June 12, 2013

Written By: Michael S. Karpoff

E-mail has become a convenient and quick means of communication, allowing people to converse regardless of where they are. On the other hand, e-mail also allows people to avoid face-to-face communication and can easily obstruct the exchange of information and create misunderstandings. Thus, e-mail cannot replace all interpersonal communication. Unfortunately, some community association governing boards have become so dependent on the ease of e-mail that they use it in place of board meetings.  That is a mistake. E-mail cannot replace board meetings.

Statutory Requirements

A community association’s board should not make decisions by e-mail. Subject to a few, narrowly construed exceptions, the board is required to make decisions at open board meetings, notice of which has been given to the unit owners and which the owners may attend. The New Jersey Condominium Act states, in part,

… If the bylaws provide that any of the powers and duties of the association as set forth in sections 14 and 15 of P.L.1969, c. 257 (C. 46:8B-14 and 46:8B-15) be exercised through a governing board elected by the membership of the association, or through officers of the association responsible to and under the direction of such a governing board, all meetings of that governing board, except conference or working sessions at which no binding votes are to be taken, shall be open to attendance by all unit owners, and adequate notice of any such meeting shall be given to all unit owners in such manner as the bylaws shall prescribe; except that the governing board may exclude or restrict attendance at those meetings, or portions of meetings, dealing with (1) any matter the disclosure of which would constitute an unwarranted invasion of individual privacy; (2) any pending or anticipated litigation or contract negotiations; (3) any matters falling within the attorney-client privilege, to the extent that confidentiality is required in order for the attorney to exercise his ethical duties as a lawyer; or (4) any matter involving the employment, promotion, discipline or dismissal of a specific officer or employee of the association.  At each meeting required under this subsection to be open to all unit owners, minutes of the proceedings shall be taken, and copies of those minutes shall be made available to all unit owners before the next open meeting.

N.J.S.A 46:8B-13(a) [emphasis added]. 

Similarly, the Planned Real Estate Development Full Disclosure Act (PREDFDA), which applies to all types of New Jersey community associations (with some exceptions), requires the bylaws of each common interest ownership association to include

A requirement that all meetings of the executive board, except conference or working sessions at which no binding votes are to be taken, shall be open to attendance by all unit owners, and adequate notice of any such meeting shall be given to all unit owners in such manner as the bylaws shall prescribe; except that the executive board may exclude or restrict attendance at those meetings, or portions of meetings, dealing with (1) any matter the disclosure of which would constitute an unwarranted invasion of individual privacy; (2) any pending or anticipated litigation or contract negotiations; (3) any matters falling within the attorney-client privilege, to the extent that confidentiality is required in order for the attorney to exercise his ethical duties as a lawyer, or (4) any matter involving the employment, promotion, discipline or dismissal of a specific officer or employee of the association. At each meeting required under this subsection to be open to all unit owners, the participation of unit owners in the proceedings or the provision of a public comment session shall be at the discretion of the executive board, minutes of the proceedings shall be taken, and copies of those minutes shall be made available to all unit owners before the next open meeting.

N.J.S.A. 45:22A-46a [emphasis added].

The requirement for such meetings and the allowed exceptions also are mandated by an implementing regulation adopted by the Department of Community Affairs, N.J.A.C. 5:20-1.1.

Exceptions Limited

The rule is that all decisions must be made at an open board meeting, unless specifically exempted by the statute. The statutes allow decisions to be made in closed session, not open to the members, if the subject is within one of four areas: 1) unwarranted invasion of individual privacy (such as where the board needs to learn of a personal family or medical situation in order to deal with an owner’s delinquency in paying assessments); 2) actual pending litigation or anticipated litigation, and contract negotiations (not contract approval); 3) attorney-client privilege (seeking or discussing communications with the Association’s attorney regarding legal advice or strategy); and 4) personnel issues. 

Even when the board considers confidential matters, it should do so at a meeting (an executive or confidential session) and keep executive session minutes. The board also may meet in private for conference or workshop sessions, which are meetings where the board may discuss issues, determine what investigations are necessary and determine the agenda for its meetings but may not vote on any decision or action. 

Meetings Allow Member Observation and Clearer Discourse

Physical meetings of the board are necessary to allow unit owners to attend and observe the meetings. To assure that owners receive notice of meetings so they may attend, the Department of Community Affairs adopted a second regulation, N.J.A.C. 5:20-1.2 specifying the types and timing of notices that must be given.   (Note, though, that the statute does not require that the board permit members to speak at the open board meetings, although it is a good idea either to set aside a specific time during each meeting or periodic meetings to receive owners’ comments and questions.)

Another reason that actual board meetings must be held is to enable board members to converse and debate with each other. This is made clear by a provision in the New Jersey Non-Profit Corporations Act, which also applies to most condominium and homeowner associations. N.J.S.A. 15A:6-10(c) states,

Any or all trustees [or directors] may participate in a meeting of the board or a committee of the board by means of conference telephone or any means of communication by which all persons participating in the meeting are able to hear each other, unless otherwise provided in the certificate of incorporation or the bylaws.

Similar language is contained in the Business Corporation Act, N.J.S.A. 14A:6-10(3). In other words, board members may participate in board meetings by telephone or electronic conference as long as all people participating in the meeting can contemporaneously communicate with each other. (Note that pursuant to the Non-Profit Corporations Act, the board may conduct a meeting solely by telephone conference. However, if that meeting is the type that must be open to the association members, to comply with the Condominium Act and PREDFDA, the board would have to notify all unit owners of that telephone conference meeting and enable the unit owners to dial in and listen in.)

E-mail Can Obstruct Communication

E-mail defeats both of these purposes. When directors communicate and make a decision by e-mail, the members cannot observe the decision-making process. Remember also that the statutes require that minutes of the meetings and the decisions of the board be recorded. E-mails are not minutes and may not accurately record the board’s actions. Thus, e-mail decision-making is contrary to the Condominium Act’s and PREDFDA’s requirements. 

Moreover, although e-mails allow simultaneous transmission of messages, they do not guarantee contemporaneous communication among the board members, particularly when they are transmitted over the course of several days, and so make discussion and debate more difficult and less efficient. In addition, as has been demonstrated in some cases, e-mails also allow more misunderstandings among board members over the issues being considered and the actual decisions made. 

Certainly, information may be shared among board members by e-mail before meetings, but the goal should not be to reach a decision through e-mails. Rather, the purpose of disseminating the information in advance is so that the directors are well-informed at the meetings and can discuss the matter and decide based upon a full knowledge of the facts, issues and options. 

In the event of an emergency, an interim decision by e-mail agreement may be necessary, but the board should meet as soon as possible and formally vote to ratify that decision. That should not become a routine practice.