Number of directors

Mark,

It really depends on the level of membership participation.

If the participation isn't there, then it won't matter how many seats are available.

I'm in a 130 lot development. We must have 3 directors but may have up to 5. It is rare that we actually seat 5 directors. Typically we can only sit 3-4.

We actually elect a whole board every year. Therefore, we stand a greater risk of losing corporate knowledge on the Board (than those Associations with staggered terms). To try and minimize this loss, we developed officer binders that provide a narrative on what the minimum job requirements are and then provide detailed explanations and examples on how to perform the tasks to meet those requirements. Since we have created those binders, there has been a quicker learning curve for newer members. You may want to incorporate something like that into your association. At the very least, the Board should develop an Association calendar listing the dates everything an association does needs to be completed by (things like corporate filings, taxes, issuing of 1099s, changing signature cards at the bank, reserve studies, when meeting notices need to go out, etc.).

TimB4,

Thank you for the input. On a previous board we were 5 members for 147 owners. But it seemed to work for us because we had more continuity and that made the job a lot more pleasant and that made it easier to get new directors. (Not that it wasn't difficult a times but usually when there wasn't anything interesting going on = apathy).

I can sure see the value of the binder, and we operate with a management company that does some of that...in theory.

What happens when you seat short of the five?

Interesting question...board conscription ;) hadn't thought of that!

The number of directors, IMO, should be based on the actual level of involvement of the community. If the association is self managed, generally you are going to need more volunteers to run it. Another consideration is whether the community has any committees that can take some of the load off the directors.

If you have a management company handling the day-to-day affairs, it should put less strain on the time of the directors. Some communities will have an on-site manager, which for some larger communities is an ideal situation.

If you change the number of directors, you will have to change the Bylaws, and in some cases the Articles of Incorporation, and in rare cases the CCRs. My recommendation is that you put in a minimum of three and allow the Board, when needed, to increase the size to five or seven. From my experience, HOA can run with three directors, with good management and some support from within the community.

Most Bylaws I have read require that the member meeting be conducted in accordance with "acceptable parliamentary procedures". Can't recall Board meetings having the same requirements, as many I have seen as good old fashion free for alls.

Bruce - Makes sense, thanks for that. We dont have those rules in our governing docs and don't run meetings with Robert's Rules but that's a good reason to...

The way our documents are written, "The affairs of this Association shall be managed by a Board of not more than five (5) nor less than three(3) Directors," we must have a minimum of three. Therefore as long as we seat at least three, there is no problem.

We always consider three to be our quorum number.

Tim,

I think this is a viable option for us. Can you explain the thinking behind not having two be a quorum when you only seat three?

Thanks for your help!

I'm sorry to keep bothering you but this is really helpful for our situation.

So at election time you just seat everyone willing to run up to five?

Again, I remind you that our terms are not staggered and everyone is elected for a one year term.

Also, when you seat four, how do you deal with 2-2 votes? Or does that ever really happen?

Darn lack of edit function.

It should read:

If you simply seat them without an election, then yes.

Dang may failure to fully reread everything. Dang the lack of edit function also.

Mark,

The way you worded your question, you would be correct.

By holding elections, if someone received zero votes, they would not be seated. However, as authorized in our State corporate laws and our governing documents, the Board could end up appointing them to fill the vacant seat.

I was speaking of the situation after the election where you only seat four. What happens on a 2-2 vote?

We also are a small association. Our documents require 5 directors with a quorum of three. We generally seat anyone who wants if there is a vacancy and not enough candidates. However, our documents also state that we can remove any director at any time by a majority vote of the board, so if a director is not working out for whatever reason they can be removed. It has only happened once when an owner wanted to be on the board and then didn't come to any of the meetings.

Unless the vacancy occurs at the time of the annual meeting the board can appoint a director to serve until the annual meeting.

All directors and potential candidate are voted on at the annual meeting.

We like 5 directors because it seems easier to obtain a quorum. I also personally think less than three is too small a number to fairly conduct association business.

Fred, Thanks for the insight. What terms for directors do you use? I definitely agree with the last sentence.

I am however trying to quantify how easy a five member quorum is compared to a two member quorum of three total. Did you try three and five was better?

Although increasing the size of any Board always run the risk of nothing getting done (as everyone is voicing a different perspective and agreements can be harder to reach), there are advantages to having a larger board. Here are a few:

More people = more knowledge and different perspectives (which can help in finding solutions).

Even if a small group has control of the Board, a larger Board can allow for new individuals to have a voice and possibly make changes.

If someone needs to recuse themselves due to conflict of interest, the perspective of fairness in the decision made is easier to maintain.

Workload is shared which can minimize burnout and perhaps encourage others to volunteer.

Fred, That makes sense. What terms do you have for the five? Yearly or staggered etc?

Say, Mark, what do your bylaws say, if you're incorporated? Most specify how many directors (or, something like 3-7), how long the terms are. Don't yours say anything about any of that? If so, as Richard points out, you will need to change your bylaws, which probably requires ballots to owners, etc., and an attorney's advise to make sure your comply with your state's laws.

A few years ago we non-board members wanted the board increased from 5 to 7, which our bylaws permitted. One reason was that the then Board always complained about how overworked they were. The 2nd reason was to get some of "our people" on the board at the next election. One of the arguments we used was that it's easier to achieve a quorum of 4 on a board of seven than a quorum of 3 on a board of 5.

Intuitively that made sense and we were right as i asked a statistician friend of mine to do his magic to figure out the probability of achieving quorum in each circumstance. But it turns out that although statistically significant, the odds of making quorum weren't a whole heck of a lot better with a board of 7.

Do note that even with an odd number of directors, there will be absences so tie votes can occur among directors. If ties do occur, the motion fails.

You, since you do have a PM who does some tasks, may want to consider a good committee structure to relieve the Board of some of its tasks and to groom future board members.

(Excuse me if i missed anything, I goat a little lost reading this thread.)

Our docs only require three board members and they are also staggered and are three year terms. What we found to be helpful is this "custom" that was put in place for easier continuity.

Third Year of term your the President-you are the responsible one to make sure stuff is being done etc and sole contact with mgmt. if you have one.
Second year your VP- your working closer with the President to prepare for taking the reins
1st year is Director- wide eyed and bushy tailed, this first year gives them a chance to see everything in action.(oh who can't recall those innocent years?)

The idea was so that by the time the Director is in their third and final year, they have the knowledge and experience in taking hold of the reins for their last year of their term. Works with our without management company.

The only time we found a board of three to be a problem was when some decisions needed to be made, we had the quorum, but we were on opposite sides of the issue, so the third director was desperately needed to break that tie. But this past year that was difficult because the third director was MIA. (another story)

Tim, wow a new board every year? No wonder you are always on point! Thanks for deciphering my post!

I like the idea of a staggered board with a three year term, but for our community there aren't enough people who have the time or interest to be an effective president. After 6 years I am still learning every day.

Although we have a good management company I have never found it makes the boards job easier. If they were in house PM's and paid to be full time managers it might be different, but when they are probably looking after 10 or 12 associations it isn't always realistic.

The BOD is ultimately responsible for the Association and, in my opinion, responsible for making sure the PM is aware of any issues and doing what is necessary to correct them. Maybe our association is an exception, but we seem to have issues arising every week that need attention.

JoK, Thanks for the insight, our terms are currently 3-2-1 for our three directors. In that scenario you always have years where two are leaving if they don't run again. It leaves a single director responsible for continuity. (That's where this all started for us).

We discovered that the only way to avoid two leaving in a single year was to put everyone in for three years as you do.

My concern with that idea is the number of years of service. It just seems like a lot to ask and would make it hard to get people to volunteer. In our 54 owner community, it seems you would likely only get the older retired people, non-working wives/husbands etc.

Shorter terms would seem to encourage people to "try" it out and if it suits them and their lifestyle - they can run again.

Mark,

One thing to consider with 5 directors and staggered terms, the candidates now have to identify which vacancy they are running for, as you may have a seat with a one year term vacant at the same time you have a seat with a three year term vacant. This actually could cause you to have 2 or 3 candidates for the one year seat and zero candidates for the 3 year seat.

When we had a spate of resignations over a one-year period and our bylaws call for staggered terms, at our next election (5 spots available on a board of 7), the top 3 vote-getters received a term of 2 years, and the next 2 a term of one year. Though our bylaws don't say anything about this approach, our HOA attorney opined that our bylaws' requirement of staggered terms meant we were OK having such an election.

We don't have three-year terms, which, imo, would discourage candidates.

Bruce, that's how we do it now but I think that is at the management company's direction.
We don't pre-decide term assignments before voting.

This time we are seating two directors but both are two year terms which makes no sense (given we are 3-2-1) now that I think about it.

The thought that was nagging at me was what happens in a 3-2-1 if a one year director comes back up for election along with say a three year spot too. Could the one year take the three year spot if he so chose? Or take the one year spot making a rookie sign up for three?(!)

In the end I have some concern about someone having to decide to run without knowing if they are signing up for one or three years based on unknowable vote popularity.

The more we talk about this the more I can see the value of all one year terms.

Carol, three years is a long time to commit to and early resignations make everything more difficult for everybody else.