Homeowner associations, condominiums, and cooperatives are established on the operating principle that they are associations of generally like-minded individuals who have jointly agreed to participate in the governance of their community and to uphold certain standards, make payments for the upkeep of shared amenities and otherwise be part of a team of equals in the operation of their neighborhood. It can be disconcerting to some residents, when the elected board of directors determines that it is necessary to convene a meeting in closed session. By definition, this excludes some members from the meeting and accompanying discussion and often leads to questions about what is being discussed: “Why can’t I know what they’re talking about?” “What is so secret?” “Are they talking about my neighbors? Or even worse, about me?”
The reality is usually far less about secrets and far more about service. After sitting through thousands of closed sessions, it has been my observation that boards of directors are not interested in using them to gossip about their neighbors or say mean things. Rather, closed sessions are most often an essential component to the protection of vital association interests.
The list of reasons for which a meeting can be closed is set forth in the governing laws of each jurisdiction, and usually includes discussion of contracts under negotiation, staff reviews, talk of delinquent accounts, covenant enforcement, and other legal matters. An honest and open discussion of these issues is frequently essential to the smooth function of the association, but could adversely affect the association in terms of negotiation, or could open staff, members, or contractors to embarrassment if publicly discussed. A closed session is the board’s opportunity to hear and understand extenuating circumstances about a particular situation, and to ask questions of staff or legal counsel to ensure that they are making the best possible decisions for their association.
If the board is uncertain whether a discussion topic is appropriate for closed session, then it may err on the side of caution and hold the discussion in open session. The decision is often characterized by a nod to the old adage: if you can’t say something nice, don’t say anything at all.
How does a board, then, protect its interests and those of its members in closed session while also providing the level of transparency and accountability demanded by members and the law? The first point of accountability is the decision to enter closed session. This should be noted on the agenda of any accompanying open session, along with the provisions of the applicable law empowering the board to enter closed session. The board should enter closed session only by motion, and that motion—including the appropriate excerpts of the empowering law—should be included in the minutes of the open session when that session is adjourned, and again in the minutes of the closed session, when the closed session is opened. Sample wording from an association in Maryland reads:
[A board member] moved to enter closed session, pursuant to Section 11B-111 of the Maryland Homeowners Association Act. Meetings of homeowners association or its governing body, which states that a meeting of the board of directors or other governing body of the homeowners association or a committee of the homeowners association may be held in closed session only for the following purposes: (iv) consultation with staff personnel, consultants, attorneys, board members, or other persons in connection with pending or potential legal matters. The motion was seconded and carried without objection.
Minutes must be kept of closed session, but they should be very brief. They should always record the attendance, date, and time. The discussion should be focused solely on the agenda items for which the meeting was closed. Any decisions must be reflected in board motions, and the record should be clear about how each board member voted on each motion. Usually, however, the substance of the discussion should not be included in the minutes.
Following the closed session, those same motions must be affirmed in the next open session. Some boards re-open the meeting directly after the closed session, while other boards will wait until the next regularly scheduled open session. At that time, the motions made and passed during the closed session should be read into the minutes and reaffirmed by the board.
A final admonition refers to the confidential nature of closed sessions. A board member who discusses with others the confidential information presented to the board injures the board and those about whom information was disseminated. The sessions are closed to protect the privacy and confidence of individuals, and to support the association in negotiating. Confidential pricing or circumstances must absolutely stay confidential within the board and should not be discussed outside of the closed session.
In conclusion, the closed session is a valuable tool for the board. It is not a gossip-fest. It is serious. It is business. Decisions must be disclosed to all members to ensure that even with the use of closed sessions, the business of the board is open to all.
By Aimee Winegar, CMCA, AMS, LSM, PCAM
Aimee has worked in the field of community management for 30 years. She is currently a large-scale manager for Community Association Services, Inc. in Frederick, MD. She sits on the Quorum Editorial Committee of WMCCAI and is the vice-chair of the Montgomery County, Maryland Commission on Common Ownership Communities.