06/08/2020

Client Alert

Written by: Jonathan H. Katz, Esq.

As we advised in our previous alert, the New Jersey Department of Community Affairs (the “DCA”) published formal regulations governing elections held in community associations, which were made effective as of the day they were made public (May 18, 2020). In addition to the election regulations, the DCA also included new requirements related to community association board meetings. Those new requirements include the following:

Scheduling and Notice of Board Meetings

• Community associations are required to hold an annual membership meeting, and within seven (7) days following that annual meeting, every association must post and maintain an open board meeting schedule for that year, which must include the time, date and location of such meetings.
• Notice of open board meetings must be:
  • prominently posted in at least one location on the community’s property accessible to owners at all times; and
  • posted on the association’s website and included in any association newsletter; or
  • personally delivered to each member or designee by mail, hand delivery, or electronic means.
• In addition to the posted meeting schedule, adequate notice of any scheduled meeting must be provided at least seven (7) days prior to the meeting date. This notice must provide the time, date and location of such meetings, as well as agenda items “to the extent known.”
• Any changes to the posted open meeting schedule – other than emergency meetings – shall be made on at least seven (7) days prior to the scheduled meeting date.
• Emergency meetings may be held to deal with matters of “such urgency and importance” that providing adequate notice would “be likely to result in substantial harm.” Notice of any emergency meeting must be provided as soon as practically possible. Emergency meetings must be limited only to such urgent matters and the board must establish on the record the facts establishing such emergency.
• Cancellation of any meeting must be posted at the meeting location by the time the meeting is scheduled to begin and must be otherwise noticed as discussed above. The cancellation notice must state the reason for the cancellation and when the meeting will be rescheduled.
• All open meeting notices must be preserved by the board for at least two (2) years.

Open Versus Closed Meetings

• By-Laws of all community associations must now include a requirement that meetings of the association’s executive board where a binding vote is to be taken must be open to attendance by all members.
• Association boards must provide a brief explanation for the basis for and cost entailed of any binding vote taken. This explanation must be included in the meeting minutes.
• Associations may exclude attendance of association members at portions of any meeting for discussion of any matters:
  • where disclosure would constitute an unwarranted invasion of individual privacy;
  • regarding any pending or anticipated litigation;
  • regarding contract negotiations;
  • involving employment, promotion, discipline, or dismissal of any association employee or office or the association; and
  • falling within the attorney-client privilege.
• However, while boards may conduct such closed (executive session) meetings and discuss those subjects listed above, boards may not take any binding votes on those issues at any closed meeting – any vote taken at a closed meeting will not be binding. If any such matter requires a binding vote, it must be taken at a subsequent open meeting “in a manner that does not disclose any confidences.”
  • Please Note: we find this provision to be extremely problematic for conducting community association business. Until we receive further guidance from the DCA, we recommend that when taking votes on confidential matters at open meetings, boards should take extreme caution not to use any language that may disclose any confidential information to the members.
• If a closed meeting is to be part of any open meeting, the closed meeting must be held either before the open portion of the meeting or at the end of the open meeting.
• While not mandatory, associations may adopt a policy for comments by association members during meetings. Any such policy must be applied uniformly.
• Although not expressly addressed by the new regulations, open board meetings may be held in person, by telephone conference, by video/audio conference, or by a combination of methods, provided that all board members can hear and be heard and all association members have the right to “attend” or “listen in.”
• We also remind you that board decisions made solely by e-mail are not binding or valid as these regulations make clear. As discussed above, if an emergency requires an immediate decision, the board should set up an actual in-person meeting, telephone conference, or video/audio conference as quickly as possible, and if there is no time for notice to the members, memorialize the reason for the meeting and decision made and then ratify the decision at an open meeting as soon as possible.

Minutes of Meetings

• Community associations must take legible minutes of all open meetings that shall include:
  • board members present and their titles;
  • clear identification of any matters addressed; and
  • clear identification of any matters voted on, including a record of the votes and an explanation regarding the basis for and cost entailed for each vote taken.
• Minutes of each open board meeting must be made available to association members in a “timely manner” before the next meeting and may be identified as “draft” or “unapproved.”
• Any electronic meeting recordings must include with it a written record of what matters were deliberated, what matters were voted on, and the record of each vote. Members of the community must be afforded access and the ability to copy any electronic or written records.

Potential Fines for Violations

• The new regulations set forth a process for the filing of complaints for non-compliance, and the DCA has the authority to levy fines of up to $50,000 per violation against any association that does not comply with these new requirements.

Although some of these regulations may be challenged, modified, or otherwise clarified, we suggest that each association make a good faith attempt to comply with all of them as currently drafted unless and until they are revised.

If you have questions about this or any other issues with your community association, please contact one of our community association attorneys.

©2020 Hill Wallack LLP. All rights reserved. Please contact Hill Wallack for permission to reprint. Notice: The purpose of this Client Alert is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, accuracy and completeness of which cannot be assured. This Client Alert should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.