Executive Session. Boards of directors are allowed to meet in executive session to consider "matters relating to the formation of contracts with third parties." Civ. Code §1363.05(b). This includes meeting with consultants to set bid specifications, reviewing and discussing proposals submitted by contractors, discussing the qualifications of the various bidders, and reviewing contract language with legal counsel. In addition, termination of contracts appears to be a proper consideration for executive session.

Voting on Contracts. When it comes to voting to approve or disapprove a contract, the vote itself is part of "contract formation" and can be done in executive session. Some argue that all contracts must be voted on in open session but there is no legal authority to support that position. If a board chooses to vote on a contract in an open meeting, that decision is discretionary with the board and many boards follow that policy.

Disclosure in Minutes. Any matter discussed in executive session must be generally noted in the minutes of the next open meeting of the board.

Member Review of Contracts. Once contracts have been approved by the board, they can be reviewed by the membership. Civ. Code §1365.2(a)(1)(D). This includes all non-privileged contracts. Privileged contracts do not include contracts for maintenance, management, or legal services. Civ. Code §1365.2(d)(1)(E)(iv). Contracts with labor unions are also not considered privileged. Employment contracts, on the other hand, are probably private.

Member Review of Bids. Bids submitted by contractors are not covered by Civil Code §1363.05. Accordingly, members do not have a legal right to review bids. However, unless there is good reason to withhold bids, boards should make them available for inspection once a contract has been approved by the board.

RECOMMENDATION: Boards should adopt a bidding policy so as to minimize unfair bidding practices. All contracts should be reviewed by the association's legal counsel before they are approved and signed by the board. Once contracts have been approved, boards should post them on the association's website in a password protected area accessible by members.