thereby asking the Board to take some action or not to act serves little positive purpose for the property. IMO you are opening a can of worms tha once the lid is off you might have a tough time capping it off.