Recently, our management office surveyed all of the communities that we manage in order to determine whether or not each board is comprised of the appropriate number of directors as required by the bylaws. We learned that, while most were compliant with the bylaws, some had either too many or too few directors.
Why Is This Important?
This may seem like an insignificant issue; however, when considering the ramifications for non-compliance, the number of directors becomes of great importance. Should issues arise regarding decisions made by boards of directors, questions often surface about the validity of the board. Attorneys quickly, and in some cases, easily, raise the argument that decisions made by the board were invalid because the association failed to follow its bylaws with respect not only to the number of board members, but perhaps also as to whether the board was properly elected, or if term and other requirements were met.
High Price for Non-Compliance
Homeowner association board members could potentially pay a high price for failing to maintain a duly elected board of directors comprised of the appropriate number of members. In a recent lawsuit, actions of a board were deemed invalid by the court because the board failed to obtain a quorum for a membership meeting, which meant that the board was not duly elected and did not conform to the number of directors required by the bylaws. The association was ordered to pay the homeowner a significant amount in damages and legal fees.
Too Many or Too Few
In some instances, associations are unable to recruit the number of directors required, while other associations are faced with the dilemma of having too many volunteers. Having too few directors is typically easier to remedy because, in most cases, vacancies caused by resignations are easily filled by appointment. Typically, there is a provision in the bylaws that gives the remaining directors the authority to appoint directors to fill vacant positions on the board; however, in some cases, the replacements must be elected by the membership at large.
Elections Should Follow By-Laws
In an attempt to accommodate all of those who volunteer to serve on the board, association members sometimes vote all of the volunteers into office. Association leaders must intervene should this happen in their association, to lead the members to a solution that is in keeping with the requirements of the bylaws. Some solutions include amending the bylaws to increase the number of directors or holding a special meeting to re-elect the appropriate number of board members to satisfy the bylaw requirements. To ensure continued compliance, the association leaders should utilize provisions in the bylaws that address the nominating committee and other election procedures.
Difference Between Directors and Officers
Often, volunteers are confused about election of the directors versus the officers. Typically, the membership elects the directors and those directors elect officers, who may be one in the same or different. For example, some bylaws provide that the officers are not required to be directors. That being the case, the officers would not be able to vote on board motions. Only duly elected directors should make, second and adopt motions.
Below are some tips to ensure compliance with board member number requirements:
- Become familiar with the bylaws that govern your association.
- Consult your association attorney when in doubt about ambiguous language.
- Default to the covenants or articles of incorporation for additional guidance if the bylaws do not address the issue.
- Keep accurate and complete minutes of association and board meetings.
- Make sure that a quorum is present when electing directors.
- Maintain a board roster with election and term dates for each director.
More information can be found here: Complete Toolkit for Boards.
Source: Association Times