How To Utilize”Executive Session” Board Meetings for Issues Relating to Contract Formation

It is common for state statutes and homeowners’ association governing documents to contain provisions that provide for the conducting of specified items of business in executive session board meetings that are not open to the association’s non-director members. Typically, one of the specified types of business that is permitted to be conducted in executive session is business relating to the formation of HOA contracts with third-parties.

State statutes and an association’s governing documents do not generally specify the reasons that business relating to the formation of HOA contracts with third-parties should be conducted in executive sessions or provide specifics on the extent of the contract making process that is to be conducted in the executive session board meetings. This lack of specificity in the language pertaining to the extent of the business relating to contract formation that should be covered in the executive session meetings can result in confusion on the part of an association’s directors as to how far they should go relative to the formation of a contract in the executive session meeting. Should the actual vote on the approval of the contract take place in executive session or in an open session of the directors’ meetings? What if there is dissatisfaction with a particular contract and a desire to terminate the contract— should discussion among the directors about the termination of a contract be conducted in executive session or in an open session meeting of the directors?

The business relating to the formation of contracts that should be conducted by an association’s directors in executive session typically includes such things as: