EMAIL RESIGNATION
QUESTION: A fellow director submitted a letter of resignation to the board by email, effective immediately, which he attempted to withdraw several weeks later. Our bylaws say a director may resign upon giving written notice to the board. Does an email meet the requirement of written notice?
ANSWER: Yes, an email satisfies the written notice requirement. As provided for in California's Uniform Electronic Transactions Act, an electronic document such as an email is an enforceable writing between parties. Emails are just as legal and enforceable as traditional letters signed in ink. Under the Act, a "digital signature" is defined as an electronic identifier, created by computer, intended by the party to have the same force and effect as a manual signature. Accordingly, the director's email resignation is effective and cannot be withdrawn unless the board accepts the retraction.
AUTOMATIC PROXIES?
QUESTION: My HOA recently sent out secret ballots but took the position that members who returned ballots were assigning proxy to the board for any votes taken at the annual meeting. I take exception to this action. I think a separate proxy signed by the homeowner should be at the owner's request.
ANSWER: Clearly, ballots are not proxies but it’s possible your association used proxy language on the outside of the ballot envelope. Many law firms and management companies advocated this when the election law went into effect in 2006 because the legislature failed to indicate whether ballots counted toward quorum. The problem was subsequently resolved with clean-up legislation which counted ballots toward quorum. Civil Code §1363.03(b). As a result, proxy language is no longer needed and should be removed from envelopes.
BOARD ORIENTATION
QUESTION: A new board was elected on a platform of integrity and transparency. Their first action was to hold an unnoticed meeting with a majority of the board in attendance. They justified the meeting by stating that it was a board orientation and no business was conducted. Isn't this a special meeting that meets the notice requirement?
ANSWER: I agree with the board on this one. I've conducted many board orientations over the years and they are extremely effective in bringing new boards up to speed on their duties as directors. I wish more associations held them. A meeting with management and the association's attorney (i) to discuss the board's duties, (ii) to discuss legal issues, and (iii) to receive historical background information does not violate the Open Meeting Act. The Act defines a meeting as "any congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business scheduled to be heard by the board, except those matter that may be discussed in executive session."Civil Code 1363.05. Accordingly, board orientations do not meet the definition of a meeting and no notice is required.
5% SPECIAL ASSESSMENT
QUESTION: The Code limits board approved special assessments to 5% of the budget's gross operating expenses. Does that include operating expenses before the reserve allocation or does it include the reserve allotment?
ANSWER: The Davis-Stirling Act uses the term "budgeted gross expenses," which means all expenses in an association's budget, both operational expenses and reserve contributions. The statute could have have said "budgeted operating expenses" which would exclude reserves but it did not. Civil Code §1366(b). Therefore, reserve allocations are included in the 5% calculation.
PRESIDENT WITH
WINDOW EXPERTISE
QUESTION: Our board recently published new specifications for replacing windows in our complex. The president of the board was primary in creating those specs. Coincidentally, he works at a company that sells and installs windows; that is his job. There has been no requirement that we use his company; however, some think that this is a conflict of interest. Do you think this should be allowed?
ANSWER: If the association is not using his company, there is no conflict. You are lucky to be getting the benefit of his expertise.