Because many homeowners associations have one or more individuals who have served as a director, and frequently the president of the association, for many years, a frequent issue that arises concerning the management of a homeowners association is how long a person can continue to serve as a director of the association. Such situations tend to prevent the introduction of new leadership that brings different perspectives and skills to an association and can enable long-time board members to further their own agendas and place their own personal interests ahead of those of the community.
The length of time that any one person can serve as a director of a homeowners association is determined by state statutes, the associations governing documents, and action in the form of voting by association members.
Provisions Contained in State Statutes.
State statutes generally contain provisions that either trump or defer to an associations governing documents relative to the term of the associations directors. For example, the state of Florida has a statute that limits the number of terms that the directors of condominium associations can serve to four consecutive two-year terms unless they are approved by a vote of 2/3 of the members or there are not enough eligible candidates to fill the director seats that need to be filled. Such language controls over any inconsistent language that may be found in the bylaws for a condominium association. More common state statutes relative to the term a director may serve defer to the association and contain language such as the following:
Unless the articles or bylaws otherwise provide, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified, unless the director has been removed from office.
Provisions Contained in Governing Documents.
Because the language of the typical state statute leaves it up to the association to include provisions in their articles or bylaws that describe the term for which a director can serve, it is extremely important for all homeowners associations to have adequate language in their governing documents that clearly specifies how long a person can serve as a director of the association. Although the statutes state that such provisions may be found in the associations articles or bylaws, they are most often contained in the bylaws for the association.
The provisions contained in an associations bylaws concerning the term that directors can serve should take into account uniform terms, staggered terms, and limits on consecutive terms.
- Uniform terms– uniform terms for serving as a director are stated periods that a director serves without any limitations on how many terms he or she can serve. An example of a provision in bylaws allowing for a uniform term is as follows:
Each director, including a director elected to fill a vacancy or elected at a special meeting of Members, shall hold office for a term of one year and until a successor director has been elected and qualified.
- Staggered terms– older bylaws generally contain language that sets the term that a director serves at one year, which necessitates annual elections for the selection of all directors for the next year. It is now common for newer associations, and older ones to amend their bylaws, to provide for two-year staggered terms in order to create continuity on the board of directors. An example of a provision for staggered terms in the bylaws of an association with 5 directors is as follows:
The directors of this Association shall serve for a term of 2 years, with two directors elected in odd-numbered years and three directors elected in even-numbered years.
- Limits on consecutive terms– a term limit is a restriction on the number of consecutive terms that the same person can serve as a director of an association. Bylaws that contain no term limits permit any one person to be re-elected to the board year-after-year until they cease to be qualified to serve, or they die. Bylaws that impose term limits allow the same person to be re-elected for a specific number of terms (generally 2 4) and then they are unable to serve for a year, unless there are no other association members who are willing to serve. The following is an example of language in bylaws that have no limitation on the number of terms a director can serve:
There shall be no limitation on the number of consecutive terms to which a director may be reelected.
The following is an example of language in bylaws that impose limits on consecutive terms that a director may serve:
Directors shall serve no more than two consecutive terms, however a director may run again for election after being off the Board for one year or longer. Each director, including a director elected to fill a vacancy or elected at a special meeting of Members, shall hold office for the term for which elected and until a successor has been elected and qualified.
Homeowners Association Elections.
Homeowners associations are required by state laws to hold annual membership meetings to elect the associations directors in accordance with the procedures set forth in the associations governing documents (i.e. bylaws). Until such time as the election of new directors is held and the new directors are elected and take office, the existing directors remain on the board.
Unfortunately, it is not uncommon for an association to be unable to conduct an annual meeting and elect new directors because of an inability to establish a quorum of association members that is required for the election of the new directors. In the absence of a quorum, business cannot be transacted, the meeting must be adjourned to a future date, and the existing directors continue as the managing body. If the required quorum cannot be established after multiple attempts, state statutes allow for the board or an association member to file a petition with the court having jurisdiction over the association to lower the quorum requirement to the number of ballots cast. Unless such action is taken, an existing board will remain in place for an undetermined period of time. In such a situation, the only way new directors would get on the board would be if an existing director died, resigned, or was removed, and the remaining board members appointed his or her successor to fill the vacancy. That successor would then have the right to serve as a director until such time as the members conduct their election.
Because of the potential for an association to be unable to elect a new board due to the lack of a quorum of the members, associations can amend their bylaws to eliminate quorum requirements for the election of directors. By eliminating quorum requirements, the election of directors will be determined by those association members who are interested enough to participate in the election.
Notwithstanding state laws that mandate the conduction of annual elections, many association boards do not take the required action to conduct the membership meeting and the election of new directors. To address such a situation, state statutes provide that, if a current board fails or refuses to hold an annual membership meeting as required by the governing documents, a member of the association can petition the court having jurisdiction over the association for an order directing that the meeting of the members and the required election of directors take place within a specific period of time. Unfortunately, because a large percentage of association members are apathetic and do not want to become involved in their homeowners association, and/or because association members do not want to personally incur the costs of taking such action, this method of forcing the meeting to elect new directors is often avoided and the result is a continuation of the term of the existing directorswho failed to take the required action that was required for the election of new directors. An alternative to seeking a court order would be for the required number of association members to make a demand on the board of directors for the scheduling of a special meeting of the members for the purpose of conducting an election of new directors. Regardless of the manner in which members tried to force the election of new directors, there could still be the issues relating to the establishment of a quorum in order to proceed with the election.
Even though there are laws and provisions in a homeowners associations governing documents that mandate the conducting of membership elections of new directors and the terms that directors may serve, it is still possible for those terms to be extended as a result of the occurrences described above. Thus, although an existing board of directors has no right to re-appoint themselves to continue as an associations board of directors in violation of the requirements for conducting elections and stated term limits, the circumstances may result in those directors remaining in control until such time as the association members take appropriate action to ensure that elections are conducted and new members who are willing and able to serve, are elected to the board.
To reduce the likelihood of encountering problems with long-term directors retaining control over a homeowners association, associations should evaluate the need for amending their bylaws and association members should be proactive in taking the action that is necessary to ensure that required elections take place. Associations whose bylaws do not have provisions for staggered terms, or limitations on consecutive terms, or require a quorum that cannot be achieved can amend their bylaws to incorporate appropriate provisions to allow for same. Such an amendment would facilitate the election of new directors and prevent the same directors from continuing to control the association year-after-year. The process of amending an associations governing documents requires strict compliance with the appropriate procedures for amending the particular document and should always be undertaken with the assistance of experienced legal counsel. Additionally, if the association has had difficulty establishing a quorum for meetings of its members, it may also be necessary to seek a court order reducing the percentage of member votes that is required to adopt the desired amendments.