Given the current litigious nature of owners, and Colorado courts’ general unwillingness to rule in favor of HOAs unless the associations have complied with all statutory and governing document provisions, it is more important now than ever to ensure your community is acting in compliance with all applicable laws and governing document requirements.
Colorado law requires all board meetings be open to attendance by owners or their designated representatives, with the exception of executive sessions, which are portions of board meetings that are closed to owners and designated agents. However, many associations fail to follow the open meetings requirement and exclude owners from meetings for reasons that are not authorized by law; such associations needlessly expose themselves and their directors to liability every time they improperly exclude owners.
Section 308(4) of the Colorado Common Interest Ownership Act (“CCIOA”) contains clear guidelines and requirements for executive sessions that boards must follow in order to stay compliant with the law. This article examines the sole reasons for going into executive sessions below.
Employment/Management Contract
“matters pertaining to employees of the association or the managing agent’s contract or involving the employment, promotion, discipline, or dismissal of an officer, agent, or employee of the association”
A common mistake with this provision is boards going into executive sessions to discuss management agreements under review that have not yet been signed. The verbiage “the managing agent’s contract” implies the discussion must be limited to the current management agreement, which means management agreements that are under review are not part of this executive session option.
Legal Counsel
“consultation with legal counsel concerning disputes that are the subject of pending or imminent court proceedings or matters that are privileged or confidential between attorney and client”
This provision allows boards to go into executive sessions when meeting with the association’s legal counsel.
Criminal Misconduct
“investigative proceedings concerning possible or actual criminal misconduct”
It is important to note, this provision does not limit discussion of criminal misconduct to any specific individual, but applies to all discussions of criminal misconduct. This would include possible criminal misconduct by a director, homeowner, contractor, or any other individual.
Protected Communications
“matters subject to specific constitutional, statutory, or judicially imposed requirements protecting particular proceedings or matters from public disclosure”
This provision causes much strife for boards as it may not be immediately clear what it is intended to cover. However, this provision is not as broad as it originally seems.
Constitutionally protected communication primarily involves communication between congress and the military, which does not apply to the HOA industry. Statutory privileged communications involve the attorney-client privilege (which is already addressed above), as well as medical information an association may possess concerning any owner, or other individual, and communications involving religious consults, communication between two spouses, and communication concerning certain financial information (such as credit scores).
Based on the above, this provision is somewhat narrow as to what it truly encompasses and boards should be very careful not to use this provision as a reason to go into executive sessions to discuss topics that do not fall under the above parameters.
Invasion of Privacy
“any matter the disclosure of which would constitute an unwarranted invasion of individual privacy, including a disciplinary hearing regarding a unit owner and any referral of delinquency; except that a unit owner who is the subject of a disciplinary hearing or a referral of delinquency may request and receive the results of any vote taken at the relevant meeting”
This provision is even more problematic than the protected communications provision, because it is widely used by boards to hold executive sessions on almost any topic they do not want to discuss in open meetings.
This provision has been expanded recently to include disciplinary hearings and referrals of delinquencies to attorneys or collection agencies as appropriate and mandatory reasons for boards going into executive sessions.
However, the term “unwarranted invasion of individual privacy” is extremely broad and somewhat ambiguous. The typical legal definition of this term is the disclosure of information that is highly personal to a reasonable person and in which the individual’s right to privacy outweighs any legitimate public interest in obtaining the information. Therefore, make sure to keep this definition in mind when deciding whether a topic truly warrants an executive session under this category.
Communication from Attorney
“review of or discussion relating to any written or oral communication from legal counsel”
This expands the legal counsel provision by allowing boards to meet privately to discuss legal advice even when the attorney is not present at the meeting. As long as the board is discussing advice received from an attorney by phone, email, or any other mode of communication, it is appropriate to go into executive session.
If you have questions regarding executive sessions, please contact an Altitude attorney at 303.432.9999 or at [email protected].