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Subject: Directors term question
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PaulaR3
(South Carolina)

Posts:33


02/06/2021 7:56 AM  
We have a 9 person Board of Directors. Out Bylaws state that we elect 1/3 of the directors every year. Due to covid we have not had an annual meeting in 2021. The President extended those terms which should have expired March 23, 2020 for another year without a Board Resolution.

Our annual meeting should take place next month and the President whose term is up says that she is extending the 3 directors who term expires March 2021 by another year without board or Co-Owner approval. Can she legally do this? As a consequence, then those directors who were elected for a 3 year term will serve a 4 year term.

How are other HOA’s conducting annual meeting? We would like to use zoom but we have elderly residents who do not have internet access.

Thank you.

Paula
PaulaR3
(South Carolina)

Posts:33


02/06/2021 8:00 AM  
I meant to say we have not had an annual meeting in 2020 and noon the President wants to delay the meeting normally in. March 2021 another year or when covid is no longer an issue.
AugustinD


Posts:0


02/06/2021 8:03 AM  
Posted By PaulaR3 on 02/06/2021 7:56 AM

Our annual meeting should take place next month and the President whose term is up says that she is extending the 3 directors who term expires March 2021 by another year without board or Co-Owner approval. Can she legally do this? As a consequence, then those directors who were elected for a 3 year term will serve a 4 year term.
HOA-specialized law firms nationwide are recommending that, where needed and because of the pandemic, Boards try to be reasonable. First, at a minimum, the Board should have voted on how it can conduct an election during the pandemic. Second, at a minimum, the Board and not the President should have made this decision.

Personally I find the president's unilateral decree disgusting and yes, illegal.

But it will be hard to fight.

Get members to the board and annual meetings. Have the members let the Board know how they feel. Always, always offer solutions for the problem. Offer to help make the election happen. Then see what happens.

Going to court is so demanding; not for the feint of heart; and takes a long time.
PaulaR3
(South Carolina)

Posts:33


02/06/2021 8:07 AM  
Thank you so much for your advice. One Co-Owner is threatening legal action since the President is acting outside of the Bylaws and SC State Legislature.

Thanks again.
CathyA3
(Ohio)

Posts:2607


02/06/2021 8:30 AM  
I agree that this was not legal. Even without the annual meeting, the year happened and presumably the board continued to do all of their other duties during that time (eg. paying the bills and whatnot).

On the other hand, it may make some sense because those whose terms would have ended at the missed election would have stayed on regardless. It would be easier to get yourselves back on track and maintain your staggered terms by doing it this way. And it's not like the board members are receiving something wonderful by doing this: they're getting an extra year of unpaid, demanding volunteer work.

My main objection is the unilateral decision without a board vote.

Legal action is expensive - you have to consider whether the benefit justifies the expense and turmoil.

So... my bottom line would be that it wasn't right but it wasn't so terrible to warrant whatever steps I'd need to take to make it right (assuming you can get agreement on what that even is).
PaulaR3
(South Carolina)

Posts:33


02/06/2021 8:38 AM  
Thank you for your reply.

The Board President has not called any regular meetings since March 2020 and I know the Co-Owners feel like they are in the dark. I am an Officer of the Board and reminded her of all of the pending items we have from last year and this year as well as the 2021 budget which has never been approved. Three years ago she as Vice-President of the Board followed the bylaws and Robert’s rules of order. Since she has been President, that has not been the case even with the pandemic.

The Building Manager has been paying the bills yet the Vice-President and myself have been trying to force the President to call a regular meeting but she refuses. I believe she has no intention of calling for the annual meeting next month.

How does your HOA deal with the pandemic?

Thank you.
AugustinD


Posts:0


02/06/2021 9:22 AM  
Posted By CathyA3 on 02/06/2021 8:30 AM
On the other hand, it may make some sense because those whose terms would have ended at the missed election would have stayed on regardless. It would be easier to get yourselves back on track and maintain your staggered terms by doing it this way.
In the vein of CathyA3's point above, I too am concerned about how to resolve the staggered terms in a rational way that serves the best interests of the HOA to the satisfaction of as many people as possible.

Paula, you say you are an officer. "Officer" and "director" are two different things. Normally, the membership elects directors. But once elected, the Board votes on the appointment of Officers.

Are you a director?

Are you also an officer (president, VP, treasurer or secretary, usually)?
CathyA3
(Ohio)

Posts:2607


02/06/2021 9:23 AM  
Our bylaws require an annual meeting in the first quarter of the year. We always meet in March.

In 2020, the annual meeting did not take place until September due to covid restrictions and whatnot (the in person meeting was actually a violation of the state's restrictions, but whatever...).

The board has begun meeting via Zoom, as have many boards, even though their existing bylaws don't permit this. Fortunately my state does not require open board meetings and it allows decisions via email if the board is unanimous.

We're planning the annual meeting for March 2021, so we'll be back on track. This means that our newbie board member's first year of service is actually only 6 months long, and the person she replaced served an additional 6 months beyond the official end of that term.

Everybody was punting last year as a result of covid.

Bylaws often call for staggered terms in order to preserve corporate memory and to allow for orderly governance and transitions. In my opinion, this is the greater good, and it should take precedence when boards are forced to punt due to unforeseen circumstances. Courts generally expect board decisions to be "reasonable", and I think your board actually did come up with a fairly simple, quick and orderly way to preserve the staggered terms with minimal confusion. It's possible that there were other ways of doing this, but I don't know that they would have been "better" or faster. As I said, my real issue is with the unilateral decision, and the board could easily have voted and put the decision in the minutes.
PaulaR3
(South Carolina)

Posts:33


02/06/2021 9:25 AM  
Yes I am a Director and Secretary of the Board.
AugustinD


Posts:0


02/06/2021 9:25 AM  
PaulaR3, also, practically speaking, you are stuck playing some politics here. This means you have to build an alliance with the other directors, such that a majority agrees on a certain position to take. As needed, this includes a board's vote to remove the person serving as president and appointing, also by board vote, a new president.
AugustinD


Posts:0


02/06/2021 9:28 AM  
Posted By AugustinD on 02/06/2021 9:25 AM
PaulaR3, also, practically speaking, you are stuck playing some politics here. This means you have to build an alliance with the other directors, such that a majority agrees on a certain position to take. As needed, this includes a board's vote to remove the person serving as president and appointing, also by board vote, a new president.
Or even better, simply have the Board outvote the director (who happens to be President) when it comes to whether the HOA should have an election as scheduled; whose seat is up for grabs at the election; whether to do the election online using a contracted service (which I recommend); whether to hold the annual meeting by Zoom or google meet.
JohnC46
(South Carolina)

Posts:11667


02/06/2021 9:53 AM  
Paula

We kept delaying our 2020 Annual Meeting (scheduled for April) and we did not have one. As of now we are not sure when we will have a 2021 meeting but we expect to in the late Fall. We did not go the Zoom route as we felt it was not worth learning for only one meeting. This was our decision and I realize it does not meet everyone's desires.

We have a 5 person BOD. 3 elected one year, 2 elected the next years so two year terms. We notified people we were extending the terms of our present BOD until our next Annual Meeting when we will have an election for all 5 BOD positions. Does not sound much different then what your BOD has done.

At the next Annual Meeting, we will have a vote for all 5 BOD positions. Our 3 highest vote getters will have a two year term. The next 2 highest vote getters will have a one year term so we get back on our 3 and 2 elections. That said, we have never had more people running then open positions. We go begging for people to be on the BOD. I expect the same at the next Annual Meeting. Our BOD meets via telephone. We have not had an issues to vote on so we do not have to address that.

Our attorney said Covid has really thrown a monkey wrench into things and as long as we are fair in our decisions he says the courts will more then likely agree with how we are doing it. We did notify our owners about the no 2020 meeting, the delayed 2021 meeting, and the existing BOD staying in place. Fortunately we do not have nay ankle biters so no one has objected.

My advice to Paula about the owner threatening to sue, is to tell him to bring it on. There are always one or two CCO's in an association. Chief Complaining Officer. Their legal threats are usually 99.99% hollow.
PaulaR3
(South Carolina)

Posts:33


02/06/2021 10:54 AM  
Thank you for your comments.
SheliaH
(Indiana)

Posts:4297


02/06/2021 11:15 AM  
Our annual meeting is week after next at the clubhouse, but it'll be limited to 25% capacity, with social distancing and required mask wearing. Usually only two or three people show uo, besides the board, property manager and security officers (and moi), so I'm not expecting much more this year. Weather may also be a factor, as we've already had some snow and this is the time of year where We might get single digit weather (in fact, that's expected this weekend).

We need 10% of homeowners to attend or turn in proxies to meet quorum and they arrived last month, so I suspect a large number will be turned in. We don't have a phone or Wi-Fi in the clubhouse, so I suppose our president will prepare a summary and post it on the website next month.
GenoS
(Florida)

Posts:4276


02/06/2021 11:15 AM  
Posted By PaulaR3 on 02/06/2021 7:56 AM
We would like to use zoom but we have elderly residents who do not have internet access.

That's the excuse used by my board for just about everything this past year and it infuriates me. Zoom has an option that let's anyone pick up a plain old telephone and dial a number which will connect them to the meeting. Audio-only, of course. It's an extra-cost item to what's normally very inexpensive Zoom to begin with, but I think it's an expense that's very easy to justify if the board is so concerned about protecting the rights of the elderly and the technical illiterate among us.
PaulaR3
(South Carolina)

Posts:33


02/06/2021 11:22 AM  
Thanks for the info. That’s our answer. I will look into Zoom for the Board.
JohnC46
(South Carolina)

Posts:11667


02/06/2021 11:28 AM  
Posted By PaulaR3 on 02/06/2021 11:22 AM
Thanks for the info. That’s our answer. I will look into Zoom for the Board.



Paula

In SC, a BOD can do business over the phone and/or via Email. Really no need to meet.
PaulaR3
(South Carolina)

Posts:33


02/06/2021 11:37 AM  
Thanks for the info on zoom. I was mislead on what it could do. Thanks.
ChadH3
(Alabama)

Posts:50


02/06/2021 12:04 PM  
Hi Paula,

We had originally looked at doing a Zoom for our annual meeting last year but after talking with our lawyers (firm that specializes in Association Law), they advised against that.

Our annual meetings are in April and after postponing twice we finally held it in June, in person. We ended up getting a larger room at the community center we always have it at and they spaced chairs out more than six feet apart and the building requires masks to be worn so we didn't have to hassle with asking people to wear them. It actually went very smoothly and we had a good turn out. We also offered to hold a virtual information session after the meeting for those who didn't feel comfortable attending if there was demand for it but we didn't have a single person ask for that.

We're following the same plan for our annual meeting this year holding it in April as we usually would. Our Board from 2019 served for 14 months and our 2020 Board will have only served for 10 months. It just is what it is.

While your President can't make that decision unilaterally, the call to extend every directors term an extra year and stay on a balanced schedule is wise. The whole purpose of staggered terms is to keep an experienced Board so throwing off that balance would be a mistake in my opinion. Best of luck!
AugustinD


Posts:0


02/06/2021 12:08 PM  
Posted By ChadH3 on 02/06/2021 12:04 PM

Our annual meetings are in April and after postponing twice we finally held it in June, in person. We ended up getting a larger room at the community center we always have it at and they spaced chairs out more than six feet apart and the building requires masks to be worn so we didn't have to hassle with asking people to wear them. It actually went very smoothly and we had a good turn out. We also offered to hold a virtual information session after the meeting for those who didn't feel comfortable attending if there was demand for it but we didn't have a single person ask for that.

We're following the same plan for our annual meeting this year holding it in April as we usually would. Our Board from 2019 served for 14 months and our 2020 Board will have only served for 10 months. It just is what it is.
Excellent problem solving, like what the above describes, is just one good reason why I think directors deserve some nominal payment for their work. Maybe the law could be changed to allow such payment, up to say $5000 per year, adjusted for inflation yearly, while directors retain their "volunteer" status under federal law, along with the legal protections for same.
PaulaR3
(South Carolina)

Posts:33


02/06/2021 1:05 PM  
Thanks Chad and Augustin for your feedback.
GenoS
(Florida)

Posts:4276


02/06/2021 4:32 PM  
I think even a modest $1,000 a year compensation for directors would result in a flurry of undesirable candidates whose only motivation is the money.
GeorgeS21
(Florida)

Posts:3806


02/06/2021 5:07 PM  
A Zoom or even telecon meeting during a pandemic will satisfy any judge.
CathyA3
(Ohio)

Posts:2607


02/07/2021 6:15 AM  
Posted By GenoS on 02/06/2021 4:32 PM
I think even a modest $1,000 a year compensation for directors would result in a flurry of undesirable candidates whose only motivation is the money.




That would be my concern as well. Unfortunately, in some (many?) cases we have to choose between candidates who are motivated by the wrong things and no candidates at all.

Personally I would like to see boards replaced or at least supplemented by licensed professionals of some sort (essentially "receivership lite") who are paid a salary (comparable to a PM's?) but independent from the PM. It's not a perfect solution, but it would solve the problem of selecting your governing body from among people who have no qualifications aside from homeownership and who often don't want the job at all. It would raise the cost of ownership in these communities - perhaps we'd need an exemption for communities below a certain size - but I think it's unrealistic for homeowners to expect professional quality services without paying for them. And that's what we have now.


JohnC46
(South Carolina)

Posts:11667


02/07/2021 8:54 AM  
Posted By GenoS on 02/06/2021 4:32 PM
I think even a modest $1,000 a year compensation for directors would result in a flurry of undesirable candidates whose only motivation is the money.



I agree.
GeorgeS21
(Florida)

Posts:3806


02/07/2021 9:02 AM  
In another construct, think how effective a qualified volunteer board of non-owners (or percentage) would be in a lot of HOAs ...

More of a professional non-profit approach - retired or older business leaders with tested skills at running organizations.

Enough of these probably exist - and, since they would not be dealing with their own communities, the neutrality of their involvement might increase their effectiveness.

Just a crazy thought ...

How to form them? Set up a non-profit with co-membership of pro bono board membership bodies?
JohnC46
(South Carolina)

Posts:11667


02/07/2021 9:10 AM  
Posted By GeorgeS21 on 02/07/2021 9:02 AM
In another construct, think how effective a qualified volunteer board of non-owners (or percentage) would be in a lot of HOAs ...

More of a professional non-profit approach - retired or older business leaders with tested skills at running organizations.

Enough of these probably exist - and, since they would not be dealing with their own communities, the neutrality of their involvement might increase their effectiveness.

Just a crazy thought ...

How to form them? Set up a non-profit with co-membership of pro bono board membership bodies?



One of the foundations of an owner's association is the owners control it by voting. Any non-owner assistance would have to be advisory only. They must not be allowed to vote. Is having qualified people to assist the BOD not one of the requirements when hiring a PM?
AugustinD


Posts:0


02/07/2021 9:17 AM  
Posted By GeorgeS21 on 02/07/2021 9:02 AM
In another construct, think how effective a qualified volunteer board of non-owners (or percentage) would be in a lot of HOAs ...

More of a professional non-profit approach - retired or older business leaders with tested skills at running organizations.

Enough of these probably exist - and, since they would not be dealing with their own communities, the neutrality of their involvement might increase their effectiveness.

Just a crazy thought ...

How to form them? Set up a non-profit with co-membership of pro bono board membership bodies?
I think this is a pretty darn good idea, with the caveat that I want these retired older business leaders to, I dunno, pass a test on how the covenants and state law necessarily must dictate how a HOA/condo is supposed to be run far more than a Board does.
PaulaR3
(South Carolina)

Posts:33


02/07/2021 9:31 AM  
The problem I see is the old 80/20 rule. Boards have 20% of directors doing 80% of the work. It really doesn’t matter if they are paid or not. Some Directors never speak up or participate in discussions or volunteer to serve on a committee. One wonders why they serve. Being a Director is hard work, and the ability to take criticism since one can’t please all the people all the time.
CathyA3
(Ohio)

Posts:2607


02/07/2021 11:06 AM  
Posted By PaulaR3 on 02/07/2021 9:31 AM
The problem I see is the old 80/20 rule. Boards have 20% of directors doing 80% of the work. It really doesn’t matter if they are paid or not. Some Directors never speak up or participate in discussions or volunteer to serve on a committee. One wonders why they serve. Being a Director is hard work, and the ability to take criticism since one can’t please all the people all the time.




Actually, I think this would change if you have an independent group from outside of the community who have chosen to do this - especially if there is some performance evaluation along with "licensing" - demonstrated competence required to stay on the job.

You'd eliminate the folks who view board service as a social event rather than a job. You'd eliminate those who'd had their arms twisted to fill a position and who really have no interest in serving. It's easier to take criticism from folks you don't live with. And you don't have to worry about neighborhood feuds erupting because some people don't like how a board member voted.
CathyA3
(Ohio)

Posts:2607


02/07/2021 11:20 AM  
Posted By JohnC46 on 02/07/2021 9:10 AM
Posted By GeorgeS21 on 02/07/2021 9:02 AM
In another construct, think how effective a qualified volunteer board of non-owners (or percentage) would be in a lot of HOAs ...

More of a professional non-profit approach - retired or older business leaders with tested skills at running organizations.

Enough of these probably exist - and, since they would not be dealing with their own communities, the neutrality of their involvement might increase their effectiveness.

Just a crazy thought ...

How to form them? Set up a non-profit with co-membership of pro bono board membership bodies?



One of the foundations of an owner's association is the owners control it by voting. Any non-owner assistance would have to be advisory only. They must not be allowed to vote. Is having qualified people to assist the BOD not one of the requirements when hiring a PM?




Actually, I think this is the one area where the idea will fall apart.

I've been kicking around the idea of a product that would function the same way as George's idea. And the authority issue seems to be the deal breaker.

The whole idea is to protect boards from their own incompetence, to put it bluntly. But if the independent whatever-it-is has no decision making authority, or if boards can override the decisions made by the whatever-it-is, you'll prevent it from doing what it's intended to do. So why bother?

I've been thinking about this for quite a while, and this is always a sticking point. I believe that there is a screaming need for such a whatever-it-is. But need doesn't translate into a viable market - the people who need it the most would be the least likely to make use of it. Or they would "use" it and do whatever they want anyway.

The one remaining benefit I see is that it would take the burden off the owners who have to serve on the board while the vast majority of their neighbors don't stir a finger. This is one of my gripes about HOAs and COAs in general - the whole idea is that all owners have the same rights and same responsibilities, but this clearly isn't the case when a small group of owners have to do the heavy lifting.
GeorgeS21
(Florida)

Posts:3806


02/07/2021 2:51 PM  
Hmmm ...

Bylaws would need to be changed to allow non-owner board members (my current community never changed their Bylaws so non owners are OK as board and as officers of the board).

Owners would still vote, but it would be for those who have volunteered to be on the board - in addition to others in the community.

Yep - clearly, since this would be specific to HOAs, those non-owner volunteers would need to be knowledgable - but, I gotta tell ya, this part would be easy assuming reasonable, educated folks are doing this to be helpful. CAI training probably a pre-requisite?

GeorgeS21
(Florida)

Posts:3806


02/07/2021 3:11 PM  
Or, just “consultant” vice director - way easier and less threatening?
EvelynW
(South Carolina)

Posts:10


04/29/2021 5:00 PM  
John, they still have to have their actions in writing and signed by all directors.
BenA2
(Texas)

Posts:1114


04/29/2021 6:20 PM  
As others have said, the president has no authority to make any decisions on his own. That being said, somebody has to serve on the board so I would not fight it too much.

We had our annual meeting on Zoom but but we always do our elections by ballot. Normally, everyone turns in their ballot at the meeting or absentee prior to the meeting. That way, if something happens preventing a meeting, the election still can happen. This year we required did the same thing but encouraged people to vote absentee. For those who insisted on voting at the meeting, we had someone at the clubhouse to collect the ballots.
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