Can Email Exchanges Constitute Valid Action By HOA Board?

This case involved a dispute between a homeowners’ association (“Association”) and a developer, who owned two lots that it planned to develop (“Owner”), over efforts by Association’s board of directors (“Board”) to regulate new construction in the development.

In April of 2013, over a period of two days, Association’s five board members exchanged a series of email correspondence in which the Board discussed: (i) whether to exercise a right of first refusal to purchase Owner’s properties; and (ii) the adoption of a rule limiting construction of new residences to homes that are no larger than 2,500 square feet, with no more than 5 bedrooms and 3 bathrooms (“2,500 Square Foot Rule”). Through the exchange of emails over the two-day period, the Board purported to have adopted the 2,500 Square Foot Rule as an amendment to Association’s bylaws. On May 2, 2013, the Board sent notification to Association members of the Board’s adoption of the 2,500 Square Foot Rule. Subsequent to this action by the Board, Owner submitted applications to contract homes on its two lots that were in excess of 2,500 square feet. Both of said applications were denied by Association’s Board because the planned homes violated the 2,500 Square Foot Rule.

On January 24, 2014, Owner filed an action for declaratory relief against Association challenging the denial of its applications. The trial court initially rendered a decision in favor of Association after concluding that the 2,500 Square Foot Rule was validly adopted by action of the Board through the directors’ email exchanges. A motion by Owner for challenging the decision was granted and the trial court reversed its initial findings in favor of Association, and instead found in favor of Owner. In the revised decision, the court found that the series of email correspondence was not a meeting of the Board and any action purportedly taken as a result of the email correspondence did not constitute valid action of the Board. Accordingly, the court ruled: