 Welcome to the Condo Insiders show. I'm the new host, Cheryl Franklin. So bear with me, but today on the show, I have my good friend and mentor, Richard Emery. We're going to be speaking on the subject of effective board meetings. Richard, why don't you take a moment and just introduce yourself as an expert in the industry, which I appreciate. Well, thank you for having me, and congratulations have become in one of our co-hosts. As you know, Jane Sugimura and I and you are going to be the co-host. Condo Insider is sponsored by the Hawaii Council of Community Associations, and we've done over 160 shows trying to help board members and owners alike understand association living. Me personally, I've been in the industry about 25 years, served on the Legislative Action Committee for CAI, Hawaii Council of Community Associations, co-hosted the show, and just been an advocate in the industry for a very, very long time. Awesome, awesome. So you've been to a few board meetings in your time. I've been bored of the few board meetings here this time, but yes, I've been to quite a few board meetings in the 25 years. Yeah. So let's talk a little bit about the importance of having a board meeting and why we have board meetings. Well, first of all, you have to understand that the associations are self-governed, and so the owners at an annual meeting elect people to represent them to make the decisions for the association. And their powers are defined in the governing documents of the associations. They don't have all the power. In some cases, they have to go to the owners to get permission, but they're elected to represent the people. And the state law says you have to have at least one board meeting a year. But the larger associations or the mid-size associations pretty much meet quarterly or monthly because they have decisions to make on how to spend the money and what to do. So a very, very important part of condo living is to have a good board that meets regularly and makes decisions for the association. Yeah, that lends itself to the true meaning of the purpose of the board meeting, is to make decisions. Would you agree? That's true, it's absolutely true. And the key that I find, because I've been an expert witness in many lawsuits, that for boards to understand that there's a lot of obligations they have under the statute to run an effective board meeting. And if you may, if you don't mind me saying, it begins with the notice. By law, all the board meetings are open to all of the owners except that portion which is executive session. And as such, you have to notice all of the owners of the board meeting. And the current law says you put a notice on the project but many companies now email and have other apps that help additionally to help people with the board meeting. And that board meeting is limited to the owners. So a tenant or a guest can't go to the meeting, even the owner's attorney, unless they're invited by the board of directors. And there's certain timing requirements with regard to that. Good point to bring up. I've been to a number of board meetings in my career as well. And some of them can be quite lengthy. Well, I think that's a problem in the sense that first of all, if you're gonna have a board meeting, the statute says that you must give three days notice when practicable, key words. And then when practicable part of it means or upon simultaneous notice of all the directors. If you had an emergency, you could certainly have the meeting and this is a business meeting, the association has to do business, but you're supposed to give three day notice and the law was changed recently, last year or two, saying not only do you give notice of the meeting and the time and the place, you also have to give notice of the expected agenda. How do we discuss that night? Yeah, yeah, yeah. What do you think at the end of the day makes for an effective board meeting? Well, let's remember this. A board meeting is a business meeting. You talked about these meetings that take hours and hours. Boards really should think that they need to get the meeting done within two hours maximum, in my opinion. Maybe exceptions here or there. They have to do the meeting within two hours. And as such, the state law says that owners have the right to participate in board meetings. That's not a shouting contest and a debate. What I usually recommend for a board is transparency, without the agenda. If something comes up and they have to add something to the agenda or delete it, the law doesn't prohibit that. They just say the expected items on the agenda. And therefore, you go to the meeting, what I tell boards traditionally to do is call the agenda item, painting the building. We've had discussions about painting the building blue or pink. Before we allow owners to participate, we're gonna ask the board members first to have a discussion. Cheryl says pink, Richard says blue, Harold says blue, and you go through that discussion. Then the board and president says, before we vote on this, we're gonna allow owners to make a comment. And so the owners make a comment and you give them two or three minutes and it's flexible depending on how many people you have there and what's going on to speak their piece. But at some point you have to say, thank you for your input. Do I have a motion to paint the building? I make a motion to defer this to the next meeting so we can get more information from the architect. Are there objections to deferring this item to the next meeting? No, okay, the meeting is the item is deferred. Or Richard says I moved to paint the building blue and we have a vote and the vote's three to two now to paint a pink and then it's recorded in the minutes because these minutes are a very legal document. So there aren't lawsuits and associations and it's very critical that an accurate record be kept to what they decided to do. That's a very good point. I've seen a lot of minutes also in my career and I think it's always important to keep what you just said in mind when writing the minutes. Who's responsible for writing those minutes? Well that's really a more decision. More times than not, you have an elected secretary but that's really more of a corporate secretary for signing documents. Most people today, the managing agent, the management company, in their contract provides that they will write the minutes. What is important to remember about the minutes is that it's decisions, it's not discussion. So if you and I were having this debate on blue and pink, I think blue is better because it doesn't fade as fast and you like pink because it's a more emotional color. There's no way a third person can put it in minutes. All of the intent of what is being said. So at the end, you should only have Richard made a motion to paint the building blue. The vote was Richard, yes, Cheryl, no and because the law requires you to put in the vote of each director in the minutes. Yeah, in my experience in training, it was kind of drilled motions and actions, period. Nothing more, nothing less. Because as you stated, those minutes can end up becoming part of a legal proceeding. Well more times they do than they don't and I get to ask all the time, should there be minutes of executive sessions? And the answer is you can have minutes of executive sessions. Executive sessions don't require the vote of the board member to be identified. You would certainly have majority vote of yes and majority of no, but the problem you don't realize is executive session minutes are discoverable in a lawsuit. Yeah, yeah. And so you'd want to be careful exactly what you put in the minutes because hypothetically, if you're having a discussion on a legal issue, should we repair the stairs so they might fall down and kill somebody? You know, and you wouldn't want necessarily to have the board vote of no because it costs $5,000 to not repair the stairs that might kill somebody and then have the stairs fall and seriously injure or kill somebody. Yeah, yeah. So I'd be very careful when I put it. I'm not a big fan of executive session minutes. Because in theory, you see, to go into executive session, you have to announce the regular session while you're going in. So let's just say is to discuss the lawsuit of owner Emory against the association. So then you go to executive session and you have the discussion. Maybe the discussion is owner Emory wants a million dollars to settle it. Let's offer him $5,000 to settle it. But I'm willing to go as high as 50,000. Would you really want that discoverable? Right. Of course not. You're in this negotiation and your strategy is to offer a low number. And then you're saying to the lawyer that we'll give you the authority up to a higher number. So you don't want to necessarily, you have executive session minutes come back to hurt you. So I'm a big fan of not having minutes in the executive session. Because if in fact, the vote was something more concrete, to approve the contract with ABC Roofing, the roofing for $1 million because you've gone through the bids and the comparison and you've decided in executive session you want ABC Roofing. I know I have a lot of roofers out there gonna be angry and use them as the example, but that's the way it goes. But at the end, they could go back out at the end and say, okay, the board wants to ratify us as soon as the next session, approve the $1 million contract with ABC Roofing to paint the roof or fix the roof. Another question that I have is who actually determines the agenda for the meeting? Well, believe it or not, there's two parts to that question. The truth is the president sets the agenda for the meeting under Robert's rule. He sets the agenda. There are certain meetings like annual meetings and things like that that the order of business is prescribed in the bylaws. And so he would have to follow the bylaws. But for board meetings, typically, the board president sets the agenda which wouldn't prohibit at the meeting a director saying, I'd like you to add to the agenda the problem with 1-1-4. And the president would say, if there's no objections from the rest of you, we'll add a new business issue with 1-1-4. To me, it's not an executive session hearing issue. And so, but it's truly the president and they set the agenda. And because you wanna keep it to two hours, there may be items you defer to the next meeting because people get tired after two hours. Yeah, yeah, they really do. I know I've been involved or I've taken over accounts where the agenda was a little bit lengthy. And at that time, it's a good idea to start prioritizing and kind of trying to reduce that agenda so that you complete the meeting within two hours. I measure a good board meeting at the end of the, it finishes in two hours or less. And there's been no deaths or injuries. Yeah. That's very, very true. That's very true. So what's the best practice to preparing for a board meeting? What needs to happen before? Well, and I would tell you, I wish this happened all the time, but it doesn't. But most management companies, and even if you're a self-managed, you're a general manager, compared to what they call a board packet. This is the backup information for what we're gonna discuss tonight. And that board packet usually goes to the board one week in advance. And in some cases, parts of it, like financials or bids might have gone earlier. Well, the most important thing that board members should do is read the board packet before they go to the meeting. Because you get there and all of a sudden... They're opening the packet. Yeah, they're opening the packet. And the first item on the agenda, typically, after an owner's form to kind of let owners come in and see what they wanna say is, you don't have to stay for the whole meeting, is approval of the minutes. You know, approval of the minutes is really not a motion. It should be the president says, the minutes have been distributed, are there any corrections to the minutes? Hearing none, the minutes are approved as presented. You know, they don't have to have a vote on it. It should be, it should take two minutes. Or it couldn't be, a management distributor, an owner says yes. They had me voting yes for this, but I voted no. And you misspelled the name of Sally. Okay, are there any other corrections to the minutes? Are there any objections to the minutes as corrected? No, hearing no objection to the minutes as corrected. You should get out of the minutes in two minutes. And if you put in dialogue, like who said, he said, that's when you get into these arguments. That's not exactly what I meant. You know, and they fight through that. So you need to have preparation that board members have read the packet and are prepared to discuss the items and realize that they each should be given a chance to discuss. But if you're not agreeing, you want the building pink and I want a blue, you want to spend an hour with me continuing to argue with you over pink and blue where we're not going to change our mind. At some point in time, the chair is going to say, okay, everybody's been heard. Let's have a vote. I moved to defer and talk about some more. I moved to paint a pink or blue and move on, but you continue to talk to somebody. Is it going to change your mind? Yeah, it's not, it's not. But this is a good time for a break. So we're going to take a one minute break and it will be right back after the break. Hi guys, I'm your host, Lillian Cumick from Lillian's Vegan World. I come to you live every second Friday from 3 p.m. And this is the show where I talk about the plant-based lifestyle and veganism. So we go through recipes, some upcoming events, information about health, regarding your health and just some ideas on how you can have a better lifestyle, eat healthier and have fun at the same time. So do join me. I look forward to seeing you and Aloha. Aloha. I'm Marcia Joyner, inviting you to join us on Wednesdays at one o'clock for Cannabis Chronicles, the 10,000-year Odyssey, where we take a look at cannabis as food, cannabis as medicine, cannabis and religion, cannabis and dear old Uncle Sam. So please join us to learn all about cannabis. Again, Wednesdays at one o'clock. Thank you. Aloha, welcome back to the show. After the break, we are going to continue our conversation with Richard Emery, discussing effective board meetings. Before the break, Richard was expounding on the agenda and tools and steps to take to try to limit the board meeting to two minutes. Why don't we talk a little bit about the responsibilities of the community manager versus the responsibility of the board in facilitating effective board meetings? Okay, and I know it's your first thing. You said two minutes is two hours the length of the board meeting. Oh, two hours. I would love to have two-minute board meetings. Oh, that's my dream. Because you're new with this, you said break, first thing I did was check my arms and legs after the break. So I'll make sure that that wasn't what you were talking about, you know, or neck, it wouldn't be worse. But I think that's probably one of the most misunderstood issues of the management agent, the managing agent, keep calling it management company and the board itself. And let me explain it to you this way. The board is the responsible entity for the association. There's no way to get around it. They can't delegate the duties to a committee or the responsibilities. They have director and officer liability insurance to protect them. And the managing agent, I look at it like your body. Your body is the association and the brain and the head is the board. The arm goes out and does things because the brain tells it to is the managing agent. That's a great analogy. Yeah, the managing agent has no independent authority unless expressly provided for in the government documents or expressly provided by a motion by the board. We approve you to go sign the contract and do ABC and D. The managing agent is an agent for the board of directors. And you'll find in most management companies the contracts that we have an indemnity and a whole harmless provision for our action because how can we have an action being held responsible that the board has instructed us to do it. So the managing agent prepares the minutes and prepares the board packet typically, attends and if an issue comes up on parliamentary procedure or the governing documents or common practice standards of care in the industry, best practices, they will provide their input or consideration by the board who will make the final decision. It's not managing agent and I can tell you from experience some managing agents are more forceful about it than others. But in the end, does it make any difference whether I'm forceful or not? It's gonna be on the board's culliana at the end to make the decision and take responsibility for it. Yeah, yeah, I agree. In terms of the order of the agenda and the meeting and how the meetings should be handled, are there any rules or standards that all association board meetings should follow? Well, you know, under state law, we're all obligated to follow Robert Schultz's order. It certainly comes into play much greater in an annual meeting or a special owners meeting. Robert Schultz provides for a section on conduct of a small board, less than 12 members, which is almost all the conduct boards. And in those cases, the board operates under relaxed rules. So you don't have to have the motions prepared in advance. Actually speaking, you don't have to have a second on any motion. Factually speaking, the president can vote on a small board, you know? But Robert Schultz also defers to, I'm gonna call it the practice of the organization. So if your association, the practice is to have a second on motions, it's not a big deal. It's really the standard. It's not violating Robert Schultz, you know? It's the standards, just like you may have a more expanded set of minutes. If that's your practice, it's okay. It's just not recommended, it's not what Robert Schultz says. The order of business is determined by the president when he does the agenda. You don't have to do the minutes first, the financial statements second. You know, you don't have old business or unfinished business, the right way to call it. New business, you don't have to do it in that order. Because the big thing I see is you get structured, you know, in one of these things. And all of a sudden you have a guest, like a lawyer or an architect who's charging you $300 an hour to be there. If there's no objections, we're gonna take the attorney first and let him come in and go in respect for his time. Saving you money, saving him anguish of sitting there all night long, kind of impolite, doesn't have much of a lot of spirit to it. And so there's a lot of flexibility in it, but the order of business is determined by the president. He's got flexibility, subject to the assembly, in this case, the board of directors. It should be clear, we're talking about board meetings on annual meetings and everything I'm saying. Yeah, yeah. In what instances do you think you would need a parliamentarian at a meeting? Well, I see him at board meetings. And I see them at annual meetings. It's more prevalent at annual meetings because there's some issue where the owners want to amend the bylaws or remove all the board or some bigger issue. In board meetings, I see it more times than not because the chair doesn't have confidence in writing the meeting. He wants somebody else to do it and he'd be a shy person and they want someone else to run the meeting because they're not there. They're afraid to have some duty they don't know like a Robert's rules. And so more times than not. But I have seen issues where a board member was gonna try to push an agenda item and the chair maybe didn't wanna do it and the chair could certainly say things like, well, I'm gonna defer that to the next meeting. And then the other person would say, I object and you have to have a vote. And so sometimes you get a little complicated issues that because of the personal emotions and the agendas of the board factions. I would have to tell you that I don't see that many boards that totally have board factions. They have differences on views. I don't ever see it to get to the level of angst that causes parliamentarian. But it's an available resource. And the good thing about it is, if it has to go to court later, you've protected the record with respect to that aspect. Yeah, yeah, good point, good point. Have you seen instances where the property manager will chair the meeting? Probably that lends itself to what you were just speaking to. You have a president. Well, I've chaired many meetings, both annual and board meetings, that got into a bunch of issues, the steps regarding a loan, construction litigation, things along that line that they needed to get the board to approve before it went to the owners. And because of the nature of the board, they felt a neutral person would be better. And so I've chaired many board meetings. But the reality of it is a good property manager, and I would encourage all of the property managers to join the National Association of Parliamentarians and at least get the basic certification of passing the admittance test because it'll save them quite a bit of trouble. Yeah. Earlier we spoke about owner participation at meetings. I know early on in my tenure in this industry, that wasn't always the case that they could participate. And I find that once the law changed to allow owner participation, the meetings started going a little bit longer. Well, I think that's true, but the owners are the owners and they really are the board's boss. I think we should be transparent and have respect for them without letting them hijack the meeting. And without letting them become negative and bitter towards the board member and how they're conducting, running the association. That's the fine line. And if owners want to make comments, make suggestions, realizing the board can say, we don't agree with your suggestion, they want to participate and you have transparency on the decision making again outside of certain limited areas in the executive session. I think that's all very, very healthy for the owners. But I see so many boards still try to minimize owner participation. When the law clearly says that they have their right to participate on every agenda item, which means it's not just a forum in the beginning of the end, it says you bring up a single item on the agenda, they have a right to make a few comments. Yeah, no, I agree. I think old habits are hard to break. There was a time when board members limited owner participation to two minutes and that was usually during an owner's forum. And once the law changed, I don't know if the word was slowly getting out, but I agree that transparency is beneficial on both ends and a homeowner's been to appreciate that. Yeah, I see the biggest problem today. I shouldn't say one of the biggest problems is probably a better way to describe it is that we're still having trouble getting people to understand that on the notice of the meeting, they have to put the expected agenda. And people make mistakes. And I think owners who have some particular angst against their board and looking for every microscopic thing they didn't do in, they gotta realize they're all volunteers. They gotta work together collaboratively because in some ways I call it form over substance. If they forgot to put the expected agenda on the meeting, okay, that's wrong. They should do it. Does it violate the fact they can't have a meeting? No. Is it gonna make all the decisions made avoidable? No. If you have a quorum for the board there and they vote and they do things, the courts have lend decisions towards that, but I certainly would advocate for boards to follow the law through the proper notices with the expected agenda that people participate reasonably in the meeting. Reasonable, yeah. And I find, frankly, the meetings go longer not so much from owners, but boards fighting among themselves with what to do. Yeah. And whose responsibility do you think it is to kind of rein that in, if you will? Well, it's the chair, it's the president. It's the chair of the meeting. It's his meeting. He's the chair of the meeting. And certainly having the property manager sitting next to him, the agent, and saying, I recommend you bring this to a vote or I recommend we either defer it or move on. Kind of remind him we're losing track of time and a good president will hear what he has to say and say, I'll take the effect, okay, we've discussed this now for 20 minutes. I'm gonna take two more minutes and then we're gonna move on. If I don't have a motion, we'll move on. If we have a motion, we'll vote. You can go on for days. I actually went to an annual meeting once. It took three days. Costs $75,000. That's possible? Yes. You just adjourned it. You had to close down at 9.30 at night and adjourned until the next morning. And they had experts and lawyers that are all fighting over a proposed repair to the building. And they had these factions because the cost between the two competing repairs was millions of dollars of difference. So you had this faction of fighting. And it went for two days. Well, I don't particularly like that because... Yeah, that's pretty brutal. Yeah, but we still had no deaths or injuries. That's one good thing. Well, that's always good when you have no deaths or injuries. But a lot of good stuff, Richard. I mean, you've had a lot of experience in this industry. I've seen a lot. I've experienced a lot. It's always different. But I think the key is everything you kind of discussed just kind of sticking to an agenda, making sure you make decisions, moving on, being transparent, allowing the homeowners to weigh in. They appreciate that. And that can lend itself to a win-win. You got it. Yeah. Well, thank you again for joining the show. I appreciate you as my friend and mentor. Always. Wish me luck going forward. Going forward. We'll be right here with you. Yeah. That's it. Thank you.