JaliscoCondosOrg Blog

Tag: board meeting

  • Boards Must Hold Open Meetings

    In the “Jalisco Condo Manual,” I say that all board meetings must be open, and that owners must be allowed to come.

    So… where is this in the state condo law?

    If you’re looking for a specific article in the Condo Law that directly says this, you’ll be disappointed. It’s one of those things that are derived from other requirements in the legislation. We’ll go over these in this article.

    The other related issue I want to bring up is that of transparency.

    What does the condo Board do?

    While this might seem obvious, I’m convinced that many people don’t understand this. Unfortunately, some of them are on condo Boards.

    The Board is elected each year for a one-year term by the owners. This happens at the Annual Ordinary Assembly. The Board should be given powers of representation by this assembly – this gives them the ability to act for the condo in legal and administrative matters beyond the condo’s walls.

    In simple terms, the Board is responsible, with the Administrator, for looking after the ongoing repair and maintenance of the common property, and carrying out any directives given by the owners at an assembly.

    The state condo law says that the Board must: act for the owners in matters of their common interest; make sure that the Administrator complies with his/her obligations; meet at least once a month to examine the state of the condo accounts and their proper entry into the financial records of the condo; and fulfil their obligations together with the Administrator under observance by the owners.

    The Board can also have other duties and abilities that are defined in the condo By-laws. However, these must be additional to, and cannot contradict or remove, the duties and authorities given by the state condo law (or any other higher laws).

    Why must board meetings be open?

    The state condo law clearly says that the Board must work with the Administrator to carry out their obligations under observance by the owners.

    Since the only forum in which the administration discusses condo issues and makes decisions about them is the board meeting, it’s rather hard to imagine how this requirement can be met with closed board meetings!

    Given this, it also stands to reason that owners must be given adequate notice of the time and place, along with an invitation to be there. While it’s possible that no owners will show up, they must be given the opportunity to do so. If not, they’re being deprived of their legal right to oversight.

    Condo records are the owners’ property

    Some secretive, non-transparent Boards seem to also want to prevent owners from inspecting the records of the condo. In my opinion, they cannot do this.

    The state condo law calls for a minimum of three specific kinds of records to be kept as part of the condo’s permanent records: minutes of all assemblies, with attachments; minutes of all board meetings, with attachments (financial and other reports, quotes, letters, emails, and all other documents presented or discussed at the meeting); and financial records of all income and expenses. By law, these financial records must be up to date within 15 days after the latest expense has been paid.

    These records are the property of the condo, and not the Board or the Administrator. Both the Board and the Administrator are transient (they each serve a one-year term), and the Administrator must turn over all condo records in his/her possession to their successor.

    As condo property, the records are the property of the owners (since the condo cannot own anything). Owners cannot be denied access to property they co-own.

    What’s transparency?

    Although not yet reflected in the condo law, transparency is the cornerstone of modern administrative practice.

    In Mexico, recent legislation has imposed an impressive transparency model on both the federal government and non-profits. State governments are rapidly following this lead, and at least one municipality (Tlajamulco) has passed ground-breaking transparency legislation.

    Although governments are taking the lead with this, a move towards greater or full transparency should be the goal of every administrative body (such as a condo board).

    The ideal of transparency is that all decisions to be taken by an administrative body must be placed under scrutiny by its stakeholders, and in the widest possible sense. A condo board is an ideal candidate for this goal, since it’s much more similar to a municipal government than to a corporate body.

    Great! However, understanding transparency is much easier than carrying it out. Many administrative bodies have fallen into set routines, even if they are against the law.

    To some, the appeal of a culture of administrative secrecy is high. Especially to those personalities who enjoy exercising power and control.

    Laziness is also a significant element. It takes more effort to make sure that the rationale for decisions is recorded, that supporting documents exist in the records, and that everyone has access to this data.

    In the 21st century, no one disputes that transparency is essential to modern democracy (yes, a condo is a democracy). Unfortunately, many people only fully support transparent practices up until they have to follow them.

    All this is especially true of condo boards. This status quo is a very difficult thing to change. The administrative culture in many condos directly contradicts the concepts of transparency.

    Building transparency for owner oversight

    Since the goal of all condo boards should be to administer their condo in a transparent way (owners should be very concerned if this is not the case!), there are steps a Board can take to go beyond the bare necessity of giving owners oversight.

    For example, a Board should include an Agenda for each board meeting with the meeting notice sent to the owners. Following good practice for effective meetings, an Agenda should have been prepared before the meeting for the board members anyway (so that they can prepare for the meeting). It’s just a matter of distributing it more widely.

    This also gives the owners an opportunity to have items put on the Agenda for discussion by the Board. Many Boards forget that they’re elected by the owners to represent their common interests. The Board cannot ignore valid concerns of owners.

    It’s also a good idea to send out a draft of the board meeting minutes to the owners (by email, or posted on the condo web site) as soon as possible after the meeting. These should include all attachments, just as they will be entered in the condo records.

    This lets those owners who couldn’t be there (especially those who were out of the country) know what was discussed at the board meeting, and what decisions were made. Apart from increasing transparency, this also guarantees that oversight by the owners, as required by law, is possible for those who could not physically be at the board meeting.

    The state condo law requires the Board to meet at least once a month to receive the Administrator’s monthly financial report, and to verify the state of the condo’s accounts and their correct entry into the condo’s financial records.

    Beyond being a legal requirement, this is an excellent and necessary management tool so that the Board can monitor the actual expenses of the condo vs. the budget approved by the owners. If condo finances start going wrong, this trend can be identified, and corrective measures taken, before it gets out of hand.

    This financial report must be attached to the minutes of the monthly meeting in which it was presented, both for the permanent condo records and the owners inspection (that pesky oversight again!).

    While the condo law only says that the quarterly financial report must be made available to any owner who requests it, I recommend that these reports should also be automatically sent to owners either by email or posting it on the condo web site. This extra step is proactive, and goes towards achieving the goal of transparency. Besides, the financial report shows how the Board is managing the owner’s money, and there certainly should be nothing to hide!

    Summary

    By law, the board and Administrator must carry out their duties under the observance of the owners. Condo records, of which board meeting minutes and financial reports are a part, are the owners’ property, and owners cannot be prevented from accessing them.

    In my opinion, this means, at a minimum, holding open and announced board meetings, and making the minutes of these meetings available to the owners.

    I also strongly believe in going further than this minimum to create an administration that is as open and transparent as possible. This costs nothing, increases the sense of community (which a condo is!), and contributes to a feeling of inclusiveness by the owners. That should be what everyone in the community wants.

    WARNING: Rant Ahead!

    This next bit is a bit harsh. However, this is something I feel strongly about…

    In my opinion, we all must question the motives of those who want to run a community by a secretive body, with closed meetings and little or no owner oversight. If this happens, it isn’t at all unreasonable for owners to wonder, “What are they hiding?”

    I feel that this practice not only goes against the intent of the law, but creates an unhealthy and adversarial relationship between the Board and the owners whom it serves.

    I know of no rational reason to leave owners out of the process of administering their own property. Nor can I imagine any legitimate business operation or process associated with the management of a condo that should be hidden from the owners. Certainly, I’ve yet to hear any reason for this behaviour that makes sense.

  • How to Satisfy the Legal Requirement of a Minute Book for Board Minutes

    Why do you need to keep board minutes?

    Your condo is required by Article 1012 of the Civil Code to keep minutes of every council (board) meeting, along with their attachments. These minutes are an important part of your condo’s records that:

    • are a permanent and legal record of the proceedings of each board meeting;
    • record the decisions made by the Board, how they were made, and any resulting actions taken by them;
    • clarify what happened at a meeting for those who weren’t there;
    • document actions that are required to fulfil the board’s legal duties;
    • help orient new board members and owners to past issues facing the condo; and
    • are a useful management tool for evaluating the work of the Board.

    Legally, minutes can be inspected by owners, and used in court as evidence. As legally required official records, courts can consider the contents of board minutes when deciding a lawsuit.

    Minutes can be used to prove that board members fulfilled their legal obligations (such as meeting once a month), and have carried out their duty of care to the condo. A condo Board’s duty of care to the owners has at its core: active, informed, conscientious, inquiring, and impartial service. Therefore, board minutes can show that a board or committee took reasonable steps to be informed, and to carefully consider relevant issues before making a decision.

    What form must your board minutes be in?

    This article of the condo law also says that board minutes must be kept in a bound minute book signed on its first page by the municipal government. Such books are readily available at papelerías (stationery stores), and are designed to have hand-written entries (although this isn’t a requirement of the law).

    While this might seem odd, it’s not at all unusual. Some regional legislation north of the border calls for similar practices in association and corporate statutes.

    The intent of this requirement is simple: minute books have bound pages as a reliable way to prevent tampering (such as changing the minutes after they’ve been approved).

    In the 21st century, there are disadvantages to this requirement:

    • most people today prefer to use a notebook or tablet, and not to hand write anything;
    • it’s impossible to circulate DRAFT minutes to the meeting participants for review and comment; and
    • hand-written minutes are often not legible, and can’t be reproduced easily or well.

    Electronic devices are excellent and efficient tools for minute taking because they make editing, copying, and sharing of the minutes easy. How, then, can we reconcile modern technology with the aims of the condo law?

    While minutes could be taken electronically, edited, circulated in DRAFT, and sent to owners (or posted on a web site), and then transcribed by hand into a bound book, this is rather tedious and prone to errors.

    Adopt a sequential numbering system

    One of the main goals of this legislation is to prevent tampering by removing or adding pages. Adopting a sequential numbering system for your board minutes goes a long way towards meeting this need.

    In this system:

    1. Each board meeting is given a number, and this is included in the title at the top of the first page of the minutes. For example, “Minutes of the 29th Board Meeting of Condominio Vista del Basurero.” By doing this, no meetings can be erased from history, and no extra meetings can be added.
    2. Each page of a set of minutes is numbered sequentially in the footer. Add the meeting number to this page number as a prefix. For example, the pages of the minutes in the point above would be in the form: “29-1, 29-2, 29-3, 29-4…” As further security against tampering, add the page count to each page, such as: “29-3 (of 6).”
    3. The heading for each item of business in the body of the minutes is also sequentially numbered. These item numbers also include the meeting number as a prefix. For example, “29.3 Adoption of the Agenda;  29.4 Approval of Minutes of the Last Meeting;  29.5 Administrator’s Report…”

    With this system, each set of minutes starts with the title (containing the meeting number) and ends at the signature block. Each page and each item of business is sequentially numbered in a way that uniquely ties it to this one set of minutes. This makes it difficult for someone to tamper with the minutes. Further a collection of these sets of minutes (such as, a given year) is also sequentially numbered and difficult to tamper with.

    Have the approved minutes double signed

    When an approved set of minutes is printed to be archived in the condo records, have it signed by both the Chair and the Secretary of the meeting in the signature block on the last page. This must include the date they signed the minutes. Further, they must both sign each of the other pages in the margin.

    This is standard practice in Mexico for legal documents, and makes it difficult for anyone to put in an altered page.

    How do you meet the minute book requirement with computer-generated board minutes?

    There are two possibilities:

    1. glue the printed minutes (and all pages of the attachments) into sequential pages of a bound minute book; or
    2. keep them in a loose-leaf binder during the year, and have them bound at the end of each year (or periodically during the year).

    Gluing the pages into a minute book most closely satisfies the spirit and intent of the law.

    Keeping them in a loose-leaf binder can be a dangerous choice, because anyone can just take out a page and put another in its place. For this reason, it’s vital that you adopt the numbering and signing systems I’ve mentioned above.

    If you choose this route, I also strongly recommend that the binder be a temporary repository only for the current year (or part of it). At the end of the fiscal year, have the year’s minutes bound into a single volume. During the year, the loose-leaf minute binder must be properly secured on the condo property, and not accessible to anyone but board members. The requirements of owner access can be satisfied by making electronic copies available by email or on the condo website.

    Book binding services are usually available in most cities from business printers. Look in the Sección Amarilla (Yellow Pages) under “Imprentas y Encuadernaciones” (Printers and Book Binders). Since notarios regularly have their protocol books bound, you could ask your notario to recommend a company.

    Make sure that the binding method you choose is permanent. Spiral or cirlock bindings (where pages can be removed) are not acceptable. If your minutes have a lot of attachments, and an entire year would be too thick, bind them into six-month, four-month, or three-month groups, as needed.

    Whether you glue them into a bound minute book, or have them bound on an annual basis, don’t forget to include the attachments (financial and other reports, quotes, emails). Have the book signed by the municipal government. These two things are required by law.

    Avoid the minute book requirement by having board minutes certified by a notario

    This article of the Civil Code also says that if you cannot enter the minutes into a bound minute book for any reason (being impractical is a reason), then, for these minutes to be valid, they must be protocolised by a notario having residence in your jurisdiction.

    This means that you can take the final printout of your minutes to a notario and have him protocolise them. You’ll then have a stamped and signed official copy, and the original will be bound into the notario’s protocol book.

    If you adopt this route, then you need to budget several hundred pesos per month to protocolise your monthly board minutes.

    Also be aware that if your minutes are in English, the notario might insist on translating them before protocolising them. This should not be strictly necessary, because you won’t be publicly registering them.

    Alternatively, you could have the notario certify a printed and signed copy of the minutes. He’ll stamp and counter-sign each page, and attach a certificate. I don’t know if this satisfies the Civil Code requirement for “protocolisation.” Ask your notario.

    What happens if your condo doesn’t comply?

    Let’s say you don’t do any of these things. You just keep unbound printouts of your board meetings in your records. Are the Condo Police going to raid your office, and cart the Administrator off to jail?

    No. You can probably get away with this for years, with no apparent problems.

    However, if you get involved in a lawsuit where you need to rely on the board minutes to prove your side of the issue, you’ll find them inadmissible, and you won’t be able to use them to support your legal argument. Further, the fact that you’ve kept improper records might cause the court to find against you.

    Retention of board minutes

    These binders and minute books are part of the condo’s legally required records, along with the assembly minutes and the financial reports. They’re the historical record of the condo, and must be securely stored and not destroyed. They must also be accessible to any owner who wants to see them.

    In my opinion, minutes kept only in the form of electronic documents do not meet the requirements of the condo law. As well, electronic storage does not guarantee long-term preservation of your records because of changes in technology (a word processor ten years from now might not be able to read today’s files) and the degeneration of the computer media (hard drives fail, and CDs and DVDs can lose their data over time).

  • Conferencing in Meetings and Assemblies

    In the past week or so I’ve received similar questions from different book owners. They were interested in knowing whether it’s proper for a board member to take part in a condo board meeting by videoconference technology (such as Skype).

    If you have board members who are snow birds, or if you have board members who are on vacation (and are dedicated), electronic participation at board and committee meetings can be a useful tool to hold meetings if those physically present wouldn’t form a quorum. Apart from quorum, it also lets these absentees express their views on topics that are important to them. It’s a great enhancement to democracy.

    What does the law say about board meetings?

    The portion of the state civil code that deals with the condo law is silent on how board and committee meetings are to be carried out. There’s nothing I can find in the rest of the civil code to prevent electronic participation, so unless someone can come up some other law that forbids this, I see no reason why you can’t (even more reasons why I think you can a bit later).

    Because of this silence of the laws, it’s probably wise to put any important procedures such as this into your by-laws. You’ll want to cover such things as quorum, rules of order, and electronic participation.

    What about Robert’s Rules?

    Since the civil code appears to be silent, what about the main North American authority on meetings: Robert’s Rules of Order.

    The latest edition of Robert’s Rules accepts the 21st century, and allows modern technology in meetings. Their main requirement is that whatever technology is used, must let everyone taking part hear each other at the same time and, in the case of a videoconference, see each other as well. They say that simultaneous communication amongst all participants is “central to the deliberative character of a meeting.” It recognizes both videoconferencing and teleconferencing technologies, but recommends their use be included in the organization’s by-laws.

    However, they warn that although e-mail or fax are fine for issuing calls for meetings, or for voting by ballot, these technologies, unlike conferencing, aren’t suitable for carrying out the business of a meeting because of the lack of real-time interaction amongst all participants.

    As far as electronic participation is concerned, your by-laws should say, at a minimum:

    • members can attend in person, by teleconference, by video conference, or any other method that allows simultaneous communication amongst all participants;
    • electronic participation counts towards quorum; and
    • electronic participants can vote.

    What’s the general acceptance in Mexico of this technology?

    In 2005, UNCITRAL (United Nations Commission on International Trade Law) has been encouraging countries to incorporate electronic signatures and electronic mediums into their laws. Since 2006 or so, Mexico has been embracing a world trend in letting conference technology be used in meetings. It’s important to note that any international agreements signed by Mexico have the same weight as Federal Law.

    Apart from major corporations who routinely use this technology for meetings, I’ve looked at the laws governing two federal departments (chosen at random). Both the Consejo Nacional de Ciencia y Tecnologia (National Council of Science and Technology) and the Consejo Nacional de Evaluacion de la Politica de Desarrollo Social (National Council for Evaluation of Social Development Policy) allow videoconferencing technology. Here’s an excerpt from the statutes regulating the last of these two councils (Article 22.- Attendance):

    In special cases, members of the Executive Board will be able to attend the ordinary and extraordinary sessions of the Executive Board in a virtual way, through videoconference or other similar medium that lets them analyse, suggest, and discuss in real time the business of the session and the choices for the solution of problems.

    Further, there are significant changes being made to the legal system by Federal legislation to let videoconferencing technology be used in courts. This is particularly true of those courts that deal with business and commercial disputes. For example, the Tribunal Federal de Justicia Fiscal y Administrativa (Federal Court of Fiscal and Administrative Justice) has allowed videoconference testimony since at least 2009.

    The 2012 version of the Código De Comercio (the federal Code of Commercial Law) lets videoconference testimony be used in judicial hearings for matters falling under this code’s jurisdiction.

    If it’s acceptable to the federal government, I don’t see why your condo can’t do it.

    What about condo assemblies?

    Since use of this technology appears to be possible for board and committee meetings, what about a condo assembly?

    Again, the condo law is silent. In Jalisco. Interestingly, the condo law in the state of Quintana Roo specifically lets participation in a condo assembly take place by videoconference. Their condo law says that for voting in an assembly, electronic voting and communications can be used for owners who aren’t present.

    For a large condo with a high number of absentees, the technical issues could be overwhelming, but there doesn’t appear to be a legal impediment. In such a case, this might be impractical at the present time, but a few years in the future…

    Personally, I’d rather attend a meeting or an assembly by conferencing than by proxy. Why would you allow one and not the other? What’s the difference in concept, apart from the technology and the superior ability to take part in the discussions with conferencing?

    This last section about assemblies is bound to be a bit controversial, so let’s hear your thoughts…