Former director "resigns" after selling her house.

Started by TerriS6 • 40 replies • 167 views

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TerriS6 (California)
Posts: 3,305

Posted:

Last week: A director's house sold and deed was recorded before 4pm. Later that day at 10pm, house seller who was disqualified from being a director when the deed was recorded, wrote a letter of resignation to the president by email. Now president thinks board can appoint someone to fill the vacancy but our bylaws only allow appointment for vacancies created by death or resignation.

TimB4 (Tennessee)
Posts: 21,102

Posted:

Quote:

Posted By TerriS6 on 07/28/2026, 8:59 AM

Last week: Later that day at 10pm, house seller. . . . wrote a letter of resignation to the president by email.

Now president thinks board can appoint someone to fill the vacancy but our bylaws only allow appointment for vacancies created by death or resignation.

Letter of resignation submitted.

Bylaws allows Board to appoint to fill vacancies created by death or resignation.

President wants Board to fill vacancy.

I don't see an issue.

Typically, the appointment only lasts until the term of the seat ends or at the next annual meeting (depends on applicable laws and governing docs)

ElleN (Idaho)
Posts: 1,376

Posted:

Like TimB4 explained, I do not see what the problem is.

Even if a letter of resignation had not been submitted, then Civ Code 5105 (b) says "A director who ceases to be a member shall be disqualified from continuing to serve as a director." State statute trump's the bylaws.

TerriS6 (California)
Posts: 3,305

Posted:

Quote:

Posted By TimB4 on 07/28/2026, 7:23 AM

--------------------------------------
Quoted Post:
Posted By TerriS6 on 07/28/2026

, 8:59 AM

Last week: Later that day at 10pm, house seller. . . . wrote a letter of resignation to the president by email.

Now president thinks board can appoint someone to fill the vacancy but our bylaws only allow appointment for vacancies created by death or resignation.
--------------------------------------

Letter of resignation submitted.Bylaws allows Board to appoint to fill vacancies created by death or resignation. President wants Board to fill vacancy.
I don't see an issue.
Typically, the appointment only lasts until the term of the seat ends or at the next annual meeting (depends on applicable laws and governing docs)

The resignation letter is void because she sent it 12 hours after she ceased to be a member.

ElleN (Idaho)
Posts: 1,376

Posted:

The resignation letter is void because she sent it 12 hours after she ceased to be a member.

For a few reasons, I think a court would say the board has both a lawful right (under the bylaws, state law and case law) to appoint a replacement, but a fiduciary obligation to do so.

ElleN (Idaho)
Posts: 1,376

Posted:

For a few reasons, I think a court would say the board has both a lawful right (under the bylaws, state law and case law) to appoint a replacement, but a fiduciary obligation to do so.

Post-o. I think a court would say the board has both a lawful right (under the bylaws, state law and case law) and a fiduciary obligation to appoint a replacement.

TimB4 (Tennessee)
Posts: 21,102

Posted:

Quote:

Posted By TerriS6 on 07/28/2026, 12:34 PM

The resignation letter is void because she sent it 12 hours after she ceased to be a member.

OK, so instead of a resignation, the Board declares the seat vacant due to individual no longer qualified to serve. Yes, it appears that CA defers to the bylaws.

Is there still a quorum without that individual?

Is there a requirement to fill a vacancy?

https://www.davis-stirling.com/HOME/D/Director-Appointments

TerriS6 (California)
Posts: 3,305

Posted:

still 4 on board. appointment only allowed if death or resignation per bylaws. it was neither. must be member election. no requirement to fill vacancy.

ElleN (Idaho)
Posts: 1,376

Posted:

For the reasons TerriS6 gives, let's assume this non-owner did not resign from the board.

Has the Board removed, via a vote, this person as a director?

So far I see no evidence that the board had such a vote.

Is this person still on the board?

I guess so.

Now this HOA's Board has a non-owner serving on it.

Huh.

For reference, Corp Code 7224(a) says in part:

"Unless otherwise provided in the articles or bylaws and except for a vacancy created by the removal of a director, vacancies on the board may be filled by approval of the board (Section 5032)... "

TerriS6 (California)
Posts: 3,305

Posted:

Yes, that code shows that the bylaws govern. The minute the deed was recorded, the director ceased to be a member and a director and a board member. She was automatically disqualified and also therefore had no standing to resign because she was automatically off the board at recording.

TimB4 (Tennessee)
Posts: 21,102

Posted:

I look at this differently.

Personally, I don't think an individual sitting on a Board is not allowed to resign simply because they sold the house before resigning.

The individual was qualified (because he was a member of the Association) and elected to the board.

The individual sold his property and, by doing so, was no longer qualified to serve on the board.

However, the selling of the house did not automatically remove him from the board. It simply made him not qualified to serve.

As a member of the Board, knowing he was no longer qualified to serve, the individual tendered his resignation.

Because he resigned, the Board may appoint someone to fill the vacancy created.

Per the link I posted earlier, it appears that their is split legal opinions on what happens when a member elected to the board is no longer qualified to serve on the board:

"Unqualified Directors
Once a director is no longer qualified to serve on the board, for example, if they cease to be an owner, the board can vacate the person’s seat. (Civil Code § 5105(f)) Once the seat is vacated, the board can appoint someone to fill it (unless the bylaws require that seats be filled by a vote of the membership). See “Director Appointments.” NOTE: There is a split among legal opinions on whether the seat needs to be vacated. Some believe it is legitimate for the director to complete his/her term on the board, but not be eligible thereafter to run for or be appointed to the board."

ElleN (Idaho)
Posts: 1,376

Posted:

The minute the deed was recorded, the director ceased to be a member and a director and a board member. She was automatically disqualified and also therefore had no standing to resign because she was automatically off the board at recording.

You claim she was "automatically" disqualified. The President (and his lackeys) will respond that Civ Code 5105(b) and other statute sections are clear that the Association (meaning either the Board or owners) have to first vote to disqualify her.

No vote has occurred. Hence she is still on the board until such time as either the board votes; the owners vote; or possibly someone litigates the point.

TerriS6 (California)
Posts: 3,305

Posted:

The primary qualification for director is being an owner/member. Once a person is no longer an owner/member he is no longer qualified and automatically loses all standing as a member. Just as the buyer automatically gains all the rights of being an owner/member. 5105 has to do with the election stage.

TerriS6 (California)
Posts: 3,305

Posted:

Quote:

Posted By TimB4 on 07/28/2026, 12:18 PM

I look at this differently.Personally, I don't think an individual sitting on a Board is not allowed to resign simply because they sold the house before resigning.
The individual was qualified (because he was a member of the Association) and elected to the board.The individual sold his property and, by doing so, was no longer qualified to serve on the board.However, the selling of the house did not automatically remove him from the board. It simply made him not qualified to serve.As a member of the Board, knowing he was no longer qualified to serve, the individual tendered his resignation.Because he resigned, the Board may appoint someone to fill the vacancy created.
Per the link I posted earlier, it appears that their is split legal opinions on what happens when a member elected to the board is no longer qualified to serve on the board:
"Unqualified Directors
Once a director is no longer qualified to serve on the board, for example, if they cease to be an owner, the board can vacate the person’s seat. (Civil Code § 5105(f)) Once the seat is vacated, the board can appoint someone to fill it (unless the bylaws require that seats be filled by a vote of the membership). See “Director Appointments.” NOTE: There is a split among legal opinions on whether the seat needs to be vacated. Some believe it is legitimate for the director to complete his/her term on the board, but not be eligible thereafter to run for or be appointed to the board."

If they sold the house they are no longer an owner, a member, a director and have nothing from which to resign. They. have no authority even to attend meetings let alone vote.

ElleN (Idaho)
Posts: 1,376

Posted:

TimB4, quoting the bottom of this site https://www.davis-stirling.com/HOME/D/Director-Qualifications :

NOTE: There is a split among legal opinions on whether the seat needs to be vacated. Some believe it is legitimate for the director to complete his/her term on the board, but not be eligible thereafter to run for or be appointed to the board."

Ha. From Civ Code 5105:

A director who ceases to be a member shall be disqualified from continuing to serve as a director.

Evidently "some" believe that "disqualified from continuing to serve as a director" means that such a person cannot run for re-election but can still serve as a director until the annual election rolls around (or she resigns, or the owners vote to remove her). Why? Because 5105 is titled "Election Rules," and its focus is indeed on election rules.

I love it.

TimB4 (Tennessee)
Posts: 21,102

Posted:

per Civil Code § 5105

(b) An association shall disqualify a person from a nomination as a candidate for not being a member of the association at the time of the nomination. An association shall disqualify a nominee if that person has served the maximum number of terms or sequential terms allowed by the association. A director who ceases to be a member shall be disqualified from continuing to serve as a director.

From a MC website: Board members resign from HOA boards of directors for a myriad of reasons. The predominant reason usually revolves around the member’s other pressing personal commitments. Another common cause is the board member selling their home and moving out of the HOA.

OK, I'm on the Board and I tell the individual you are no longer qualified to serve as a Director. Please submit your resignation or the Board will remove you.

The individual resigns, creating the vacancy and the Board fills the vacancy caused by the resignation.

The reason for the resignation is not relevant. When the resignation was submitted, in my opinion, is not relevant providing it was prior to the next Board meeting. Only the act of resigning itself is relevant and is what should be acted on (as the disqualified to serve was resolved with the resignation).

TerriS6 (California)
Posts: 3,305

Posted:

Had she resigned one week, one day, or one hour before the deed recorded, she could have resigned and a replacement could have been appointed. As it was, she waited until after the deed was recorded at which time she was automatically disqualified from continuing on the board and thus had no basis for a resignation.

TimB4 (Tennessee)
Posts: 21,102

Posted:

We will have to agree to disagree.

I suspect that you and your Board will also have to agree to disagree unless you are willing to take the issue to a court of law for a ruling.

Realistically, I doubt the case would be heard prior to the next annual meeting.

ElleN (Idaho)
Posts: 1,376

Posted:

This.

ElleN (Idaho)
Posts: 1,376

Posted:

The President is dug in. You are dug in. It is time for a board vote.

Let's see what happens.

TerriS6 (California)
Posts: 3,305

Posted:

So then, you think a non-member can be on the board.

ElleN (Idaho)
Posts: 1,376

Posted:

So then, you think a non-member can be on the board.

It depends.

TimB4 (Tennessee)
Posts: 21,102

Posted:

Quote:

Posted By TerriS6 on 07/28/2026, 7:06 PM

So then, you think a non-member can be on the board.

A non-member was on the board for 12 hours (per your posting). They were not qualified to serve any longer (applicable in CA but not other States) so they submitted their resignation.

Had the individual stayed on the board after they were not a member that would have been an issue.

TerriS6 (California)
Posts: 3,305

Posted:

So, the question is: Can a non-member unqualified to be a director resign from a position he is not qualified to hold? A resignation is moot or meaningless.

TimB4 (Tennessee)
Posts: 21,102

Posted:

Quote:

Posted By TerriS6 on 07/29/2026, 8:35 AM

So, the question is: Can a non-member unqualified to be a director resign from a position he is not qualified to hold? A resignation is moot or meaningless.

To me, the answer is yes.

Otherwise, the Board would have to vote to remove them.

Until one or the other happens, that individual, who was elected to that position, was (in fact) on the board.

TerriS6 (California)
Posts: 3,305

Posted:

Somebody quoted this earlier: A director who ceases to be a member shall be disqualified from continuing to serve as a director. civ code 5105b. When someone is automatically disqualified a resignation or vote is unnecessary.

TimB4 (Tennessee)
Posts: 21,102

Posted:

Yep, they are disqualified from continuing to serve. Hence they submit a resignation or the Board removes them from the position.

If they were an Officer (remember, Directors and Officers are different positions), they would still be serving in the officer position until they resigned or were removed by the Board as there is no qualifications (I could find) preventing a non-member from serving in an officer position.

Out of curiosity, what does it cost to hold a general membership meeting?

I actually calculated what it costs for my Association (75 members, 83 lots) and it was $350.

TimB4 (Tennessee)
Posts: 21,102

Posted:

Just for fun, I did an internet search for in a CA HOA, what should be done when an individual elected to the Board is no longer qualified to serve on the board because they sold their property?

AI response was: When a California HOA board member sells their property, the board should request a resignation, declare the seat vacant due to a loss of membership qualifications, and appoint a qualified replacement to fill the remainder of the term.

TerriS6 (California)
Posts: 3,305

Posted:

AI of course can give quite different answers. Once a house is "sold," the seller has zero standing as a member - no standing to submit a "resignation." The board has no standing to request anything from the former member. Declaring a seat vacant is permissive not mandatory. Once a seat is vacant by operation of law (recording the deed so the seller is automatically disqualified from continuing on the board), the board isn't required to declare it vacant. And the appointment is dependent upon the bylaws. And yes we are not referring to officers. In our case, holding a director election would cost about $1,000. and would take 5 months. Makes sense to leave the seat vacant until next election in August '27.

ElleN (Idaho)
Posts: 1,376

Posted:

Quote:

Posted By TerriS6 on 07/29/2026, 6:35 AM

So, the question is: Can a non-member unqualified to be a director resign from a position he is not qualified to hold? A resignation is moot or meaningless.

Asked and answered. The question now becomes:Can you agree to disagree; let the board vote; and then depending on the vote, decide on your next step?

TerriS6 (California)
Posts: 3,305

Posted:

No choice! Thanks for all your comments.

TimB4 (Tennessee)
Posts: 21,102

Posted:

Quote:

Posted By TerriS6 on 07/29/2026, 9:52 AM

Makes sense to leave the seat vacant until next election in August '27.

I agree with that.

ElleN (Idaho)
Posts: 1,376

Posted:

Declaring a seat vacant is permissive not mandatory. Once a seat is vacant by operation of law (recording the deed so the seller is automatically disqualified from continuing on the board), the board isn't required to declare it vacant. And the appointment is dependent upon the bylaws. And yes we are not referring to officers. In our case, holding a director election would cost about $1,000. and would take 5 months. Makes sense to leave the seat vacant until next election in August '27.

Leave a board seat vacant for a whole year?

A board has a fiduciary duty to try to have all board seats filled. Sometimes the bylaws even mandate a certain number of directors. Legally the board needs a good reason to refuse to even try to fill a seat.

In this case, you say the law says an owners' election has to be run. Others say the law says the resignation counts and so the board has a legal right to appoint a director.

Whichever it is, I do not think the cost of $1000 justifies keeping the seat vacant for a year.

As well with only four on the board, the risk of tie votes is good.

Two cents.

TimB4 (Tennessee)
Posts: 21,102

Posted:

Oh, I thought it was August 27 of this year. I disagree if the seat was to be vacant for a year or more.

TerriS6 (California)
Posts: 3,305

Posted:

I just saw this; I was focusing on our bylaws. Our Declaration says: "Term. Members of the board shall serve for a term of two (2) years and until their respective successors are elected, or until their death, resignation, or removal; provided that if any member ceases to be an Owner, his membership on the Board shall thereupon terminate."

ElleN (Idaho)
Posts: 1,376

Posted:

Our Declaration says: "Term. Members of the board shall serve for a term of two (2) years and until their respective successors are elected, or until their death, resignation, or removal; provided that if any member ceases to be an Owner, his membership on the Board shall thereupon terminate."

Then I think you just established your best (by far) legal argument to run an owners' election. IMO it is strong. The "shall" is not for nothing.

A bit of elaboration:

It seems statutes and sometimes bylaws recognize the difference between the owners choosing a replacement director and the board choosing one? I am not 100% sure. For example, for a California HOA, if the board removes a director, then to thwart the possibility that the board is up to no good, and either pursuant to statute, the bylaws or both, the owners get to vote for who will be the replacement.

If a director resigns, then one would tend to think this was not due to board influence. Hence the board gets to choose the replacement. Same idea for a director who dies.

Two cents.

TerriS6 (California)
Posts: 3,305

Posted:

A few things…the membership has superior authority in that it can remove directors that directors can’t remove…for years this is how a bad board stayed in power - by having someone resign so they could choose the replacement who would want to stay for next term so another candidate wouldn’t be needed so no one would volunteer…and finally, a real resignation is voluntary - in this case the “resignation” was involuntary as the person was no longer qualified.

ElleN (Idaho)
Posts: 1,376

Posted:

in this case the “resignation” was involuntary as the person was no longer qualified.

Because of the wording in the Declaration ("shall thereupon terminate"), I think it is now fair to say the removal was 'automatic.'

Aside: If this Declaration section were absent, then I think some lawyers might argue that selling one's home is a resignation. After all, a home sale is voluntary and so on.

If the Declaration section were absent, who knows how a court would rule?

Anyway based on everything above, I come down on the side that if the owner did not resign while still an owner (and you say she did not), then what the Declaration says is a big deal. From all that I have seen at this point, an owner's election is the right thing to do.

TimB4 (Tennessee)
Posts: 21,102

Posted:

As you can see, there are varying viewpoints on the issue.

You know the Boards.

What to do is now up to you.

The options I see are (as they typically are for all issues):

Gather owners together and approach the board requesting to elect (hoping many voices will get results).

Gather owners together and petition the Board for a special meeting to remove Directors and, if successful, replace.

Speak with an attorney regarding legal options

Wait until the next election, gathering support and vote the bums out (so to speak) so it doesn't happen again

Live with it

Sell and move

Granted, not great options, but they are the options I see.

TerriS6 (California)
Posts: 3,305

Posted:

It only takes 5% of the membership to call for a special meeting to set up an election. Here that's only 4 people.

TerriS6 (California)
Posts: 3,305

Posted:

I still would rather wait until next August 2027.

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