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TomK14 (California)
Posts: 1
Posted:
Our small rural HOA has run into a few problems we hope you maybe able to assist with solving.

Two of our newly elected Directors reconsidered serving and emailed in their letters of resignation. On the same day one Director then changed his mind again and emailed a notice rescinding his resignation. The second Director did the same several days later.

First question is whether these two “rescinding notices” are valid for retaining a seat on the Board or if these two Directors should be subjected to the rules for filling vacancies on the Board and re-vetted by the membership ?

Unfortunately, there are no specifications in the Bylaws for Rescinding a Resignation. To further complicate matters, it was pointed out at the last Board meeting; though the HOA is registered as a 501C non-profit with the Articles of Incorporation on file, the Bylaws were never approved by the board or membership.

At the last scheduled Board meeting the two Directors, who had resigned, sat in as Board members, changed the agenda at the meeting and made a motion to remove the one remaining original Director for what they decribed as: a “conflict of interest”, since the original Director was acting as the Treasurer and Road Manager (There was no other option available, due to the lack of volunteers for the Board and Officers positions, until now).

Are there any guidelines/ rules/regulations regarding operating an entity without ratified Bylaws?

Would the action by the two Directors to retain their seats and remove the third be valid?

Thank you .
NpS (Pennsylvania)
Posts: 4,216
Posted:
Welcome Tom

The most common sequence is as follows:
1 Director resigns, but continues to serve as a director until replaced;
2 The remaining board members select someone to replace the director who resigned - This does not involve a vote by the HOA members;
3 The replacement serves as director until the next election.

IMO, a director can rescind his resignation any time between the resignation and the selection of a replacement. Since no replacement occurred, no further action is required for the 2 directors to regain their seats.

The Developer usually creates the original Bylaws. When Association management is transferred from the Developer to the homeowners, the homeowners get whatever Bylaws the Developer established. Neither the homeowners nor the board approves these Bylaws.

A director who has been elected cannot be removed by the other directors. It would take a vote of the membership for that removal to take place. Under CA law, there a rigorous requirements that need to be followed - Making a motion during a meeting does not satisfy those requirements.


Sikubali jukumu. Read all posts at your own risk.
GlenL (Ohio)
Posts: 5,491
Posted:
Tom I would direct you to davis-stirling.com, this is a website run by attorneys specializing in HOA law in CA. There you can read the applicable statutes on things such as resignations, removal from office, by-laws, agenda etc.

As I understand it, once the agenda is set, its set and can't be changed to blindside someone. As NP pointed out a director elected by the homeowners can only be removed by the homeowners, the other directors can however remove them from their officer position.

Studies show that 5 out of 4 people have problems with fractions
KerryL1 (California)
Posts: 14,550
Posted:
Both NpS and Glen are correct re: CA Open Meeting Act (Civil Code) & CA Corporations codes concerning:

Only members (homeowners) may remove directors if members elected them. this may be in your bylaws.

Only items on an agenda posted 4 days in advance may be discussed an/or voted on a board mtg. in CA. The agenda may not be "changed" unless for an emergency (basically).

I cannot answer what happens when written resignations are submitted and then retracted. I suspect NpS is right.

As said above, bylaws don't need to be approved by the board or membership and in these bylaws is stated how to revise or rewrite them.

The director who's your "road manager" has no conflict of interest unless he didn't reveal when appointed road mgr.that he has an interest in such a company or a company that supplies gravel or whatever. If he revealed his "interest" in something that he may even profit from he not in a COI. He should not vote to appoint himself or on anything re: his (or, e.g., his relative's) interest in materials or services that would benefit them differently than other H/Os.

do vist the excellent site that Glen recs. Say, how many home are in your HOA?

LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By TomK14 on 10/02/2015 1:31 PM
Our small rural HOA has run into a few problems we hope you maybe able to assist with solving.

Two of our newly elected Directors reconsidered serving and emailed in their letters of resignation. On the same day one Director then changed his mind again and emailed a notice rescinding his resignation. The second Director did the same several days later.

First question is whether these two “rescinding notices” are valid for retaining a seat on the Board or if these two Directors should be subjected to the rules for filling vacancies on the Board and re-vetted by the membership?


To whom did they email their notices? Did the recipient have the authority to accept the resignation and did he/they actually accept it?

My thought is that if the remaining board members accepted the resignation by some sort of vote and notation in the minutes then it was a done deal. Otherwise, they are still on the board.

Quote:

To further complicate matters, it was pointed out at the last Board meeting; though the HOA is registered as a 501C non-profit with the Articles of Incorporation on file, the Bylaws were never approved by the board or membership.

Are there any guidelines/ rules/regulations regarding operating an entity without ratified Bylaws?


Your association is likely incorporated as a non-profit through the state. Status as a 501C can be granted only by the IRS. While I do not know the ins-and-outs of section 501C, generally it requires that the corporation be organized for some charitable or educational purpose. HOA's normally do not qualify.

As to the bylaws: how long has your association been in existence? If it has been longer than a few months since it was incorporated there is an argument to be made that the bylaws were constructively approved just by following them.

There is not much need to approve them at this point but if someone wishes to amend them then they need to be approved.

Quote:

At the last scheduled Board meeting the two Directors, who had resigned, sat in as Board members, changed the agenda at the meeting and made a motion to remove the one remaining original Director for what they described as: a “conflict of interest”, since the original Director was acting as the Treasurer and Road Manager (There was no other option available, due to the lack of volunteers for the Board and Officers positions, until now).

Would the action by the two Directors to retain their seats and remove the third be valid?


First, altering the agenda at the meeting is a violation of the Open Meeting Law. There was no emergency to justify the violation.

Second, if the third board member was elected by the members he cannot be removed by the other board members. Only the membership may remove a board member they elected.

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