2-year-old HOA (Texas)

Good morning all. I found this site last night by searching for some of the issues I am seeing with my HOA's current BOD, and would like to inquire whether my interpretations of By-Laws and state statutes are reasonably correct according to the pool of more experienced folk here =)

Quick note: our annual meeting is close enough to the beginning of a calendar year that for purposes of making discussion easier, I will treat a term-of-service year as equivalent to a calendar year.

Background:
Transfer of my BOD was executed in early 2014 at an Annual Meeting. At that time, we elected 3 new Board Members, who were assigned the Offices of President, Vice-President, and Secretary/Treasurer in order of votes received. The voting style was the Cumulative Equal & Even style described on the wikipedia page on Cumulative Voting.

I was not present at the 2015 Annual Meeting due to work obligations (out of town), but it's my understanding that that meeting did not have quorom.

Fast Forward to about 3 months ago:
I volunteered for a new By-Laws Committee whose purpose was to review the By-Laws and CC&R and propose amendments to both documents to effect the removal of clauses granting the Declarant any voice/rights/whatever. My particular interest is in making sure all articles/section/clauses are harmonious, which is something I have a knack for in my blue-room job.

In the course of reviewing the By-Laws section regarding the BOD, our committee quickly identified a serious problem - not with the docs, but in that the BOD has failed to execute them.

Issue #1:
Our By-Laws call for a 3-member BOD, with 2-year staggered terms - one year we elect for one seat, the next year we elect for the other two seats. For the transfer from Declarant control, for the first election, one seat serves for 1 year to effect the staggering, then all seats sit for 2 years. During the 2014 Annual Meeting, designation of which seat was the 1-year seat was not made, and we do not have a mechanism under the By-Laws or state statute for resolving that issue. Has anyone else run into this, and what has been the resolution? I can think of 3 ways of handling it: a) gentleman's agreement, b) assigning the 1-year seat to the person with the lowest number of votes in the original election, or c) straws.

Issue #2:
Once we identify the 1-year seat, it is my interpretation that that seat was instantly (and retroactively) made vacant at the failed-to-quorom Annual Meeting, and has sat vacant since then. Subsequently, it would not be possible for a roster of Officers to qualify for 2015. We do have a By-Law stating in the absence of qualified officers, the previous roster of officers continues to serve, and in our case, is currently in service.

Issue #3:
And this one gets sticky: for this, the /reason/ for the vacancy becomes important.
A) It is my opinion that the vacancy is due to expiration of term.
B) The By-Laws empower the Board to appoint someone to a vacant seat in 3 cases: Death, Resignation, or Removal (later language in the By-Laws regarding Removal make this the common understanding of "recall"). The By-Laws are silent on the reason of expiration-of-term.
C) Texas statute regarding Election of Board Members:
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Sec. 209.00593. ELECTION OF BOARD MEMBERS. (a) Notwithstanding any provision in a dedicatory instrument, any board member whose term has expired must be elected by owners who are members of the property owners' association. A board member may be appointed by the board to fill a vacancy on the board. A board member appointed to fill a vacant position shall serve for the remainder of the unexpired term of the position.
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My interpretation - again, this is where I am looking for 2nd/3rd/92nd opinions...
Since our By-Laws and CC&R a) define specific cases where a vacant BOD seat may be appointed, b) are silent on the case of vacancy-by-expiration, then the statute clause requiring the seat to be "elected by owners" is the language of force; ie, since the vacancy is by expiration, it can only be filled by election - not by appointment. The statute goes on to say that an appointment in violation of the statute is void.

So, to remediate the issue *today*, I believe the only way of fixing the issue is to hold a special meeting to elect someone to the vacant seat. I do not believe the remaining members of the board are empowered under the By-Laws or by statute to appoint the seat.

I've notified the sitting BOD of these issues, although for the moment by unofficial means - since we are actively working on revising the By-Laws, we have active email threads about several things. I did request placement on the agenda of the next BOD meeting (was supposed to be on 10/1 but it has been cancelled).

Since the first meeting did not meet quorom, nothing happened (other than the 1 BOD seat going vacant-by-expiration). We do have language in our By-Laws calling for a second meeting at half the original quorom (and so on, consistent with what I have read elsewhere), but no second meeting has taken place. I actually do have recourse-by-statute here (Sec 209.014) and am debating on whether to take action on it - I can force a meeting.

I am open to having the 2016 Annual Meeting elect all three board seats - this time with clarification of which seat has which term. But unless my interpretation of things is very wrong, I am disinclined to accept only 2 board seats being up for election.

On a sidebar matter, I'm also of the opinion that the sitting board is not executing their duty to provide notice of board meetings - TPC Sec 209.0051(e), but the statute is worded poorly and permits the board to only give notice "on any Internet website maintained by the association". We have two separate websites, both of which require logins to see anything, and the URLs for which are not well-communicated. I'll take that up with my state rep.

FWIW, I am not particularly interested in standing for election to the board; as above I joined the committee to ensure harmony amongst our various documents, and relevant state and federal law, likewise my interest in this matter is to ensure that the operation of the board is in harmony with those same documents and laws.

Thanks in advance for any advice.

-j

If I understand you correctly, if a seat becomes vacant by expiration, and no election is held to re-fill the seat, the incumbent continues to sit? Ugh.



You landed on a fundamental problem - we didn't settle the board classes in the 2014 Annual Meeting / Election. I'm trying to push that to be resolved.



Correct for us, seems to be the norm.



Since quorum was not met, no meeting could take place, and no election could be held. I think the question of who was on the ballot is mooted, and tbh, I don't really care who was, and frankly I would be perfectly fine if in our 2016 Annual Meeting and Election, the 3 sitting members were reelected. I'm focusing on process, not content, as it were.



I can see how that clause in our By-Laws could be interpreted that way. Added that to my list of discussion points for the By-Laws Committee to address and hopefully change.

Thanks much for the reply.
-j

I do not recall receiving a ballot by posted mail. I'm also curious as to what happened at the 2015 Non-Meeting.

I have some emails into the BOD asking for their plans; if I don't get satisfactory answer (meaning they are figuring out how to get legit again), I'm going to go forward with getting copies of all minutes records for any meeting in 2014 and 2015 and figure out what happened, what needs to happen to get back on-track, and if I need to, exercise some statutory rights.

(sidenote: I've got a good rep at work for that sort of thing - just this past month, I was brought into a project that had lost direction after 1.5 years of inaction, identified what scope remained of the original project, and established a zero-cost order-of-events to complete and close the project /flex =D ).

I agree with your comments on a "restart" in 2016 - that seems to be the most effective way to get back on-track.

Have a good Sunday, sir.

Jeremy

When there is not a Quorum for an election then the existing BOD stays in place.

When a BOD Member resigns, the BOD may fill the vacancy. Your Bylaws will say if it is filled only until the next election or until the term being filled expires.

As I understand it, the existing BOD (3) will have served for two year terms (2014 and 2015) whereas in 2014 one should have served for a 1 year term, then thereafter all terms would be for 2 years years, thus staggering the BOD and this was not done. If I am correct, in the upcoming election all 3 terms will be up for election. Easy enough. Admit the error and go back to the original procedure and say the lowest of the 3 vote getters in the upcoming election will serve a one year term. Be thankful you have people that want to serve.

Hope this helps.

Jeremy

First, to level set, I am the President of the BOD in the Association in which we live, secondly, my wife and I own a HOA Management Company, we are in Texas.

I'm sorry I don't have time to go into your problem in detail at the moment, most likely I will be able to provide further input tomorrow or Tuesday, HOWEVER . . .

The Texas Legislature enacted changes to the Property Code in the 2013 session--as they do every session. One of those changes addresses election of a BOD if a quorum is not present at the Annual Meeting. Without going into detail, the election of the original Board was "legal" without a quorum. I cannot tell if the Annual Meeting in which the election took place followed the process which must be followed; a legal challenge that the process was not followed would probably not stand as the net result is the same--a BOD was elected. If the meeting minutes were prepared accurately it would be possible to tell from the minutes if the process was followed. The staggered term problem is a separate and unrelated issue.

Any other business transacted in that meeting, if a quorum was not present, should not have taken place and is of questionable validity. The 209 citation you provided does not appear to include the election without a quorum language to which I am referring, I don't recall at this moment if it is in the paragraph you cited or elsewhere in 209.

Meeting notice: A quick read of your post indicates the Property Owners may not be receiving proper notice of meetings.

For everyone else, Guys, what takes place in your states regarding electing a BOD without a quorum, or continuance in office, was the norm in Texas until January 1, 2014. At that time, the aforementioned change took place which allows the election of the BOD at a meeting in which a quorum has not been attained. No other business may be transacted, as is probably the case in most states.

I found this link from 2011 and it involved an HOA election in Texas where quorum was not reached.
http://www.hoatalk.com/Search/ForumSearch/tabid/87/view/topic/postid/108586/Default.aspx

I am going to pick on GlenL as he wrote that the Board was correct in not calling another meeting. That is incorrect. This is a member meeting and not a board meeting. The members would decided whether the Bylaws are followed and a second would need to be called.

Also, according to POA statues in Texas, when the term of a Board member has expired an election MUST be held.

I can find anything in the POA statues that allow, on their own, elections without quorum. In the thread above, it was mentioned that it was done in Michigan.

Found this as an amendment of a Texas Bylaws.

http://goslingpines.org/index.php/documents/bylaws/37-first-amendment-to-by-laws/file.html

BTW, ALL governing docs in Texas must now be recorded with the county, including Bylaws and Rules and Regulations.