SPECIAL CLIENT LETTER
April 9, 2018
IS E-MAIL VOTING BY A BOARD ALLOWED?
John E. Tsikerdanos, Esq.
In today's busy world, many people struggle to find a balance between work obligations and spending time with family and friends. This is especially true for the members of a Board of Directors, who also must find time in their schedules to address the myriad of issues impacting their respective communities, many of which are time sensitive. While it is our advice that a Board of Directors should meet in person to conduct business of the Association, as a practical matter, how can a Board of Directors run the affairs of the Association when the members cannot find time to meet in person? Is a Board permitted under current Maryland law to conduct business via e-mail?
Under Maryland law, the answer is not entirely clear because there is no statute expressly authorizing a Board to conduct meetings via e-mail. Additionally, there is no case law in Maryland addressing this issue. As a result, some Boards will use e-mail as a means of discussing issues and voting, other Boards will discuss issues but only vote at a duly held meeting of the Board, and other Boards will not conduct any business via e-mail.
Maryland statutory law provides some guidance on this issue. Both the Maryland Condominium Act ("Condominium Act") and Maryland Homeowners Association Act ("HOA Act")(collectively, the "Acts"), have incorporated laws pertaining to open and closed meetings of a Board. Section 11-109.1 of the Condominium Act and Section 11B-111 of the HOA Act authorize a Board to hold a meeting in closed session to discuss any of the following matters:
1. Discussion of matters pertaining to employees and personnel;
2. Protection of the privacy or reputation of individuals in matters not related to the business of the condominium or homeowners association;
3. Consultation with legal counsel on legal matters;
4. Consultation with staff personnel, consultants, attorneys, board members, or other persons in connection with pending or potential litigation or other legal matters;
5. Investigative proceedings concerning possible or actual criminal misconduct;
6. Consideration of the terms or conditions of a business transaction in the negotiation stage if the disclosure could adversely affect the economic interests of the condominium or homeowners association;
7. Complying with a specific constitutional, statutory, or judicially imposed requirement protecting particular proceedings or matters from public disclosure; or
8. Discussion of individual owner assessment accounts.
Generally, all meetings of a Board must be open for all members of the community to attend unless the meeting may be closed for any one of the limited purposes set forth above. A Board conducting business through e-mail is arguably equivalent to holding a closed meeting because non-Board members (i.e., the rest of the community) cannot listen to and/or contribute to the discussion as they could during an open meeting.
Ultimately, for the reasons more fully discussed below, it is our opinion that a Board may conduct business (i.e., discuss Association matters and/or hold a vote) via e-mail, but only if the meeting pertains to one of the eight limited topics that are permitted to be addressed in a closed meeting under the Acts. In other words, a Board is not permitted to conduct Association business via e-mail if the topic is required under the Acts to be discussed at an open meeting of a Board. In addition, all Board members must be given notice of the possibility of discussing closed meeting topics via e-mail, so that each Board member can then vote on whether or not to conduct such business via e-mail. Further, if a meeting is held in closed session via e-mail (or in person) and pursuant to the Acts, the minutes of the next Board meeting must include a statement of the time, place and purpose of the closed meeting, the record of the vote of each Board member, and the authority to hold the e-mail discussion/voting.
In forming our opinion on this topic, our office spoke directly with a supervisor at the Maryland Office of the Attorney General, which is the office that interprets and enforces the Acts. The supervisor confirmed our interpretation of the statutory law with respect to holding a closed meeting via e-mail. Moreover, the supervisor also confirmed our opinion that the open meeting laws and voting procedures set forth in the Acts supersede the general laws governing all corporations (e.g., Under Armour, McCormick & Company, etc.) in Maryland. The general corporate laws permit a corporate Board of Directors to act without a meeting but only if all Board members consent in writing to such action. However, under the Acts and all Associations' Declaration and By-Laws, which control the actions of a community association's Board, only a majority vote of the Board is required to take action on an item discussed during a closed meeting held via e-mail.
As noted above, there is no Maryland case law that directly addresses this issue. However, the Montgomery County Commission on Common Ownership Committee (the "MCCOC") has addressed this issue. The MCCOC is an administrative agency that adjudicates certain disputes between owners and community associations in Montgomery County. Similar to an action in a court of law, the MCCOC will render an opinion based upon the facts and arguments that are presented by the parties; however, unlike an appellate court, the MCCOC's opinion is binding only on the parties involved in the case. While the MCCOC's opinion might be persuasive for other future similar cases before the MCCOC or courts, the opinion is not binding.
That said, the MCCOC's opinion in a recent case before it supports our position on this issue. In the matter of McBeth v. Fountain Hills Community Association, et al., the MCCOC opined that a Board may vote via e-mail if the Board could have held the vote in a closed meeting pursuant to Section 11B-111 of the HOA Act. This is consistent with our interpretation of the law, as explained above. In addition, in the McBeth case, the MCCOC also explained the procedure a Board should follow prior to discussing any closed meeting topic via e-mail. Before taking any action on a closed meeting topic, the MCCOC recommended that the Board should first: 1) make a proposal on the record to hold a closed meeting, 2) state the statutory authority for closing the meeting, and 3) record the votes of each member of the Board agreeing to hold the meeting in closed session. In other words, the MCCOC recommends establishing the authority for closing the meeting before (or at the start of) the closed meeting. Although this procedure is not set forth in the Acts or otherwise required by law, we recommend that all Boards follow this procedure prior to holding the closed meeting or voting on any topic via e-mail.
Based on current law, we are advising our association client's that a Board may hold a closed meeting and vote via e-mail, but only if such meetings are limited to the topics which are authorized under the Acts to be the subject of a closed meeting. Moreover, given the MCCOC's guidance on this subject, we recommend that the Board, before taking any other action, vote to hold the meeting in closed session and record that vote in the e-mail correspondence. Lastly, the Board must follow the procedures established in the Acts, and include a statement of the time, place, and purpose of the closed meeting, the record of the vote of each Board member, and the authority by which the meeting was closed in the minutes of the next Board meeting.
All of this said, it is again our strong advice that Boards meet in person to conduct the affairs of the Association. Conducting Association business via e-mail should be the exception, reserved for only extreme situations when meeting in person is not possible.
Please do not hesitate to contact our office if you have any questions about whether a topic is appropriate for discussion in a closed meeting.
In the District of Columbia, DC Code Section 42-1903.03(4) provides that meetings of the executive board may be conducted or attended "by telephone conference or video conference or similar electronic means." If a meeting of the executive board is conducted by one of those methods, all members of the executive board in attendance must be able to hear and be heard by, and to communicate what is said by all other executive board members participating in the meeting.