A Guide to Understanding the HOA Elections Process
Homeowner’s Associations come with many interesting and different processes for most first time members of an HOA community. An important process members of homeowners’ associations have to deal with is the election of a Board of Directors which can be a member’s first exposure to corporate law. This article is designed to give a general background on how board members in a homeowners’ association are elected and what processes are in place to protect homeowners from problematic board members.
Understanding the process of how the HOA Board is elected and how members may participate in that process are important to understand, especially because the homeowners’ association Board will generally have the power to enact rules, regulations and the like which without question have an impact on a homeowner’s overall experience living in an HOA community. It is also important for members to understand what can be done in the unfortunate event that a board member fails to act in a manner that the homeowners’ association deems is in the best interest of its members.
Understanding the HOA as a Separate Legal Entity.
Depending on what state your homeowners’ association is located in, several different possibilities exist as to what type of legal entity your homeowners’ association is and accordingly, the process for electing and removing board members. In many states, a homeowners’ association is a non-profit corporation which is formed as a separate legal entity from its members by filing what are known as Articles of Incorporation with the Secretary of State’s Office in a particular state. The type of entity that is formed is also generally tied to what was designated in the original documents that formed the neighborhood which is governed by the homeowners’ association. This document might be referred to as a Deed of Dedication or other similar document and generally describes the CC&Rs that govern a particular neighborhood. For homeowners’ associations that are formed as non-profit corporations, state law will generally govern how Bylaws can be enacted by such a corporation and also the process to elect and remove members of the Board of Directors.
In other states, a homeowners’ association can be its own special type of legal entity which also includes a special set of laws that govern how the organization is formed and run and also how elections are held for a particular organization. This type of law is prevalent in states that have an abundance of HOA communities.
HOA Election Process
In general, a homeowners’ association will typically enact a set of Bylaws that govern how the original Board of Directors will be elected and how subsequent elections will take place and at what intervals of time. Most Bylaws would provide that the original directors are nominated by members of the homeowners’ association. The Bylaws may also specify how many directors will make up the board and also how vacancies might be filled in the event that a director resigns. It is very common for an HOA Board of Directors to have an annual meeting at a designated time and place for the purpose of electing directors. The Bylaws will also likely specify how officers are elected from within the Board of Directors and which positions are the designated officers. A typical configuration for an HOA Board of Directors would include a President, Vice-President, Secretary and Treasurer. In most cases, HOA members elect the directors who then in turn elect the officers. This will generally be set forth in the association’s Bylaws and/or CC&Rs also known as the “governing documents.”
Terms Limits For HOA Board Members
Most HOA Bylaws have limits on the number of terms that a particular board member can serve so as to ensure that there is some changeover in board members over time. In addition, most Bylaws also provide for staggered terms for Board members so that there is not a 100 percent change of board members and officers in any given year. How the terms are set up is a function of both the HOA’s Bylaws and also potentially state law depending on what state the homeowners’ association is located in. Many homeowners’ associations simply have annual election of officers and stagger terms for directors so that only a few directors cycle off the board at any one time.
How To Remove an HOA Board Member
The first place for an HOA member to look when trying to determine how to remove a member of the Board of Directors is the association’s Bylaws or its CC&Rs. The question can also be a two part depending on if the party in question is only a director or also an officer. In other words, it would not help much to be able to remove an officer from their role as an officer but have them remain on the board of directors. In most cases, a majority vote by the Board of Directors would be enough to remove the Officer from his or her role. This may vary based upon the association’s Bylaws and CC&Rs and can also be determined by state law. The general idea is that those elected to officer positions serve at the pleasure of the board, therefore, can be removed by the board.
There are also differences in HOA rules depending on if a homeowners’ association is governed by its members, or governed by the Board of Directors. This is determined by the Bylaws of the organization itself. Most homeowners’ associations give members voting rights that are similar to those of shareholders in a for-profit corporation. In other cases where the Board of Directors controls the organization, the members of the HOA do not vote directly on matters. In either case, how the structure is set up depends on the Bylaws adopted by the homeowners’ association.
The removal of a problematic director from an HOA Board is not likely to be a simple process. The initial place to start would be for the members to attend a board meeting to raise concerns with the board. Another alternative might be an individual meeting with the board chair or other board members to discuss the concerns. If these options do not work, then the next step may be to consider the formal options for removal of a director as provided in the association’s Bylaws.
In general, the removal of a director can happen in a few different ways. The most straight forward is if the director is not re-elected during the normal election cycles or processes which can vary depending on the situation. In other instances if the board or members seek to remove a director, it can be done through such processes as a special meeting for the purpose of voting on such matters. This typically requires a notification to the director in writing, a notice process for scheduling the special meeting and also an advance notification requirement. The process may also be governed by state law which may provide specific processes or criteria that must be followed in order to remove a board member. Owners may also seek to effect change within a homeowners’ association through the democratic process by:
Running for the board,
Contesting the reelection of a board member or officer, and or
Organizing amendments to the association’s Bylaws or CC&Rs following the process outlined in the association’s documents.
Reasons Directors/Officers Can Be Removed
Board Members of a homeowners’ association are considered to be stewards of the organization which is generally deemed to be a charitable, non-profit type of organization. Among the basic things that are required of non-profit board members is that the board members act as fiduciaries, meaning in the best interest of the organization and for charitable purposes. This requires board members to put the needs of the organization ahead of their own and to not act in a manner that would be considered self-dealing. Examples of self-dealing could be situations where the board member has a conflict of interest in a particular decision, vote or course of action but acts in his or her own best interest instead of the greater good of the organization. Thus, these types of breaches of fiduciary duty could be reasons that a board member is removed. There are also situations where the board members simply cannot get along or perhaps a particular faction of members within the association that disagree with the decisions made by a particular board member.
State law often also governs situations where a board member can be automatically removed in certain circumstances. This might be in the case where a board member is convicted of a felony, there is theft or embezzlement or something of a greater magnitude. In the garden variety situation where there is a disagreement over items like management style, a particular vote and similar items, it may be less likely that removal is the clearest option. A better course might be attending meetings to raise concerns and to attempt to build consensus with other board members so that the issues are resolved in that way.
The process to remove a difficult member from a homeowners’ association board will depend greatly on the type of issues involved in the removal, the organization’s Bylaws and state law concerns. A good place for an HOA member to start to avoid issues that can lead to a desire to remove an HOA director is to be involved in the process of attending meetings and providing input into the governance of the association. After all, at the end of the day, the homeowners’ association members and directors are neighbors and will have to interact with one another. As such, it is often best to use a common sense problem solving approach to these issues rather than assuming than heading directly for removal of a director as that outcome may well lead to more problem than solutions.