one man board

more or less, yes it is possible.

In my case, by board members being late with their assessments, and no one in the community willing to serve, even if appointed.

JohnR4,

One person active does not mean one person necessary. What do your by-laws require for the number of directors?

GeraldT1
NNJ

In our Association when a Board member resigns the remaining Board members appoint someone to fill out the term of the member who resigned. Most HOA's are legal entities i.e. the corporation and if there are no directors it goes into receivership like Harold said. Trust me if you think your dues are high now; wait until you have to pay someone that the court appoints. I do not believe you can legally "turn it over" to the management company. Roger your thoughts on this.

If there are no Board members then there is no one to appoint the MC to run the association. The court could appoint someone and it would be very expensive. IMO a better solution is to have an "inactive Board" which appoints the Managing Agent to run the association. The Board would still be in charge but would authorize the responsibilities of every officer to the Managing Agent. An even better solution is prevention - have most duties done by the Managing Agent so Board members will not burn out. They attend meetings (can even entice members to run for the Board by having meal meetings paid by HOA), set policy, and let the Managing Agent do the rest - set up and run meetings, take minutes, hire contractors, pay bills, and whatever else the Board wants.

Sorry Roger, but no way would I allow the MC total control. Until the states enact some oversight and require bonding of MCs, there is just too much temptation there. That opinion was probably reinforced because of the recent MC, who is a convicted felon, here in Arizona accused of fraud & theft, and your matter-of-fact reply to that thread that "management companies defraud HOAs several times a year." Just wonderful. No thank you. Harold

Harold you don't need the State to require bonding of management companies, it's in our By-Laws and if it's not something every association requires it should be. It's not just the occasional dishonest MC you need to be on guard for. I was on the Board of Trustee's of my Life Squad, we even required two signatures on a check and still the treasurer managed to steal quite a bit before we caught her. She did make restitution when she got out of jail. Our HOA insurance policy bonds the BOD and we require the MC to provide a bond:

The Board shall obtain fidelity bond coverage with respect to any person who either handles or is responsible for funds held or administered by the Association, in an amount no less than the maximum funds that will be in the custody of the Association or its management agent at any, time while the bond is in force. Provided, however, the fidelity bond coverage must at least equal the sum of three months’ assessments on all living units in the project, plus the Association’s reserve funds. A management agent handling funds for the Association shall also be covered by its own fidelity bond, at the sole cost of said agent, naming the Association as an additional obligee. All bonds shall provide for ten (10) days written notice to the Association before the same may be canceled or substantially modified for any reason.

Roger, I don't know who judges appoint as receivers, but I'm sure they have a pool with a wide range of business experiences. I'm just quoting from the non-profit law and the analysis of that section of law by a law group in AZ who compiled a book of all the laws applicable to planned communities and condominiums. Their binder of the laws is all inclusive and they gave them to local managers, some of whom passed them out to presidents of their communities.

My point about paying for meals had to do with this being an inactive board that you describe. Why would an HOA give any monetary incentive to a board that is not going to do anything but meet once a month for a free dinner? You could probably get the entire community to serve on that board.

Bylaws or planned community laws do not have a provision for an inactive board. The Bylaws require certain duties of directors and officers. The inactive board that you describe is simply a group of people who don't want to do anything, but are willing to come out once a month for a free meal.

To me, that's a recipe for continued disaster that was initially created by all the directors resigning. The inactive board is not going to carry out their responsibilities, which could get them into trouble for negigence, because the insurance company and courts are not going to differentiate between an inactive and an active board. They're going to differentiate between carrying out responsibilities in a business manner and being negligent.

The MC is not going to have the guidance and supervision that is required, and neither are the vendors. From my short experience in this business, when nobody is watching the store, things are not going to get done.

The MC is charged with offering advice to a board, or in this example, the community, of when they should consult experts in the field, and on the courses of action that are available to them, so they can make a decision.

If I were the MC, I would write a letter to the homeowners informing them that there is no board of directors, and that the Bylaws require a minimum number of directors. If members do not step forward with the minimum number to serve as directors, then the MC or a community member will need to contact an attorney to petition the courts to appoint a receiver to run the Association, which is a corporation that is governed by the non-profit Corporation law.

It should also be explained to them that this will be a very expensive sitation and the homeowners could be mandated by the judge to suffer a special assessment, or a huge increase in dues in order to pay for the receiver.

With this letter, there will probably be quite a few responsible people come forward because they would be able to foresee the problems they would face without a board. If they don't come forward then they have shown sufficient apathy to deserve to have to pay for the courts to run the store, and possibly dissolve the corporation.

I believe it would be improper for an MC to ask for people to serve as an inactive board because there is no such thing allowed in the Bylaws, and would be tantamount to having the MC run the Association and supervise themselves. That would be a conflict of interest, in my layman's opinion.

Roger, I think we're close to being on the same page, but not quite.

Our Bylaws state: "The Board may delegate the duties listed above (Officer duties) or other duties to a manager or managing agent, or other: however, such delegation shall not relieve any member of the Board of his responsibility for such duties."

So the board can not delegate any responsibilities. The buck stops with the BOD.

For the Duties of the Board, our Bylaws state: "It shall be the duty of the BOD to..." "...(b) supervise all officers, agents and employees of the Association, and to see that their duties are properly performed..."

If the inactive board is only going to meet and have dinner, they are not going to attend to their duties. They cannot delegate their responsibilities, and neither can they delegate their duties to supervise and see that the agents, etc., are performing their jobs.

An MC can do a lot of financial damage if it becomes careless and is not supervised. So can the vendors. In this area the property managers typically each have 7 to 10 properties to manage, and they are extremely busy. I hear them complaining at CAI meetings that they have no life except the job. Because of that, it is easy for these managers to be slack where they know they can, and do the job properly where they know the board is watching.

Any elected board must know that they have to perform the duties that are not permitted to be delegated, and to live up to their responsibilities. If they do that, then they are an active board. Certainly they can delegate the permitted duties, but that's all.

Roger, I probably misunderstood your interpretation of inactive board. So we are on the same page.

Yes, managing from 7 to 10 properties is a real problem, which is exacerbated by inexperience.

What happens is that the managers who become very good are either promoted or leave for a higher paying job somewhere else.

Before I joined this board, the MC they had some years ago was accidentally getting our dues income credited to another Association with a similar name. There was some reason why the treasurer didn't pick up on it, but I forgot. Anyway the one manager that was really good, had been transferred to different properties and the one they replaced her with was not liked by the board for several good reasons.

The board told the MC that they would not change MC's if they would sit down and explain why the fund problem occurred, and what they were doing to see that it did not happen again, and also if the previous manager were assigned back to this association.

They refused all the requests, so an MC change was made. The good manager went on to become vice president of the MC company a couple years later.

In Maryland legislation will be introduced this session to 1) require management companies be bonded to practice in Maryland and 2) allow for receivership for common ownership communities that are so messed up no one wants to serve on the board.