HOA Homefront: Did our board change the rules properly?
The rule-changing process involves two open board meetings.
Q: If the board decides to change any rules shouldn’t those rule changes be placed on the open general session board meeting agenda for discussion and vote of the board members before being sent out for the 28-day comment period? Is it a violation to make this decision in executive session, without first putting it on the open general session agenda? — P.G., Rancho Santa Margarita
A: The adoption, deletion, or changing of HOA rules must comply with Civil Code Sections 4340-4370. The discussion of a proposed rule change is not something that by itself qualifies for executive session discussion under Civil Code Section 4935, the list of permissible closed session topics. There could be situations in which HOA legal counsel might be advising the board about the legal implications or risks of a proposed rule, and that might qualify for a closed session discussion. However, the actual approval of the publication of the proposed rule change must occur in open session and be recorded in the board meeting minutes.
The rule-changing process involves two open board meetings. In the first meeting, the board decides to publish a proposed rule change. That proposed rule change announcement per Civil Code 4360(a) must include the verbatim text of the proposed rule change. At the second board meeting, at least 28 days after the proposed rule change is announced, the board is required to permit an open forum on the proposed change. Then, in open session, the board proceeds to approve (or disapprove) the proposed change.
Civil Code 4350 says that rules (or, by inference, rule changes) are only enforceable if adopted in substantial compliance with the statutory requirements. A board playing fast and loose with the statute’s requirements could be surprised by a judge refusing to enforce the rule.Sincerely, Kelly
Q: In the past, when my HOA board wanted to change the rules and regulations, notification and the changes were sent out by snail mail. This time, the notification was sent by e-mail and there are supposedly so many changes that they incorporated the changes in the text of the rules book and that one has to log into a site to read the changes. The problem is that it is quite lengthy and there is not so much as highlighting or bold type to show the changes. How many people will take the time to read all the pages of the rules and even be able to spot the changes? Is this legal? I totally enjoy your interesting and educational column. — FP, Mission Viejo
A: Civil Code Section 4360(a) requires that the text of the proposed rule change(s), as well as the purpose of the rule change, is to be published by “general notice”. General notice under Civil Code 4045 can be by several different methods, including the HOA website. However, the text of the proposed changes must be published – simply posting a copy of how the rules will look after the changes is insufficient. It takes so little effort using Microsoft Word or other similar programs to prepare a “track changes” view of the proposed rule changes. It’s also fairer to the members. Your board could find out to its consternation that rules improperly published might be found to be unenforceable under Civil Code 4350.
Kelly G. Richardson CCAL is a Fellow of the College of Community Association Lawyers and Partner of Richardson Ober LLP, a California law firm known for community association advice. Send column questions to Kelly@roattorneys.com.