Oregon homeowners associations and condominium unit owners associations are subject to open meetings laws. The laws are found in ORS 94.640 for planned communities, and ORS 100.420 for condominiums. However, each of those statutes was amended by the legislature in 2021 by the adoption of Senate Bill 329. The rules for Oregon planned communities and condominiums are essentially identical. But, directors frequently have questions about the scope of open meetings laws and the potential liability for violating them.
The basic rule is that all meetings of the Board of Directors are open to attendance by owners of lots or units, with some stated exceptions. This blog post will first look closely at the basic rule, and then discuss the exceptions. Finally, there will be some discussion of the consequences for violating the laws.
The first thing to note about the open meetings rule is that it applies to board meetings. It does not apply to committee meetings. So, even if an association’s governing documents create a formal Architectural Committee, or if there are other committees formed by the Board, the meetings of those committees may be conducted in private.
A second important point is that the rule requires that owners be allowed to attend. It does not require that owners be allowed to participate. This had been the common interpretation of ORS 94.640 and ORS 100.420 even prior to adoption of SB 329. But, SB 329 made this clear by inserting into each statute the statement that “[a]n owner does not have any right to participate in a meeting except as may be provided by the governing documents or by the board.” Many associations have owner-input sessions, or owner forums, as part of their regular Board meetings. These sessions are usually considered best practice, but they are not required by law (which is in contrast to several other states that require owner input sessions by statute). Therefore, if the Board determines it is advisable to have an owner input session, such owner input is subject to any reasonable rules that the Board decides to impose.
The open meetings rule applies to “all meetings of the Board of Directors.” The statutes clarify that “‘meeting’ means a convening of a quorum of members of the Board of Directors at which association business is discussed.” Directors frequently ask whether the open meetings rules apply if no decisions are going to be made or no votes are to be taken. The answer is yes. Any time a quorum of directors gets together and discusses association business, regardless of whether a vote is taken, that is a meeting which must be noticed to the members and open for observation.
Another common question is whether the open meetings rule applies to committee meetings if the committee is made up of directors. Often, governing documents authorize a Board to carry out the functions of an Architectural Committee. So, for example, perhaps there is a Board of three directors, and all three directors also serve on the Architectural Committee. If those three individuals meet solely for the purpose of carrying out Architectural Committee matters, may that be done in private? The answer is no. Even though the meeting is ostensibly a committee meeting, it is also a board meeting for purposes of the open meetings rules.
The statutes make this point clear by including the following provision: “The meeting and notice requirements in this section may not be circumvented by chance or social meetings or by any other means.” Again, the definition of meeting is “a convening of a quorum of members of the Board of Directors at which association business is discussed.” Architectural Committee business is association business. Just because the directors are wearing two hats—Director hats and Architectural Committee hats—it does not permit a quorum of directors to convene and discuss association business in private. In short, although directors may in some cases wear two hats, they cannot take off their director hat. For purposes of the open meetings rules,
directors are always directors, regardless of whether they may simultaneously be serving in some other function.
However, there are some exceptions written into the statute. The first exception to note is that a convening of a quorum of directors for the purpose of participating in litigation, mediation, or arbitration proceedings is not a board meeting. It would be onerous, and frankly untenable, to give owners a right to observe these types of activities.
The second exception is for executive sessions. The Board may close a meeting and meet in executive session for a few specific purposes. Those purposes are:
(A) Consult with legal counsel;
(B) Consider the following:
(i) Personnel matters, including salary negotiations and employee discipline; (ii) Negotiation of contracts with third parties; or
(iii) Collection of unpaid assessments.
It is important to note that the Board may not simply have an executive session without noticing the owners. The Board may “close the meeting” to move into executive session. “[T]he board may not meet in executive session unless voted for by the board in an open meeting and the presiding officer of the board states the general nature of the action to be considered, as precisely as possible, when and under what circumstances the deliberations can be disclosed to owners. The statement, motion or decision to meet in executive session must be included in the minutes of the meeting.”
A common question is whether hearings for violations of covenants or rules may be conducted in executive session. The answer, unfortunately, is no. Although violations hearings are often awkward and involve information specific to one lot or unit owner, the statute simply does not create an exception for these types of hearings. If such hearings include a quorum of directors, then they are meetings of the Board, and they must be open.
Finally, what are the consequences of violating the open meetings rules? ORS 94.640 and ORS 100.420, as amended by SB 329, do not contain any specific penalty for violating the open meetings rules. However, the wording of the statutes provides a clue. Each statute states that “all meetings of the Board of Directors are open to [owners].” It does not say that the Board must hold open meetings. The distinction is, if a meeting is not noticed or open, then it is arguably not a legal meeting. Therefore, any decisions made or votes taken at a private meeting are void and subject to challenge in a court of law.
Additionally, under ORS 94.780 and ORS 100.470, owners have a right to bring an action in court to enforce compliance with the relevant statute, and if that owner prevails, they will have their reasonable attorney fees paid for by the association. While this is unlikely to matter in the case of one or two inadvertent private meetings, if a Board has a regular practice of circumventing the open meetings rules, an owner would likely be able to obtain an injunction— a court order—requiring the Board to comply with the law.
The consequences of violating the open meetings laws may not be severe, but they do matter. Open meetings are the law, and they are best practice as well. Boards should take care to understand the open meetings rules and abide by them.