One of the most annoying parts of serving on a board can easily be the wide variety of invisible lines that you simply can’t step over. From the questionable practice of wining and dining your board (without inviting board members) to dealing with conflict of interest rules, there is so much invisible red tape that it can be really hard to realize that you’re doing something wrong. Fortunately, your good buddies at Spectrum are here to set the record straight so you can cut the tip toe-ing down to a minimum. With that in mind, we are here today to talk about informal meetings and how they fit into the grand scheme of the board member’s day-to-day life.
What are Informal Meetings and Why Does it Matter?
Do you have friends on the board? Do you sometimes go out to eat, perhaps talk a bit about business, maybe even come up with some decisions while the rest of the board isn’t there? Most importantly, do these buddies (with you added in) create a quorum of board members? If the answer to all these questions is yes, then you have participated (knowingly or unknowingly) in an informal meeting. Basically, any time you talk to a quorum of board members about HOA business outside of scheduled meetings, you are having an informal meeting. No matter if you are just at a bar with other friends, eating dinner, or just having a social meeting, the moment a quorum is present and you begin talking about HOA business, you are technically having a meeting of the board.
Now, some of you might be wondering why exactly this matters. After all, we all talk to our friends about business, right? It shouldn’t matter if that business is HOA related, nor should it matter if the other members of the conversation have to be board members! Well, even though these meetings seem innocuous enough, there are many cases in which these meetings aren’t just wrong, they can also be the basis of a lawsuit. You see, in Arizona, most meetings organized by the board have to be open to the members of the community (aka the homeowners). As defined by ARS 38-431(6), homeowners need to be given notice of board meetings—particularly those discussing actionable topics—and an informal meeting as described above does not adhere to those standards.
In other words, if something is agreed upon during a meeting like this, there is always a possibility that a homeowner brings litigation upon your association.
What You Can Do
Long story short, do your best to avoid informal meetings. Sometimes, it happens on accident; sometimes, you don’t even realize that an informal meeting may be taking place. But, overall, it’s a good practice to avoid making decisions with a quorum of board members outside of an officially sanctioned meeting. Even if homeowners haven’t drawn up litigation before, and even if the chance of them winning a possible lawsuit isn’t extremely high, it’s always good to try and avoid these types of situations. Besides that, decisions should always be made with some input by the homeowners (it’s their neighborhood too, after all) so why not just leave discussions to the meetings where they belong? It will keep your homeowners happy, and it will ensure your board stays out of the murky legal waters that ARS 33-1804 has created.
For more information on meetings, check out these great articles; or, call today to learn more about Arizona HOA law from Spectrum Association Management!
