Board's Failure to Take and Maintain Minutes

First it is necessary to define the term meeting under California law. A meeting is a gathering of a quorum of directors at the same time and place to hear, discuss, or deliberate upon any item of business that is within the authority of the board. A meeting can be in person, by phone, or by zoom. The board shall not take action on any item of business outside of a board meeting. Minutes are the official records of the proceedings of an association's actions. Associations are obligated to keep minutes of board and membership meetings. This includes incorporated and unincorporated associations. Minutes are required to be taken at board meetings, membership meetings, meetings of committees with decision making authority, executive committee meetings, and architectural committee meetings.

HOA boards must be aware of the following:

  • Banks require corporate resolutions to be reflected in board minutes to open new bank accounts;
  • Banks require corporate resolutions to be reflected in board minutes to change the persons authorized to sign on bank accounts;
  • The enforcement of operating rules requires that they be adopted in accordance with California law. This requires that the minutes of the association reflect that every step was followed;
  • Mortgage lenders may charge borrowers higher rates if they are not provided copies of minutes generally for a two year period;
  • Mortgage lenders may refuse to make loans secured by condominiums in associations that do not keep minutes of meetings;
  • The IRS and FTB require complete and accurate corporate minutes when they are auditing books and records of an association;
  • Any Certification of Election prepared by the Inspector of Elections is required to be incorporated into the minutes of the meeting held to count the ballots;
  • Certain actions of the board to collect delinquent assessments are required to be memorialized in board minutes. Failure to do so may provide a delinquent owner a defense to the association's collection action;
  • All members of an HOA are legally entitled to copies of all meeting minutes;
  • Disciplinary hearings are required to be held in an executive session of the board with certain information reflected in the minutes of the meeting;
  • The decision of the board to spend money, outside of budgeted items, must be voted upon and the vote reflected in the minutes of a meeting;
  • Any reimbursement made to a board member must be reflected in the minutes of a board meeting;
  • Reports of dangerous conditions and the action the board intends to take to address the reported conditions must be reflected in the minutes in order to minimize liability. This also holds true for criminal activity;
  • Without minutes, creditors may take the position that certain debts are personal debts of
    board members and not the debts of the corporation;
  • The minutes should always reflect that a current financial report was generated, reviewed by the board, and approved; and
  • The minutes of prior board minutes must be approved, if acceptable.
  • There are other reasons to maintain corporate minutes, but boards must always keep "in mind that they are required by law to be taken and maintained.

Boards should consider hiring a professional to take minutes of meetings.

Coast Management of California