Get 1 year of free community web site hosting from Community123.com!
Thursday, September 24, 2020











HOATalk is a free service of Community123.com:

Easy to use website tools to help your board
Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.
Subject: When does the term of a member of the Board end
Prev Next
Please login to post a reply (click Member Login on the menu).
Author Messages
BillH10
(Texas)

Posts:554


09/05/2020 7:55 PM  
First, our client is located in Dallas County, Texas.

Our client is a Property Code Chapter 81 Condominium Association organized before the TUCA became effective on January 1, 1994. Our client has not elected to be governed by TUCA/Chapter 82.

This is the issue and question:

An annual meeting of the Association was held this afternoon. One seat on the Board of Directors was open to be filled as the 3 year term had expired.

The incumbent did not run for reelection, for which the incumbent was eligible as there are no term limits. The incumbent did not resign.

No owner submitted a candidate form (self-nominations are permitted and encouraged).

No owner was nominated for the floor during the annual meeting, permissible in Texas.

No owner volunteered (self-nominated from the floor, also permissible in Texas).

Question: I have seen discussion on this forum which indicates incumbents continue in office until new Board members are found and appointed. The scenario generally seems to be the entire Board is up for election and there are no volunteers.

In this case, only one Board seat was up for election. If there are no candidates, as there were not, when does the term of the incumbent expire?

Those who developed the governing documents of this condominium association in 1981 (probably earlier) never envisioned this scenario. The documents are silent.

What is your advice and counsel, especially my colleagues in Texas who may have encountered this situation.

Thanks for your input, thoughts, and reasoning.
AugustinD


Posts:3900


09/05/2020 8:17 PM  
I see nothing in the two Texas Condo Acts addressing this. From the Texas Nonprofit Corporation Act:
===============
Sec. 22.208. TERM OF OFFICE. (a) Unless the director resigns or is removed, a director on the initial board of directors of a corporation holds office until the first annual election of directors or for the period specified in the certificate of formation or bylaws of the corporation. Directors other than the initial directors are elected, appointed, or designated for the terms provided by the certificate of formation or bylaws.

(b) In the absence of a provision in the certificate of formation or bylaws setting the term of office for directors, a director holds office until the next annual election of directors and until a successor is elected, appointed, or designated and qualified.

(c) A director may be removed from office as provided in Section 22.211.
============

See https://statutes.capitol.texas.gov/Docs/BO/htm/BO.22.htm


But the Bylaws here do have a provision setting the term of office. This term has expired. I conclude that, under the law, the incumbent is no longer on the board. There is now a vacant seat on the board. The board has the right to appoint a director to fill this seat with anyone qualified (per the governing documents) that it desires.
GeorgeS21
(Florida)

Posts:3113


09/05/2020 9:07 PM  
My take is that no resignation is required, or appropriate, as the term of the director has expired.
JohnC77
(Washington)

Posts:139


09/05/2020 11:47 PM  
The general rule in the corporate world is the director is in office until replaced. In this instance, they would have to resign or otherwise they are still on the board.
TimB4
(Virginia)

Posts:16955


09/06/2020 2:36 AM  
Bill,

From your posting, it sounds like this is only one seat on the board and not the whole board.

Based on the statutes provided by Augustin and what you posted, I would say that the seat became vacant. This would allow the remaining board of Directors to appoint someone to the seat.

The proper procedure might not have been followed, but I suspect that the end result would be the same.

The key point here is, if you don't want those who are willing to serve to serve, volunteer to serve so the members have a choice.
GeorgeS21
(Florida)

Posts:3113


09/06/2020 4:51 AM  
So, John, how would you square against a (paraphrased) statement in Bylaws that, "each director will serve for a three year term?"

Assuming there is an annual election meeting with quorum?
CathyA3
(Ohio)

Posts:1235


09/06/2020 5:27 AM  
Posted By JohnC77 on 09/05/2020 11:47 PM
The general rule in the corporate world is the director is in office until replaced. In this instance, they would have to resign or otherwise they are still on the board.




Do boards in the corporate world have terms of service, or are things more open-ended?

For what it's worth, in my community we assume that at the end of a term, the incumbent must seek re-election or else is off the board. If no one else is elected to fill the position, we have an open, unexpired term which the board may fill by appointment. A director who is in the middle of his term and who does not want to serve any longer must formally resign; otherwise he remains on the board until the end of this term, whether or not he fulfilling his duties. (Although three consecutive absences from board meetings are deemed to constitute a "resignation", and the board shall declare the position vacant and appoint a replacement - the only instance where the board may remove a director. Per our bylaws.)

MarkM19
(Texas)

Posts:643


09/06/2020 6:45 AM  
Bill,
The way I am reading your OP I would say that if the Board member does not wish to run for his current seat it is no different than if he resigned. He is not obligated to remain on the Board. If he/she wanted to continue he/she should be able to stay till the Board fills the seat with a replacement.
SheliaH
(Indiana)

Posts:3460


09/06/2020 7:35 AM  
I agree with Mark - the board member decided not to run again, no one stepped up to volunteer for the spot so the seat is now vacant. If sometime in the future,someone steps up, I think the clock for that term will start at that point.
CathyA3
(Ohio)

Posts:1235


09/06/2020 8:57 AM  
Posted By SheliaH on 09/06/2020 7:35 AM
I agree with Mark - the board member decided not to run again, no one stepped up to volunteer for the spot so the seat is now vacant. If sometime in the future,someone steps up, I think the clock for that term will start at that point.




I disagree about when you would start the term. If the bylaws require staggered terms so that you always have a mix of experienced and newbie directors, you have to maintain that staggering. This means that you'd have to keep track of when the open position starts - otherwise you'd lose the orderly expiration of terms.

For example: a three-person board, staggered 3-year terms, nobody volunteers at the last annual meeting so there is an open position that began in March 2020. If the remaining two board members finally find someone willing to serve, that person occupies the term that began in March - so if the newbie remains in his position, he will serve for 2-1/2 years until his term's scheduled end in March 2023.

If you don't do it this way, you'd have a mess, with terms expiring whenever, rather than when the annual meeting takes place. And it would be pretty likely that you'd lose track of whose term started when.
MarkM19
(Texas)

Posts:643


09/06/2020 9:37 AM  
Cathy,
I was also surprised about the 3 year term for the Board seat. I have always on seen that in the first elected homeowner board. This is how the staggered elections get started. Once that first 3 year term expires on a 5 member board it should become Next year 3 2 members are up for the election and then the following year 2 members are up for the election. This is an older HOA and it appears like they did not make that change after the Declarant turnover.
JohnC77
(Washington)

Posts:139


09/06/2020 9:39 AM  
Posted By GeorgeS21 on 09/06/2020 4:51 AM
So, John, how would you square against a (paraphrased) statement in Bylaws that, "each director will serve for a three year term?"

Assuming there is an annual election meeting with quorum?



This pandemic is a perfect example. Annual meetings have been postponed, some for a year and maybe more. Those in office would be serving on expired terms.
JohnC77
(Washington)

Posts:139


09/06/2020 9:43 AM  
Posted By GeorgeS21 on 09/06/2020 4:51 AM
So, John, how would you square against a (paraphrased) statement in Bylaws that, "each director will serve for a three year term?"

Assuming there is an annual election meeting with quorum?



The Bylaws of my association stated the directors shall hold office until their successors are elected.
GeorgeS21
(Florida)

Posts:3113


09/06/2020 10:14 AM  
Ah ... I have not seen language like that before.

Pandemic ... hmmm ... I think it has exercised our new abilities to have online meetings - my sense is that the concept of "meeting" even for HOA/COA/POA is pretty much changed forever.

Would be interesting to see a list of states that do NOT allow online membership meetings - and, online board meetings. Then, next, see how many sets of bylaws do NOT allow, or have weird wording that forces face-to-face meetings that are not overridden by statute.

If this concept holds, then only really odd circumstances - something like a Board refusing to set a date for the meeting - might cause there to be an extension requirement beyond the intended timeframe.
JohnC46
(South Carolina)

Posts:9877


09/06/2020 10:42 AM  
Posted By TimB4 on 09/06/2020 2:36 AM
Bill,

From your posting, it sounds like this is only one seat on the board and not the whole board.

Based on the statutes provided by Augustin and what you posted, I would say that the seat became vacant. This would allow the remaining board of Directors to appoint someone to the seat.

The proper procedure might not have been followed, but I suspect that the end result would be the same.

The key point here is, if you don't want those who are willing to serve to serve, volunteer to serve so the members have a choice.




I agree. Also my belief is the only time BOD Members would carry over was if there was not a Quorum thus no election. In this case an attempt was made to have an election but no one wanted the job. I say the position is vacant and the BOD should act accordingly.

In our docs, when one is appointed to a vacancy by the BOD, that person fills the remaining length of the term.
BillH10
(Texas)

Posts:554


09/06/2020 11:00 AM  
Thank you all for your thoughts.

So, a Paul Harvey moment--

As it happens, one of the owners who participated in the Zoom Meeting contacted the Board President about 3 hours after the meeting was adjourned. She volunteered to fill the vacant position. I was unaware of this at the time of my OP, we did not learn of what took place until we looked at email this morning.

The incumbent had stated during the meeting she would continue on temporarily until a replacement could be named. The President and remaining board member quickly accepted the offer of the volunteer, and appointed her to the 'vacant' seat with ratification of the action to take place at the next meeting of the Board.

With Augustine, I found no solid guidance in either the Chapter 81 or Chapter 82 sections of the property code, nor in the Texas Non-Profit Corporation Code. I have not looked at Section 209 of the Property Code which governs HOAs in this state as, with minor exceptions, it pertains to homeowners associations and not condominiums.

Should this situation occur in the future, in the absence of black letter law language in the Bylaws of the Association or revisions to the Property Code or Non=Profit Corporation Code, we will advise our clients to simply treat the seat on the Board as being vacant at the conclusion of the Annual Meeting and to appoint a replacement when one can be found.

Thank you again to all who replied.
AugustinD


Posts:3900


09/06/2020 11:28 AM  
Posted By BillH10 on 09/06/2020 11:00 AM

With Augustine, I found no solid guidance in either the Chapter 81 or Chapter 82 sections of the property code, nor in the Texas Non-Profit Corporation Code.
I think the Nonprofit Corporation statute, section 22.208 both sections (a) and (b), actually does provide solid guidance.

Regardless, to me a willing volunteer, who evidently is agreeable to all, stepping up to serve on the board denotes a happy ending.

BillH10
(Texas)

Posts:554


09/06/2020 12:21 PM  
I agree, I misread both citations.
GenoS
(Florida)

Posts:4064


09/06/2020 12:53 PM  
Posted By GeorgeS21 on 09/06/2020 10:14 AM
Ah ... I have not seen language like that before.

Pandemic ... hmmm ... I think it has exercised our new abilities to have online meetings - my sense is that the concept of "meeting" even for HOA/COA/POA is pretty much changed forever.

Could very well be. What's infuriating to me is the obvious need to amend the relevant statutes, at least in Florida, and what is sure to be the abject failure of state legislators to do it. I will be SHOCKED if there's anything noteworthy that changes in the Florida HOA and Condo laws next year in response to the pandemic.

What are "our new abilities to have online meetings"? What we've got is a preponderance of FL attorneys advising their clients that it's highly unlikely that any judge or court would rule against a board that's "doing its best" in unprecedented times re. the pandemic. From 30,000 feet I think that's reasonable and justified. But every board who flounts the law is rolling the dice. Especially with the "ability" of homeowners to attend meetings remotely or virtually. Nothing in the statutes allows that. It's explicitly allowed for Directors to attend Board meetings remotely, but there's nothing that allows the same sort of attendance by Homeowners (or Unit owners) to attend any sort of meetings remotely.

If there were truly "mew abilities to have online meetings" then I think we wouldn't be seeing a surge in the number of Annual Meetings that are being cancelled or postponed.

Posted By GeorgeS21 on 09/06/2020 10:14 AM
Would be interesting to see a list of states that do NOT allow online membership meetings - and, online board meetings.

Florida doesn't technically allow it. Again, what we've got is most lawyers saying, "Have online meetings and don't worry about it."
Please login to post a reply (click Member Login on the menu).
Forums > Homeowner Association > HOA Discussions > When does the term of a member of the Board end



Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.







General Legal Notice:  The content of forum messages are from the posting member and have not been reviewed nor endorsed by HOATalk.com.  Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship.  Readers should not act upon this information without seeking professional counsel.  HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional.  HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of HOATalk.com should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a HOATalk.com official sponsor and is identified as such in the posted message or on our sponsor page.)

Copyright HOA Talk.com, A Service of Community123 LLC ( Homeowners Association Discussions )   Terms Of Use  Privacy Statement