HOA boards often make decisions behind closed doors. California should require they meet in public

Guest Commentary written by

William Fulton

William Fulton is a professor of practice at UC San Diego and a condo owner. He is a former mayor of Ventura.

Like millions of other Californians, I live in a community governed by a homeowners association. In my case the HOA operates a tall condo building in downtown San Diego. 

My wife and I pay a lot every month in assessments, and we get a lot in return: 24-hour concierge service, beautiful common areas, two full-time engineers who keep the building running, janitorial service and more.

But we don’t really know what our HOA board does. We don’t know how they build our budget, why they enter into contracts or how they make many other decisions that affect our financial investment in our building.

Our board meets almost exclusively in closed session, communicates with us mostly via email, delivers a budget to us with an increased assessment each year without much explanation and provides information mostly through carefully curated “town halls,” rather than real board meetings.

That’s because the Davis-Stirling Act, the state law that governs homeowner associations, doesn’t require more. The law is so loose when it comes to transparency that if our HOA is sued — or sues somebody else — the board is under no obligation even to reveal this information to us.

When you talk to HOA board members around the state, they emphasize that they are volunteers serving on a nonprofit board, which is factually true.

But what’s also true is HOAs have become another form of local government. They provide services that cities and counties can’t. 

It’s about time the Legislature forces HOA boards to shine a light on what they are doing.

This year, a significant bill on HOA transparency almost got through. Assembly Bill 1184, by Assemblymember Joe Patterson, a Rocklin Republican, would have required HOA boards to reveal far more information to homeowners — for example, revealing the lawsuits the board discusses in closed session.

Patterson’s bill died on the last day of the session. 

The Legislature should pass the bill next year and go even further by requiring that HOA boards make far more information available to members.

In theory, Davis-Stirling is patterned after the Brown Act, the state’s open meetings law for cities and counties. Davis-Stirling limits the topics that can be discussed in closed session to things like litigation, personnel and what the law calls the “formation” of contracts.

But there’s little enforcement because no HOA member wants to sue an organization they belong to. 

That’s why in practice, HOA boards are far more opaque than cities and counties. They often discuss practically everything in closed session, frequently using the “formation of contracts” loophole to talk about things covered by HOA contracts. And most HOAs contract with third parties to do practically everything.

HOAs are under no obligation to even inform the people paying dues about pending litigation. 

Although homeowners may legally obtain contracts and other documents related to an HOA’s activities, the organization only needs to provide it in response to an individual’s request. 

For example, I recently learned our HOA manager had been providing contract information to a few people who asked for it, instead of putting the contracts on the building’s internal web site. Only after pressure from a number of residents were the contracts made available to everybody.

In short, the Davis-Stirling Act is set up to protect HOA boards when dealing with the property owners they serve. That perverts the whole purpose of the law and makes it nearly impossible for rank-and-file HOA members to know what’s going on with the organization they are investing their money in.

The Legislature needs to finally acknowledge that HOAs are, in effect, a form of local government and to hold HOA boards to the same transparency requirements as cities and counties. If Patterson brings back AB 1184 next year, legislators must wave it through.