A Guide to Understanding the HOA Elections Process
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Overview
Homeowner’s Associations come with many interesting and different processes for most first time members of an HOA community. However, one of the most critical processes members 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 will give homeowners 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 is essential, mainly because the 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 crucial for members to understand what can be done in the unfortunate event that a board member fails to act in the best interest of its members.
Know The Associations’ Legal Entity.
Depending on the state the HOA is located in, several different possibilities exist as to what type of legal entity an association is and, accordingly, the process for electing and removing board members.
In many states, associations are organized as non-profit corporations formed as a separate legal entity from its members by filing Articles of Incorporation with the Secretary of State’s Office.
The association’s type of entity is also tied to the original documents that formed the community. This document might be referred to as a Deed of Dedication or other similar documents and generally describes the CC&Rs that govern a particular community.
For associations formed as non-profit corporations, state law will govern how the Bylaws can be enacted and also the process to elect and remove members of the Board of Directors.
In other states, an association can be its unique type of legal entity, which also includes a particular set of laws that govern how the organization is formed and run and also how elections are held. 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 provide that the original directors be nominated by the members of the homeowners’ association.
The Bylaws may also specify how many directors will make up the board and also how vacancies may be filled if a director resigns. It is common for an HOA board to have an annual meeting at a designated time and place to elect directors.
The Bylaws will also likely specify how officers are elected and which positions are designated. A typical configuration for an HOA Board 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 information will generally be outlined in the association’s Bylaws or CC&Rs.
Terms Limits For HOA Board Members
Most HOA Bylaws have limits on the number of terms that a particular board member can serve to ensure that there is some changeover in board members over time. Also, most Bylaws provide for staggered terms for board members to avoid a change of 100 percent 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 the state the homeowners’ association sits. Many associations have an annual election of officers and stagger terms for directors so that only a few directors cycle off the board at any one time.
Reasons Directors/Officers Can Be Removed
Board members of a homeowners’ association are considered stewards of the organization, generally deemed to be a charitable, non-profit type of organization. Among the basic requirements for non-profit board members is that the board 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 community 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 community. Thus, these types of breaches of fiduciary duty could result in the removal of board members.
There are also situations where the board members cannot get along, or perhaps a particular fraction of members disagree with the decisions made by a particular board member.
State law often governs situations where a board member can be automatically removed if a board member is convicted of a felony, theft, or embezzlement or something of a greater magnitude.
In the situation where there is a disagreement over management style, a particular vote, and similar circumstances, 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 to resolve those types of issues.
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 will also depend 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 process may vary based upon the association’s Bylaws, CC&Rs, and 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.
Most HOAs 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, the association’s structure depends on the Bylaws adopted by the HOA.
The removal of a problematic director from an HOA Board is not likely to be a simple process. The first 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 option is not to re-elect the board member during the regular election.
In other instances, if the board or members seek to remove a director, it can be done through a special meeting to vote on such matters. This process typically requires a notification to the director in writing, a notification 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.
Conclusion
The process to remove a problematic member from a homeowners’ association board will depend significantly on the type of issues involved in the removal, the organization’s Bylaws, and state law.
The right 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, 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 practical problem-solving approach to these issues rather than assuming and heading directly for the removal of a director as that outcome may well lead to more problems than solutions.