THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, October 5, 1996 TAG: 9610030280
SECTION: REAL ESTATE WEEKLY PAGE: 24 EDITION: FINAL
COLUMN: Common Ground
SOURCE: G. Robert Kirkland and Michael A. Inman
LENGTH: 78 lines
From time to time we have problem with one of our board members. He tends to take rumor and gossip as the absolute truth.
If he hears that the management company didn't properly supervise a project or a contractor, he assumes it's true and acts accordingly without investigation. He usually ends up making inaccurate statements about the president or the manager. He is only interested in his own agenda.
Regardless of the facts, if we don't agree with him, then we have a battle. How can we resolve his problem? It is keeping the board from getting some important projects done.
One of he most difficult forces to combat is that of the twins, Rumor and Gossip. It is standard procedure for most boards to gather the facts first, then make decisions. When a board member disregards this simple rule, he is breaching his fiduciary responsibility to the community and to the individual owners.
Most directors are familiar with the issue of libel and slander as it applies to the board. For those who aren't familiar with the guidelines, it is simple.
Do not say anything in the board meeting or as a director that would insult or impugn the reputation of any person in the community, unless it is true and the statement is necessary to the business at hand.
Where discussions of individual problems are necessary, these should be handled with as much care as possible so as not to make unnecessary statements about a person that are negative in nature. Only discuss items of this nature in open board or committee meetings when absolutely sure have you have the facts correct.
There is a certain level of privilege in making statements in the context of a board meeting, but it is easy to cross the line and risk being liable. Similar barriers are placed on directors when dealing with rumor and gossip.
The board must be absolutely sure that the information is correct before using that information in making decisions. Failure to do that may constitute a breach of fiduciary duty and cause the board to make a costly and incorrect decision.
There are three ways to handle this problem.
One, the chair should rule persons who are repeating unfounded rumors out of order and not allow them to continue. The chair must make it absolutely clear that this type of speechmaking is not acceptable to the community or the board.
Two, make sure that the minutes of your meeting only reflect the actions taken at the meeting and not all the discussions. We see too many ``verbatim'' minutes that just go on and on for pages.
The only items that are absolutely required to be contained in the official minutes of an association are the agenda items and the action on them. For example the minutes on a motion might ready simply:
``Motion to adopt the 1997 Budget as presented made by Mrs. Smith, seconded by Mr. Jones. All present voted yes. Motion carried.''
The only time that the complete discussion or comments are included is when a member of the board or the chair specifically requests that it be placed in the minutes.
Associations that record and transcribe their minutes should limit the minutes as described above and erase the tape after transcribing. The tape otherwise will constitute a record of the association and be available to all members.
Third, it is important that the director in question be told what the rules are. Make sure that he understands before the fact that he will be cut off and that the board will not take any action without the facts.
Since all directors are elected by the owners, only owners can remove the director. If the problem continues and becomes chronic, approach the director and suggest that it might be in everyone's best interest for him either to resign or not to run for reelection. MEMO: G. Robert Kirkland, president of a Virginia Beach property
management consulting firm, and attorney Michael A. Inman specialize in
Virginia community association issues and are affiliated with the
Southeastern Virginia chapter of the Community Associations Institute.
Send comments and questions to them at 2622 Southern Blvd., Virginia
Beach, Va. 23452. To submit questions by phone, call 486-7265; by fax:
431-0410; by E-mail, grkirkland(AT)aol.com by CNB