Recently, after I had completed a presentation for community Associations, a director of an Association approached me to ask a question about a meeting the Association was planning. When I asked whether it was a meeting of the Board of Directors or a meeting of the Association membership, I was sure I must have asked the question in Greek based on the look the director gave me. (For the record, I am not Greek and don’t speak Greek. I am, however, reasonably fluent in English most of the time.) His next question: "What difference does it make?” As I explained to him, it makes a big difference.
The Basics of Association-Related Meetings
Board Meeting vs. Association Meeting
While a Board of Directors typically has significant power to administer to and govern the Association it serves, some matters and decisions must be addressed by the Association membership. If a decision that is supposed to be made by the Association membership is made by the Board alone, the effectiveness and enforceability of that decision may be called into question. Conversely, if the Board repeatedly allows Association members to vote on decisions that should be made by the Board—on issues within the Board’s purview—the Board give the membership the impression that Association members are entitled to vote on such matters. That practice may create difficulties if the Board later seeks to make a decision on a similar matter without vote of the membership. Association members may cry foul, since the Board has created an expectation that the vote of the entire Association membership is not only needed, but somehow required.
Once a determination is made as to whether the issue at hand is a decision for the Board or for the Association, the Board must then ensure that the proper notice requirements are followed. There are, in fact, differences in notice requirements for an Association meeting and for a Board meeting. Using the wrong notice provisions can jeopardize the validity of decisions made at that meeting.
It is important, then, for both Associations and Boards to have a clear understanding of what matters are within the Board’s purview, and what matters require meetings of the Association membership.
Typically, the Board is empowered and authorized to make decisions regarding:
- Budgeting and collection of assessments
- Adopting, changing or revoking rules
- Determining late fees and fines for violations of the Association’s governing documents
- Engaging the services of professionals—attorneys, property managers, vendors, etc.
- Maintaining the common areas and those portions of units which the Association is obligated to maintain
- Appointing, regulating and dissolving committees1
On the other hand, some decisions require the participation of the Association membership. These issues include:
- Amending the Declaration, Bylaws or Articles of Incorporation
- Removing a director before his or her term has expired
- Electing directors
Open Meeting of Board vs. Association Meeting
Under the Minnesota Common Interest Ownership Act (Minnesota Statutes Chapter 515B), commonly known as "MCIOA,” meetings of the Board of Directors must be open to all unit owners to attend.2 Some homeowners—and indeed, some Boards—believe that being permitted to attend a Board meeting is the same as being permitted to participate in that meeting. That belief is erroneous. In Associations working under that misguided premise, many decisions within the purview of the Board of Directors are "voted on” by the Association membership at a Board meeting. Such votes can create several misperceptions: (1) that the meeting is actually a meeting of the Association rather than the Board; (2) that the issue is one that requires vote of the Association members rather than the Board alone; (3) that Association members are entitled to participate in Board meetings and that the members’ votes are binding on the Association.
For those Associations governed by MCIOA or whose governing documents require open Board meetings, it is important for the Board to establish clear guidelines for the administration of Board meetings. Boards must be clear with homeowners that, once any "open forum” an Association may allow is completed, homeowners not serving on the Board are welcome to stay for the meeting (provided, of course, it is not a closed meeting, as permitted under MCIOA in certain circumstances), but may not participate in the meeting unless invited to do so by the Board. Homeowners are, in essence, an audience for the Board meeting: they are not permitted to participate in discussions, offer opinions or information or vote on matters before the Board. By establishing clear ground rules from the outset, a Board of Directors can avoid disputes and controversy about the homeowners’ role in Board meetings.
Regular Meeting vs. Special Meeting
Most meetings of the Association and the Board of Directors are "regular” meetings, scheduled and held in the normal course of business. A Board of Directors generally deals with, for example, budgeting issues, collection issues, and contracting with landscapers and roofing contractors in the Board’s normal course of business. Generally, the routine business for Association members consists primarily of electing directors each year at the only "regular” meeting of the year—the Association’s annual meeting.
Occasionally, however, business of the Association or the Board requires immediate attention. Storm damage may require emergency Board meetings to engage contractors. Health or safety issues may require the Board to call a special meeting to make decisions on matters that simply cannot wait until the next regularly scheduled Board meetings. For Associations, controversy regarding Board membership may result in a special meeting at which a vote to remove one or more directors may be considered. If the Association is amending its governing documents, the Board may call a special meeting of the Association membership to take the vote on the proposed documents rather than waiting until the next regular meeting, which may not occur for months.
What business can be conducted at a regular meeting?
The agenda of a regular meeting is quite flexible. As most Association members know, the final item on most agendas is "new business.” New issues and questions or concerns of homeowners are often addressed under "New Business.” In general, any business "properly before the forum”—business that appropriately considered by the group holding the meeting—is business that may be conducted at a regular meeting.
What business can be conducted at a special meeting?
One of the limitations of any special meeting, whether that of an Association or a Board, is that the only business that may be conducted at that meeting is the business noted as the purpose of the meeting on the meeting notice.3 By law, the notice of a special meeting must state the purpose of the meeting, and the business conducted is limited to that stated purpose. So, if, for example, the notice of special meeting of the Board states that the sole purpose of the special meeting is to vote on engaging a contractor to repair damage resulting from frozen pipes, the Board cannot deal with budgeting issues at that meeting.
How do Committees fit into the mix?
Committees act at the direction of the Board of Directors, and their members serve at the pleasure of the Board. In some Associations, the Declaration or Bylaws set forth a requirement that certain committees be maintained (e.g., Nominating Committee, Architectural Control Committee, etc.) Where no such mandate is present, the Board of Directors is authorized to establish and dissolve committees and to give such committees direction as to their purpose. Generally, a committee is comprised of a few homeowners (none of whom sits on the Board) and one or two directors, who act as liaison to the Board and keep the Board informed as to the Committee’s work. Typical committees might include Nominating Committee, Grounds Committee, Communications Committee, Planning Committee, as well as ad hoc committees for special projects.
Committee meetings are not subject to the same notice requirements as Board or Association meetings. Committees often function much more informally than the Board or entire Association. Any decisions made by a Committee must usually be approved by the Board of Directors. It is important that the Board maintain oversight of committees so that committees do not exceed their authority and continue to be productive and helpful to the overall governance of an Association.
Whether a decision is the Board’s to make or the Association’s has a significant impact on whether the issue is addressed at a Board meeting or an Association meeting. Making the wrong choice can have potentially troublesome consequences for an Association.
The information in this article is general in nature. If you need assistance in interpreting your Association’s governing documents, particularly as to notice requirements or delineation of items within the Board’s authority and those reserved to the Association membership, contact an attorney well-versed in community Association law.
1 These powers are those that are typical for an Association board of directors. However, readers should consult the governing documents for their Association to determine the extent of the power of the Board of Directors for their Association
2 See Minn. Stat. Section 515B.3-103(g). Note, however, that MCIOA does not govern every Association, so the mandates of MCIOA may not apply to your Association.
3 It is possible to conduct additional business, but generally, doing so requires consent of all members of the body holding the meeting—not just those attending the meeting.