HOA Boards and Executive Session: What You Need to Know
In my posting yesterday, I blogged on 2012 New Year Resolutions for directors of HOAs with an emphasis on their personal development as leaders of their communities. In that posting, I invited board members to provide me with governance topics they would like us to blog on. One of the first responses I received was a great one that dealt with the often misunderstood topic of executive sessions.
Limited Authority to Convene In Executive Session
The Colorado Common Interest Ownership Act (“CCIOA”) narrowly regulates the circumstances under which a board or committee of an HOA may convene in executive session. C.R.S. 38-33.3-308 (3) and (4) specifically provides as follows:
“(3) the members of the executive board or any committee thereof may hold an executive or closed door session and may restrict attendance to the executive board members and such other persons requested by the executive board during a regular or specially announced meeting or a part thereof. The matters to be discussed at such an executive session shall include only matters enumerated in paragraphs (a) to (f) of subsection 4 of this section.
(4) Matters for discussion by an executive or closed door session are limited to:
(a) Matters pertaining to employees of the association or the managing agent’s contract or involving the employment, promotion, discipline, or dismissal of an officer, agent, or employee of the association;
(b) Consultation with legal counsel concerning disputes that are the subject of pending or imminent court proceedings or matters that are privileged or confidential between attorney and client;
(c) Investigative proceedings concerning possible or actual criminal misconduct;
(d) Matters subject to specific constitutional, statutory, or judicially imposed requirements protecting particular proceedings or matters from public disclosure;
(e) Any matter the disclosure of which would constitute an unwarranted invasion of individual privacy;
(f) Review of or discussion relating to any written or oral communication from legal counsel.” (emphasis supplied)
On occasion, and with the best of intentions, boards of HOAs inappropriately utilize executive session for the purpose of holding hearings on covenant violations or reviewing assessment delinquencies. Boards sometimes also hold an executive session because “they want to get work done” without interruption from residents. In our opinion, utilizing an executive session under any of these circumstances is inappropriate and does not fall within any statutory category outlined above.
When determining whether an item is appropriate for executive session and reasonably falls within one of the statutory categories, we recommend obtaining assistance from legal counsel.
Procedure for Convening in Executive Session
If the board of your association has a purpose outlined in CCIOA to convene in executive session, here is the procedure your board should utilize:
1. During the regular meeting, a motion should be made for the board to convene in executive session. The motion should include the specific provision outlined above which permits the use of an executive session. Here’s an example: I move that the board convene in executive session for the purpose of consulting with legal counsel on a pending court proceeding.” Your motion should be that simple and does not need to elaborate on the pending litigation. Once this motion has been passed, the board should adjourn from the regular meeting into executive session.
2. During executive session, minutes or notes of the deliberations should not be taken. Since minutes are subject to inspection by members of the association, this would defeat the private nature of executive session. In addition, the deliberations carried out during executive session should not be discussed outside of that session or with individuals not participating in the session. This too would defeat the confidential nature of the session.
3. Once the deliberations have taken place in executive session, the board should reconvene in regular session to take any formal action decided upon during the executive session. For instance, if the consultation with legal counsel addressed settling a pending lawsuit, the motion might be: “Based upon the advice of legal counsel, I move that the Association settle the lawsuit with “Joe Homeowner” pursuant to the confidential terms of the settlement agreement.” If you have questions regarding the wording of the motion or whether any other information should be disclosed on the record, it is essential for you to consult with legal counsel on these matters.
The bottom line is that a board or committee should only utilize an executive session when you have the statutory authority to do so. In addition, unless the board as a whole votes to disclose the discussions held in executive session, you should keep the deliberations held in executive session confidential. Finally, you should consult with legal counsel on any question relating to executive session.
If you have other governance topics you would like to learn more about, please email me at firstname.lastname@example.org.