An HOA board member holdover does not often happen. But, when it does, community members typically don't know how to proceed. What exactly should you do when a board member's term extends?
An HOA board member holdover does not often happen. But, when it does, community members typically don’t know how to proceed. What exactly should you do when a board member’s term extends?
Within the context of an HOA (and most non-profit corporations), a board holdover is when the term of a board member expires yet they continue to serve as a director. This can happen for a few possible reasons:
The COVID-19 pandemic affected homeowners associations throughout the country. Due to the restrictions placed by state and local governments, it was impossible to hold face-to-face meetings. This forced many HOA boards to temporarily halt operations or continue them from a remote place. For some associations, it also meant having to skip or postpone their annual elections.
Even with the pandemic, though, many HOA communities were still able to hold their respective elections. They did this mainly with the help of videoconferencing platforms and the continued use of mail-in ballots. Many states also eased restrictions, allowing non-profits to conduct their annual meetings online. As such, the pandemic is not really an excuse for boards to completely miss holding elections.
It is worth noting, though, that some state laws can impede an association’s ability to hold elections electronically. For instance, in Florida, state statutes prevent HOAs from meeting a quorum remotely. Additionally, some communities are still operating under a state of emergency. And boards are using those emergency powers to delay their elections.
Many associations have bylaws that either prohibit electronic meetings or specify the need to hold physical ones. But, there are ways around this, too. If your bylaws permit mail-in ballots, then you can still hold an election in accordance with your provisions. All you need to do is hold a virtual meeting as a Q&A of sorts but save the voting for the mail-in ballots.
A lot of governing documents have become outdated because they were written decades ago. Many boards have had the same issue with their bylaws or CC&Rs placing a dollar limit on annual dues increases. With today’s available technology, you might consider changing with the times by allowing virtual meetings in your documents. After all, the future of HOA meetings will likely be a mix of electronic and in-person meetings.
Aside from a pandemic, an HOA board holdover can also arise from failed elections. Elections can fail to push through if, for instance, an HOA does not meet a quorum or the required number of voters. Unless your governing documents state otherwise, then the current board members will hold over until someone takes their place.
In an HOA community, the voting for the board of directors typically takes place annually. If you fail to reach a quorum, you will usually need to attempt the elections once again at the next meeting. In some cases, you can call for a special meeting for this very purpose. It is best to consult your HOA attorney to know what your next steps should be.
Failing to reach a quorum is one thing, but purposefully skipping the election is another thing entirely. If an HOA board intentionally fails to hold an election, it can be viewed as a breach of its duties. Most state laws and governing documents require HOAs to have elections on an annual basis. Thus, going against this can result in serious consequences for the board.
If your board deliberately fails to hold an annual meeting, homeowners can petition the court to force your board to do so. This way, they can ensure that elections take place.
If the board purposefully failed to hold an election and continued to serve beyond their term limits, are their actions considered illegitimate? It depends.
In Colorado, for instance, the law probably won’t deem the board’s actions as illegitimate because of certain provisions in the governing statutes (Colorado Revised Statutes Section 7-58-506). But, that does not mean the same principle applies to homeowners associations in other places. There is a real concern that a board’s decisions will be considered invalid because they are technically no longer board members.
One example of this is a case in Utah, where the district court reversed three years’ worth of decisions because the board willfully failed to hold their elections for the same amount of time. In that specific circumstance, homeowners kept silent because nothing had gone wrong thus far — until something did.
Ideally, you would successfully hold an election at the annual meeting. But, if that does not happen because you failed to reach a quorum, then it is best to hold the election again at the next scheduled meeting or call for a special meeting. In that case, the holdover board member would only retain their position until the next election.
When a holdover happens, the board member does not automatically start a new term. Instead, they retain their position for only a part of the term and relinquish their role as soon as a new person is elected. That newly elected board member, on the other hand, will serve for the time remaining.
The above cases can change, though, depending on state laws and your governing documents. As always, it is a good idea to check with your legal counsel.
Navigating the ins and outs of an HOA board member holdover can be confusing. After all, there are so many laws and governing provisions to keep up with. Even a single mistake can carry weight and put your board in a position of liability.
Luckily, an HOA management company can guide your board through the process and help in other aspects of community management as well. Start looking for the best one in your area using our online directory.
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