Unusual HOA Quorum Issue

My HOA board has three directors by our Bylaws. Coincidentally two of the three directors are simultaneously in the process of selling their homes and have resigned from the Board. Can the one remaining Director constitute a quorum to conduct business, basically unilaterally?

Furthermore, our bylaws state that "A vacancy in any office may be filled by appointment by the Board.” He has interpreted that to mean he is allowed to unilaterally appoint whomever he wishes to fill both vacant positions. Theoretically he is then able to unilaterally "stuff" the board with his allies, permitting him unchallenged authority for at least two years (until both his allies finish serving the remaining term and be replaced over the next two annual elections).

To some extent, the surviving Board member is in a catch-22 situation. If he doesn't constitute a quorum by himself than he can't conduct business. But business must be conducted to appoint at least one replacement.

If I were him, I would feel compelled to have a quick election, if for no other reason than transparency. But I've found this particular Board member to be the despotic type that would love to manage the HOA without challengers for as long as possible.

The actual answer is NO. However, they can appoint others to the Board so a quorum can be achieved. The basis for this answer is the Virginia Nonstock Corporation Act, specifically
§ 13.1-862. Vacancy on board of directors (scroll down the link page), which says:

Unless the articles of incorporation provide otherwise, if a vacancy occurs on the board of directors, including a vacancy resulting from an increase in the number of directors:
3. If the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of the directors remaining in office.

However, until such vacancies are filled, there is an outside the box, though some may question it, solution:

Prior to the other Directors leaving, the Directors can vote on a motion similar to:

The Board approves and directs Mr/Mrs abc, to 1) pay all invoices incurred by the Association; 2)make all arrangements, take all actions necessary to hold the annual meeting in [month]; 3) renew or bid out and enter into a new agreement for any existing contract that is ending prior to the annual meeting; 4)act in place of the Board for all association business until such time as the expected vacancies are filled by appointment or filled by election at the annual meeting.

This may protect and allow the individual to be a one person show. NOTE: I do not condone such action. However, if people have been asked to fill and nobody steps forward to serve, one must do what one must do to fulfill the obligations of the Board.

The other option is to petition the court for receivership (which is the absolute last thing you want to do).


Note, "Office" refers to Officers, not directors. However, there is typical language in most Articles of Incorporation and, as the link provided earlier shows, applicable statutes to allow the Director to fill vacancies by appointment.

The only limitation of who may be fill any seat will be the qualification factors, if any, that are in your governing documents.

An option to this, if you are willing to serve, is to contact the Board and have them appoint you now to fill one of the vacancies when it occurs. The basis for this action is § 13.1-862:

C. A vacancy that will occur at a specific later date, by reason of a resignation effective at a later date under subsection B of § 13.1-859 or otherwise, may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs.


However, it's not your decision.

Remember that you may utilize the suggestion made previously to contact the Board and have the current Board appoint replacements to take place when the homes are sold and the Directors resign. I'd approach those who are selling with your concerns and that suggestion.


Just remember that that individual was elected. The way to keep those type of individuals off the Board is to encourage everyone to actually participate or provide a proxy to you so you can exercise their vote.

Hope this helps,

Tim

NpS,
We have staggered terms. The surviving Board member was just re-elected at our Annual meeting in Apr of this year and so will be serving 3 years (until Apr 18). Any replacements appointed will serve the remaining terms of the Director who resigned. Thus one will serve until next annual election meeting in Apr 16. The other will serve until Apr 17.

Tim,
So you will quickly deduce that I am not a lawyer but from our more imaginative presidents I have learned that lawyers like to argue things that sound silly or illogical (such as the meaning of the word "is"), so I have to ask.

Since we currently have a Board with only one member, can't he still have a one man show by stating that he's held an "affirmative vote of the directors remaining in office" I.e., himself and thereby still allowed to unilaterally appoint two replacements?

I will check tomorrow morning on the other issue that both you and NpS asserted about the two appointees only serving until next Annual election. I guess that vote would elect two individuals...one for a one-year term, the other for a three year term. The surviving Director would have served one year of his term and have two remaining. Thus the staggered election cycle would be reconstituted for the future.

Tim,

So perhaps I'm a little thick-headed this evening but I think what you just said is that he can only do one thing without a quorum and that is "fill the vacancy" per § 13.1-862 A.3.

But doesn't that have the same effect? That he doesn't need a quorum to choose two people to fill the vacancies so basically can do it all by himself.

I interpreted your comment of the person doing it all by himself as running the association all by himself (a one man show).

Steve,

The order of precedence does place the statute above the Bylaws.
The order of precedence being:

Federal Law
Federal Regulations
State Statutes
State Regulations
County Codes
City Ordinances
Declaration of Covenants, Conditions and Restrictions (CC&Rs)
The Articles of Incorporation
Bylaws
Resolutions adopted by the Board.

NOTE: If a lower precedence document conflicts with a higher document the higher document controls (must be complied with) unless the higher document defers control to the lower document.

If you desire to fight this issue, you would need to do the following:

1) Politely inform the Board of the statute and the conflict that exists between the statute and the Bylaws. Tell the Board that you look forward to the annual meeting and the elections to fill the vacancies. Then wait and see what happens and how they reply.

2) At the annual meeting, bring this issue up (if it isn't resolved).
You need to wait for the annual meeting because they are not actually in violation of the statute until after that meeting (or at least until the notices come out saying if there will or won't be an election).

3) If not resolved. Make a complaint to the Virginia Office of the Common Interest Community Ombudsman (as that is the first step).

4) If not resolved, once a determination from the CIC Board is made, you may challenge the continued appointments through the courts.

Now - (if I may be practical in all of this) The above process takes time. The amount of time involved could take a year or (if you have to exercise step 4) years to obtain resolution. Therefore, to be practical, If step one fails to produce results, it may be quicker to gather support and do a recall. I would still make the complaint to the CIC board, but because of the time that it may take, those who were appointed would still be serving.

Might not be what you want to hear.
I know the process sucks.
However, I hope it helps,

Tim