Community Association Update: Issue # 54
  • Unmasking Your HOA's Common Area Facilities
  • How to Handle Potential Conflicts of Interest
  • Association Management and the Attorney Client Privilege
  • What is the Proper Procedure to Adjourn the Annual Meeting?
  • Can the Board Reconsider an Approved Motion?
  • Can Private Parties Restrict Parking on Public Streets?
Dear ,

This Community Association Update is part of our commitment to providing the highest quality legal services to our clients and industry partners. If your company or Association would like to see a topic or issue covered in future editions, feel free to call our offices, email us, or submit a question online!

Steven Tinnelly, Esq.
Tinnelly Law Group
Unmasking Your HOA's Common Area Facilities
California has lifted its indoor mask mandate for vaccinated individuals. While most HOA industry professionals took the position that the mask mandate did not apply to common interest developments and the HOAs that govern them because such facilities are not “places of public accommodation” (see Carolyn v. Orange Park Community Ass’n (2009) 177 Cal.App.4th 1090), for those imposing such a requirement, starting February 16th, they no longer need to require the use of masks for vaccinated individuals while inside common area facilities (e.g., HOA clubhouses, gyms, etc.).

This does not mean that HOAs are necessarily required to obtain proof of vaccination; rather, HOAs can simply post signage requiring residents to wear a mask if unvaccinated. Moreover, some local mask mandates remain in place despite the State easing its restrictions. It is therefore important for each association to check with local authorities to determine what restrictions remain in place.

HOA Boards of Directors and management professionals that have questions regarding what common area facility policies must be in place to satisfy State and local requirements with respect to COVID-related issues should contact their HOA lawyer for guidance. 

How to Handle Potential Conflicts of Interest
Conflicts of interest present possible liabilities that homeowners associations (“HOAs”) should do their utmost to avoid. There are issues that need to be deliberated and decided upon by the Board of Directors; however, in some situations, not all Directors should take part in the decision-making. A common scenario includes a situation where the Director might have a material financial interest in the outcome; or, the Director is violating the governing documents and should not decide on their own disciplinary consequences. Therefore, to keep all lines of communication and responsibilities clear, the Board should watch out for potential conflicts of interest and take the necessary steps to insulate the HOA and the Director from actual conflicts of interest.

if there were any potential or actual conflicts, legal counsel for the association should broach the idea of the Board creating an executive committee around the conflicted Director. While Directors are well-meaning, if their financial interests, property, or personal self are implicated in any way, it would be difficult for the respective Directors to act as a Director (i.e., in good faith and in the best interest of the HOA) and not as a homeowner. This could be quite detrimental for the HOA and possibly even for the Director themselves because if there is an actual conflict of interest, that Director would be exposing themselves to personal liability; and the HOA’s Directors and Officers insurance might not be applicable if the Director acted outside the scope of their duties and decided on matters in such a way that would not benefit the HOA.

Therefore, it would be prudent to resolve any potential conflicts of interest by removing the Director from any decision they might be personally involved in and forming an executive committee around that respective Director. Should the Board have difficulty with this task, it might be best to enlist legal counsel’s help in explaining liabilities and conflicts of interest to all parties involved.

Association Management and the Attorney Client Privilege
Attorneys who practice community association law are often asked whether a community manager is covered by the attorney-client privilege. In general, the attorney-client privilege shields communications intended to be confidential between an association and its attorney. Materials prepared by an attorney and that reflect the attorney’s thoughts, conclusions or opinions (attorney work product) may also be protected against discovery by adverse parties provided that appropriate precautions are taken to ensure that the confidential work product falls squarely within the scope of California’s civil work product privilege.

The California Supreme Court has recognized that a corporation such as an Association can only communicate through an officer, employee, or some other person. (Chadbourne v. Superior Court (1964) 60 Cal2nd 723, 732.) “(T)he privilege is not waived simply because the communication is made through an agent of the client or of the attorney.” Chadbourne, supra, at 735.

There is little doubt that privileged communication through the third-party management company is both necessary and in furtherance of the interests of the Association in effectively communicating with legal counsel. To ensure applicability of the privilege, association counsel can prepare a general Board Resolution authorizing the management company and its employees to act as agents of the Association where necessary to further communications with legal counsel.

What is the Proper Procedure to Adjourn the Annual Meeting?
*Asked and Answered
Asked – We recently concluded our Annual Meeting of the Membership. As always, we failed to achieve quorum. Rather than successively adjourn and reconvene the meeting, the Board concluded the meeting. Now we have several owners complaining, saying that the proper procedure was not followed when the Board concluded the meeting. What is the proper procedure?

Answered – It is not uncommon for an association to suffer from “member apathy.” Such apathy is most commonly apparent when it comes time to hold the association’s annual membership meeting (“Annual Meeting”). In order to hold an Annual Meeting (or a special meeting of the members (“Special Meeting”)), a quorum of the membership must be present in person, by written ballot, or, if allowed by the association’s Bylaws, by proxy. Quorum requirements vary.

If a quorum is present, the members may convene the Annual or Special Meeting and conduct the business at hand. If a quorum is not present, the members present at the Annual or Special Meeting have two options: (1) adjourn the meeting, or (2) adjourn the meeting to a later date. The word “members” is emphasized in the preceding sentence to highlight the fact that an Annual or Special Meeting is a meeting of the members. Thus, while the Board president may preside over the meeting, and other Board members may be present, the decisions made thereat are made by the members, not the Board.

The appropriate procedure for adjourning an Annual or Special Meeting is usually set forth in the association’s Bylaws. Nevertheless, California Corporations Code section 7512(d) states that, “[i]n the absence of a quorum, any meeting of members may be adjourned…by the vote of a majority of the votes represented either in person or by proxy….” (Emphasis added.) .

It is important to point out that neither the Board nor the managing agent has the authority to unilaterally adjourn the meeting to a later date. For example, when quorum is not achieved, the Board cannot simply establish a date for a reconvened meeting; the decision must be made by the members through a proper motion. Moreover, it is not uncommon for the association’s managing agent and Inspector of Election to be the only persons present at the meeting. Again, neither the managing agent nor the Inspector of Election has the authority to adjourn the meeting to a later date (that is unless the managing agent or Inspector of Election is also a member of the association). It is for this reason that we always recommend that at least one Board member be present at the meeting so that the proper motion can be made. Reconvening the meeting without a proper motion will make any decisions made at said meeting subject to legal challenge.

Can the Board Reconsider an Approved Motion?
*Asked and Answered
Asked – Can the Board reconsider a motion that was previously passed by a majority vote? One of the directors that voted in opposition to the motion would like the Board to reconsider.

Answered – One of the Board’s primary responsibilities is to make decisions on behalf of the association. Because the Board is comprised of volunteers with different backgrounds and varying expectations, it is common for Board members to disagree from time-to-time. The directors on the “losing side” of a motion may have concerns over the decision made, feeling that the decision was rushed and made without proper inquiry or consideration of all relevant facts. Those who are on the “winning side” of a motion may learn additional facts which calls into question the decision made. Either way, the question then becomes whether the Board is “stuck” with the decision made.

Although an association is not required to adopt and employ parliamentary procedures to govern Board meetings (unless otherwise required by the association’s governing documents), Robert’s Rules of Order provides a procedure the association can adopt and use in addressing situations where a Board member requests reconsideration of a previously decided matter. Because it is considered an “unusual” motion, and to prevent abuse from the “losing side,” the motion should be limited to those directors that voted on the prevailing side. So, in the question posed, the director voting in opposition to the motion is unable to make a motion to reconsider. The director must then convince one or more of the directors on the prevailing side to bring the motion. The motion must be made at the Board meeting following the meeting in which the decision was made.

Parliamentary procedure is complex and often confusing. Such rules seem archaic and draconian. Nevertheless, it is important for the Board to adopt and adhere to such procedures to avoid wasting time discussing matters that have already been decided.

Can Private Parties Restrict Parking on Public Streets?
*Asked and Answered
Asked – Can Homeowners Associations restrict parking on public streets?

Answered – Possibly. The restrictions set forth in the CC&Rs are known as equitable servitudes that “run with the land.” This means that when an owner takes title to the property, he is automatically bound by the restrictions in the CC&Rs, which are recorded against his property. Those restrictions continue to burden and benefit every successive owner, who later takes title to the property.

The CC&Rs contain restrictions pertaining to the maintenance of the encumbered land, but they also contain restrictions that regulate how members can use the land. When dealing with parking restrictions that attempt to regulate the aesthetics of the community, a reasonable argument could be made that the restrictions apply to all member conduct, regardless of whether that conduct occurs on private or public streets within the development.

CC&Rs restrictions dealing with parking vary greatly from association to association; therefore, the Board of Directors should first consult with an attorney to determine whether they will be able to successfully enforce parking restrictions on public streets within the development.

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