In this series of articles, we are analyzing the various changes that the affected associations will need to make to their policies, procedures, and, potentially, their governing documents by January 1, 2027, to comply with the new requirements of the Minnesota Common Interest Ownership Act (“MCIOA”) adopted in SF 1750.
MCIOA has always required that board meetings be open to the members, subject to certain limited exceptions, but up to now, that has meant that owners are allowed to observe the meeting but not necessarily participate in it. That makes sense, given that board meetings are for the purpose of allowing the board to conduct business and make decisions that do not require approval from the owners. Even so, most associations hold an open forum either before or after the regular board meeting to allow owners to bring ideas and concerns to the attention of the board. This helps both with transparency and ensuring that the board members are aware of issues that might need attention.
Starting January 1, 2027, there will be changes to how associations governed under MCIOA conduct open board meetings. Going forward, unit owners must be allowed to speak on any agenda item prior to the board taking action on any such item at a board meeting. The board can designate the time during which owners can speak on agenda items, so this could be during an open forum, provided that the forum is held before the meeting or before any vote is taken. The board may place a reasonable time limit on the time that a member is allowed to speak, and can also expel any member from a meeting if the member becomes disruptive during a meeting. The bill does provide that owners must make a good-faith attempt to notify the board in advance of the owner’s intent to speak on an agenda item at the meeting. It is unclear whether a board could deny an owner’s request to speak if the owner failed to notify the board in advance of their intent to speak, but in any case, owners cannot be prohibited from submitting a written comment to the board on an agenda item and cannot be fined for submitting a written comment or for exercising their right to speak as outlined above.
Along with providing owners an opportunity to speak on agenda items, MCIOA will now also require the board to make the meeting agenda and “contracts or other documents that the board intends to approve or disapprove at a board meeting available to unit owners in any reasonable manner, including but not limited to electronic mailing or posting on the association’s website.” This section does not actually require that the agenda or other documents be made available prior to the applicable board meeting, though that presumably was the intent. It would be hard to require an owner to notify the board in advance of a board meeting of their intent to speak on an agenda item if they do not have access to the agenda prior to the meeting. As such, boards should strive to make the agenda available sufficiently in advance of the board meeting.
The requirement to make contracts and other documents available to the members is a little concerning. While it does contain an exemption for documents related to items discussed at a closed meeting of the board, there are still open meeting documents that are typically not shared with the members prior to being voted on or approved. Many vendors feel that their bids and contracts contain proprietary information that they do not want shared with outside parties, particularly with their competitors. Requiring these to be provided before the board votes to approve a contract could result in damages to those vendors if a competitor gets the information and uses it to adjust their own bid accordingly. This could inhibit certain vendors from wanting to even bid on projects or conduct business with associations. This concern was expressed to and rejected by legislators, who were more concerned about transparency in the contracting process. Aside from contracts, though, this new statutory language will also require associations to make things such as architectural change requests and other draft documents or communications available to the members if the board intends to vote on approving or disapproving such requests or documents at a meeting. Boards may want to consult with their attorney about options for redacting some of these documents before making them available to the owners.
Finally, this same amended section indicates that associations are not required to issue notices or to keep minutes for a meeting between board members, or between one or more board members and officers, if the subject of the meeting is solely to discuss issues related to basic maintenance, or daily operations and management of the association, provided the meeting does not result in a vote or formal action of the board. While the intent here was presumably to provide clarity around what is or is not a board meeting, the result was the exact opposite. A board meeting requires that there be a quorum of the board present and communicating in a simultaneous manner, whether that is in person, by phone, or other remote communication. However, the new language seems to indicate that there could be a board meeting without a quorum of the board in attendance, which is confusing. Also, the statute does not define what constitutes “basic maintenance” or “daily operations and management of the association.” One could argue that every issue that a board deals with involves daily operations and management of the association. Further, if a quorum of the board is present at such a meeting and is discussing issues related to operations and management of the association, even if no vote is taken, that arguably should be done at a properly noticed open board meeting unless the issues involve matters for which the meeting can be closed. This new language appears to allow and even encourage boards to conduct all of their business in these secret, closed meetings and only have the formal vote at an open board meeting after the decisions have essentially been made, or, alternatively, to take action by written consent without any meeting, which defeats the requirement of having open board meetings and allowing members to comment before decisions are made. Obviously, best practice would be to promote transparency rather than secrecy, regardless of what the statute says. However, as often happens with legislation that is not thoroughly vetted or well drafted, there are likely to be unintended consequences resulting from these new requirements and changes, including a statutorily sanctioned decrease in transparency in how many boards currently operate and potentially an increase in disputes between associations and their members as a result.
If you have any questions about the legislation, compliance with the new statutory requirements, amending governing documents, or any other matter affecting your association, please feel free to contact the author.
Click here to read part one of this series.
Click here to read part two of this series.
