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Subject: what is the quorum
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Author Messages
LindaB20
(New York)

Posts:23


11/25/2018 4:19 PM  
Our by-laws states we should have nine members on the Board of Directors. It further states that the quorum is five. We did not have enough homeowners to run and win a seat on the board so, we have six Board Members. is the quorum still five?
AugustinD


Posts:1208


11/25/2018 6:35 PM  
I think a court would rule that a quorum here is four (a simple majority). Given that the apathy is so bad that the HOA cannot even fill the nine directors' seats, it seems unlikely that anyone would challenge a board meeting with only four (albeit a majority) of directors present.
KerryL1
(California)

Posts:5950


11/25/2018 7:03 PM  
Augustine's approach makes sense to me. Is there a debate going on about this, Linda? Is a 9-member board required because your HOA is really large? We often see a board needing to have a range of, say, 5-9 members. I just can't think of a time when I've seen 9 required in an HOA's bylaws.

Might be much more common that we see here, though.
EdC5
(Florida)

Posts:63


11/26/2018 5:19 AM  
Posted By KerryL1 on 11/25/2018 7:03 PM
Augustine's approach makes sense to me. Is there a debate going on about this, Linda? Is a 9-member board required because your HOA is really large? We often see a board needing to have a range of, say, 5-9 members. I just can't think of a time when I've seen 9 required in an HOA's bylaws.

Might be much more common that we see here, though.





The community I was managing last year had a 16 person board. That was, to say the least, interesting.

Edward J Cooke, CMCA, LCAM
RichardP13
(California)

Posts:3130


11/26/2018 6:55 AM  
The quorum, per your documents is five. To change that number you must amend your documents.
TimB4
(Virginia)

Posts:16045


11/26/2018 7:04 AM  
I agree with Richard.

Had your documents said that the number of directors is to be a range of 5 to 9, then the quorum would be the majority of the number of seated directors.

However, your documents specify that the number of directors is 9 and a quorum is 5. Therefore, regardless if the seats are vacant or not, you need to have 5 for a quorum.
AugustinD


Posts:1208


11/26/2018 7:27 AM  
As far as readers here know, the governing documents also say that nine people must serve as directors. When some member sues to invalidate board decisions because a (supposed legal) quorum of five is not reached, they'd best also sue to invalidate all board decisions because there are not nine directors. The defendants respond, in part, that New York Nonprofit Corporation law requires a majority of directors for a quorum.

What is a judge to do when the plaintiffs ask the judge to appoint a receiver? The judge will say, "No receiver," of course. Will the judge also say, "But the quorum number will remain at five... "? Maybe. Maybe not.

What happens when only four people want to serve as directors? Then if the requirement is for a quorum of five, the board can never transact business.

I suppose it is a toss of the coin as to which way the trial court judge would rule. But this HOA is obviously suffering from apathy, like so many. Get as many directors to meetings as possible. But if only four appear, I would go forward on the premise that the board meeting is sufficiently safe from a lawsuit, and business is pressing.
TimB4
(Virginia)

Posts:16045


11/26/2018 8:00 AM  
Posted By AugustinD on 11/26/2018 7:27 AM

What happens when only four people want to serve as directors? Then if the requirement is for a quorum of five, the board can never transact business.





The board, although not a quorum, appoints someone to fill the seat (this is typically written in corporate law).

What if there are no volunteers, I faced that. I was prepared to appoint my wife and adult daughter in order to have a quorum. Realistically, I would have likely made all decisions but we would legally have a quorum.

Fortunately, we had individuals step up and serve. Therefore, I never had to implement such a plan.


JohnC46
(South Carolina)

Posts:7865


11/26/2018 8:06 AM  
Our Bylaws call for a BOD of 3 to 7. We have always run at 5 but when the 5 fell to 3 or 4 we typically will not fill the vacancy but will wait to the next BOD Election at our Annual Meeting.
AugustinD


Posts:1208


11/26/2018 8:28 AM  
From what the OP wrote, my premise is that no one is willing to even accept an appointment. The OP is willing to correct this premise.

For some ideas on how to proceed here, I take off the shelf the book on, "What is a legally-constituted board when, say, all board members resign?" Numerous steps need to be taken to re-constitute a legal board, but how can this be done when those taking the steps are not a legal board? I have not seen a state statute, either in condo, HOA or nonprofit corporate statutes that addresses this for HOAs. From the counsel of attorneys and some actual HOA experience, where I am I am aware that judges will not appoint a receiver as long as at least one eligible person is willing to voluntarily run a HOA. Said volunteer hopefully will try to rebuild the board by appointing other directors, one director at a time, with a majority of the directors voting on each appointment. The latter is not in any state statute I have seen (though maybe someone here knows better). The same counsel says that those acting as a board (be it a legal board or not) should try to be fair and reasonable.

I am not saying that Richard and Tim are wrong. A judge might agree with them. I am saying that it is not black and white. In a situation where member apathy plays a huge role, I think the courts want to see HOAs doing "the best they can" under the circumstances. For this situation, to me this means:

-- constantly advertising three openings on the board in question and appointing any reasonably qualified applicants. It also means rejecting unqualified applicants, even though this means all seats may not be filled. Board members have to do what is best for a corporation. This too is not always black and white. As the regulars here know.

-- trying to get as many of the board members to meetings as possible.

-- following corporate law as well as possible. In this case, to me a majority of the serving directors appears to satisfy New York corporate law requirements for a quorum.


AugustinD


Posts:1208


11/26/2018 8:54 AM  
Add:

-- I think the Board should also try to pass an amendment to the Bylaws, stating that the board shall consist of three to nine directors, and a quorum shall be a majority of the directors serving. To get this amendment passed, the Board should ask for volunteers to call the membership and get out the vote, saying that, 'The HOA is struggling to get enough people to serve; meanwhile, it has legal obligations to fulfill. Please vote for this amendment. The ballot is in the mail and has to be submitted in the stamped, return envelope provided by ____, 2019.'
TimB4
(Virginia)

Posts:16045


11/26/2018 10:42 AM  
Keep in mind that a court won't be involved unless someone takes the issue to the court.
In an apathetic membership, that typically won't happen.

If someone says they are taking the issue to court, offer them a seat on the board in an effort to resolve the vacancy issue. If the individual accepts, great. If the individual refuses, a hell of a story to tell the court.
JohnC46
(South Carolina)

Posts:7865


11/26/2018 11:03 AM  
Posted By TimB4 on 11/26/2018 10:42 AM
Keep in mind that a court won't be involved unless someone takes the issue to the court.
In an apathetic membership, that typically won't happen.

If someone says they are taking the issue to court, offer them a seat on the board in an effort to resolve the vacancy issue. If the individual accepts, great. If the individual refuses, a hell of a story to tell the court.




I love it. Hoist them on their own petard.
AugustinD


Posts:1208


11/26/2018 11:16 AM  
JohnC46: Indeed. After the judge questioned the plaintiff about why he or she was not willing to serve on the board, I think the judge's stare would be long enough and chilly enough to freeze water into ice.

If the dispute got this far, and if I were the judge, I think I'd rule: 'The HOA has one year to amend the Bylaws to fix this situation. Meanwhile, to avoid a receiver, I will allow a quorum to be a majority of the sitting directors, consistent with the Nonprofit Corporation Statutes, to which this HOA's governing documents say the HOA is bound.'
RichardP13
(California)

Posts:3130


11/26/2018 11:32 AM  
Sorry Auggie, you would lose in court. Even if they only have 6 Board members, they still have EVERY opportunity to make quorum and business gets done. The issue isn't how many directors there are, business only gets done with a quorum of directors, in this case, five.
AugustinD


Posts:1208


11/26/2018 12:48 PM  
Richard, we disagree. Though I can appreciate that you think you know how the courts think about these things.
RichardP13
(California)

Posts:3130


11/26/2018 4:40 PM  
I have a liiitttlllee more experience in this type of HOA than you do. I have seen what courts and juries think about the subject matter.
SueW6
(Michigan)

Posts:354


11/26/2018 4:50 PM  
Quorum would only be set in relationship to the number of board members. The five is dependent on the nine and clarifies what a majority is for the nine.

Example if old, poorly thought out bylaws. The founders probably never doubted there would be a shortage of people willing to serve.

Amend the board to a reasonable number and use a legal definition for what the quorum would be.



KerryL1
(California)

Posts:5950


11/26/2018 6:07 PM  
All right, I agree with Richard & Tim. But, unless someone's putting up a fuss about this, I can't imagine anyone going to court over it.

Still, Linda's not responding so we don't even know what % is needed to amend this bylaw. Should be simple and cheap. As
Sue suggests, just use the general language in NY's corprations codes, assuming this HOA is incorporated and most are.
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