Archive for January, 2016

 

Transparency: The Shield against Conspiracy Theories

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Anyone that has been in the community association industry long enough has come across a situation where a board of directors is faced with an owner accusing the board of acting inappropriately and making decisions without the approval or knowledge of the membership.  In many cases, these issues arise from a lack of information or misinformation.   In the worst instances, this results in rumors being spread, accusations brought, and a division created between the Board and the community.

How do the best intentions of volunteer Board members end up being met with rumor and conflict?  Understanding that process and developing practices to counter it may require looking at the nature of conspiracy theories.

What are we up Against?

In 2013, Public Policy Polling did a national poll of American voters relating to 20 widespread conspiracy theories.   Below are some of the results:

Conspiracy Percent believing Number of Americans believing
JFK was killed by conspiracy 51 percent 160,096,160
New World Order controls global economy 28 percent 87,895,931
A UFO crashed at Roswell 21 percent 65,921,948
The government controls minds with TV 15 percent 47,087,106
Medical industry invents diseases 15 percent 47,087,106
CIA developed crack cocaine 14 percent 43,947,966
Fluoride is dangerous 9 percent 28,252,264
The moon landing was faked 7 percent 21,973,983
Airplane contrails are sinister chemicals 5 percent 15,695,702
Lizard people control politics 4 percent 12,556,562

 

Overall, at least 50% of all Americans believe in at least one conspiracy theory.   Given these numbers, it is no surprise that a community association has at least one or two members that may see shadows behind a board’s actions.

To address this issue, we need to understand what drives people to believe in and spread conspiracy theories.   University of Miami political science professors Joseph Uscinski and Joseph Parent in their book, “American Conspiracy Theories” define the four characteristics of a conspiracy theory as: “(1) a group (2) acting in secret (3) to alter institutions, usurp power, hide truth, or gain utility (4) at the expense of the common good.”[1]

For community associations, I believe that we can liberally translate this to:  (1) a board of directors; (2) acting without members present (3) to make decisions (4) that may result in increased assessments or other burdens on the members.  Boards generally do not try to operate in secret, but it is rare for owners to attend Board meetings.  How is it that the regular business of the Association may be creating conspiracy soup?

Uscinski and Parent may have some explanation:  “Researchers have found that inducing anxiety or loss of control triggers respondents to see nonexistent patterns and evoke conspiratorial explanations” and that in the real world “there is evidence that disasters (e.g., earthquakes) and other high-stress situations (e.g., job uncertainty) prompt people to concoct, embrace, and repeat conspiracy theories.”[2]

Boards of directors often face decisions relating to non-delegable duties that result in increased assessments, special assessments, fines or foreclosures.  These decisions, without adequate explanation and communication, can create stressful situations that lead members to create their own theories and to repeat them to their neighbors.

Operating with Transparency:  The Cure to Rumor and Conspiracy

Communication is the key to preventing and dispelling misinformation.   Boards need to operate with appropriate transparency to provide owners with important information and context for association actions.  This starts with holding meetings and keeping records as required by governing documents and state law, but it also may also include additional communication with members such as newsletters, social media and town-hall meetings.

Board meetings should be held regularly.   For homeowners associations, open meetings are required under the Homeowners Association Act.   The Condominium Act does not specifically require open meetings, but many associations’ governing documents do.   In any case, open meetings are generally a good idea to encourage participation in the good governance of a community.  Meeting minutes should be kept of all agenda items and board actions.  Although meeting minutes should not be a word-for-word transcription of everything said in a meeting, the minutes should reflect topics raised and actions taken.

Where a Board takes action without a meeting, it requires the unanimous written consent of the Board.  This should be reflected in a resolution in lieu of meeting.  A review of the minutes and resolutions should provide owners a complete summary of association actions.   In some cases, a majority of the directors agree via email and action is taken based on that agreement.  For volunteer directors that often hold full-time jobs, this may be a convenient way of addressing issues.   The problem with this approach is that the board action is not reflected in the records of the association.   Unless there is unanimous written consent, these decisions should be made at a board meeting.

Books and records of an association should be kept and made available for review according to the associations’ governing documents and the requirements of state law.   Generally, our state statutes require the books and records to contain the governing documents, meeting minutes, roster of members, and financial information of the association sufficient for a member, purchaser or lender to determine the financial health of the association.

What about Confidentiality? 

There is no doubt that there are some discussions, for example consultations with an association’s counsel, that may be appropriately kept confidential.   As one California Court of Appeals noted:

It is no secret that crowds cannot keep them. Unlike directors, the residents owed no fiduciary duties to one another and may have been willing to waive or breach the attorney-client privilege for reasons unrelated to the best interests of the association…`[o]ne can only imagine the sleepless nights an attorney and the Board of Directors may incur if privileged information is placed in the hands of hundreds of homeowners who may not all have the same goals in mind.[3]

Use of executive session for discussion of confidential matters is absolutely appropriate.  However, executive sessions should be conducted only when necessary.  Generally, a board may adjourn to executive session to discuss confidential matters outside of the presence of the members.  The board should make clear what the purpose of adjourning to executive session is, conduct any relevant discussion during executive session, then state the action to be taken in an open meeting and record that action in the minutes.   Appropriate matters for executive session include issues relating to:

  • Legal issues
  • Formation of contracts
  • Personnel issues
  • Disciplinary hearings
  • Privacy (including health and personal financial matters, such as considering a reasonable accommodation or a payment plan due to hardship)
  • Foreclosure

Voting may occur in executive session, but any board action must be reflected in the minutes.   Unless there is a reason to vote in executive session (such as voting for a litigation settlement), the board may wish to vote in the regular meeting session.  Where discussion is held in private, an explanation of why the members are not invited to participate may help them understand that the board’s reasoning is sound.

Increasing Communication

Particularly where facing an issue that may result in increased assessments, associations should take additional steps to include and inform the owners.  For example, when considering a large-scale repair project supported by a construction loan, it is often wise to hold a town-hall meeting and invite the association’s architect, contractor, and construction lender to address the membership to explain the process and to answer questions.   In litigation matters, community association lawyers frequently attend such meetings to field questions from members.     Newsletters, mailings, and updates on websites providing appropriate non-privileged information are also helpful in preventing and dispelling rumors.   Be sure to work with your counsel if you are providing information about litigation, as all of these communications are discoverable.

By acting with appropriate transparency, keeping good records, and increasing communication, associations can often avoid many of the rumors and conspiracy theories that managers and boards of directors face all too often.

And don’t forget your tinfoil hat.

 


[1] Uscinski, Joseph and Parent, Joseph, American Conspiracies, Oxford University Press, 2014.

[2] Id.

[3] Smith v. Laguna Sur Villas Community Assn. (2000) 79 Cal.App.4th 639, 642