Wednesday, August 3, 2016

When Can the Association Board Have a “Closed-Door” Executive Session?

I get this question more than I like. The association board wants to have a meeting and either not notify the owners about it or keep owners from attending (i.e. “closed-door”). Most of the time it comes up when a board has a controversial or unpopular decision to make and, frankly, does not want to discuss it in front of the ownership. Unfortunately, neither the Condominium Act nor the Homeowners Association Act has a provision for closed-door meetings in these situations.

One of the fundamental concepts of association living is that everything is done in the full view of the ownership. Almost every decision and document, for better or worse, needs to be open to scrutiny from the ownership. After all, it is the owners’ money and property that the board decisions are impacting!

There are two exceptions to the open meeting policy. The first is when the board is discussing personnel (a/k/a employee) issues. See Fla. Stat. § 718.112(2)(c)3.b. In this situation, the legislature decided the privacy rights of a worker trump the owners’ rights to transparency from the association. This section covers discussions regarding in house employees. However, this does not include decisions regarding the management company contract. The concept gets gray when dealing with managers that work for a management company but basically function as an employee of the association. In those cases the language in the management company contact could provide some insight. If in doubt contact your legal counsel for an opinion.

The second exception is a meeting to discuss proposed or pending litigation where the attorney is present. See Fla. Stat. § 718.112(2)(c)3.a. Basically, this is meeting covered by the “attorney-client privilege.” There are two prongs to this situation. First, there has to be litigation proposed or present. The board cannot have a closed meeting to get a legal opinion from legal counsel a topic for which litigation is not proposed or pending. Whether litigation is pending or not is self-explanatory but when litigation is “proposed” can be a grey area. If this is a question, one of the directors should reach out to the attorney individually and ask whether a conversation on a given topic would qualify under this statute for a closed-door meeting. Second, the attorney for the association must be present. The board cannot have an “attorney-client” meeting, with out the attorney present (in person or by phone).

So what can the board do to mitigate the awkwardness of these meetings? First, as long as there isn’t a quorum of directors present, directors can discuss association business. The president can call each director individually to get an idea of where they stand on an issue. This gives the directors the ability to flush out some of their differences behind the scenes. But this does not negate the requirement that the issue the board is trying to avoid must be brought up at an open meeting where owners can comment to the directors and the ultimate decision is made in the open.