By: Melissa S. Doolan, Esq.
The Arizona Court of Appeals issued an opinion that has an immediate and profound impact on the how Boards of planned communities and condominiums conduct business in executive/closed meeting. In AZNH Revocable Trust v. Sunland Springs Village Association, the Court of Appeals interpreted A.R.S. §33-1804 of the Planned Community Act.1
The Court held that a Board may deliberate in an executive meeting on an item listed in A.R.S. §33-1804(A)(1)-(5), but the Board must vote on that item discussed in the executive meeting in the open meeting. The following are the executive meeting topics: (1) legal advice from an attorney, (2) pending or contemplated litigation, (3) personal, health or financial information about an individual member of the association, individual employee of the association or individual employee of a contractor for the association, (4) job performance, compensation, health records or specific complaints against an individual employee of the association or individual employee of a contractor for the association, and (5) discussion of a member’s appeal of any violation. Going forward, a Board of Directors must vote on an item discussed in an executive meeting in the open meeting.
The Court also said the agenda for the executive meeting must provide meaningful notice under A.R.S. §33-1804(F) of what the Board will discuss in an executive meeting. Simply reciting the statutory language of A.R.S. §33-1804(A)(1)-(5) in the agenda is no longer sufficient. An Association must provide a description an executive meeting agenda with a description of the items to discuss that does not provide personal information or attorney-client information. For example, an executive meeting agenda item could be (1) review collection accounts for lien foreclosure, or (2) appeal of monetary penalties for a specified account.
The Court further ruled that the Board must authorize a person to determine what items it will discuss in the executive meeting. The Board must vote in an open meeting to authorize either the Board President, another Board Director, or the Community Manager to determine what items will be discussed during the executive meeting.
This new case law will undoubtedly have many Boards asking questions and being unsure of how to proceed. We are available to attend meetings to assist in this new voting on executive items in the open meeting. We can also assist in drafting resolutions to designate the person responsible for deciding what the Board will discuss in an executive meeting.
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(1) By extension, attorneys and courts will also apply this decision to A.R.S. §33-1248 of the Condominium Act.
The information provided herein is for reference purposes only, is general in nature, and is not intended as legal advice. For specific questions or legal issues regarding your association, please contact us at 480-219-3633.