Direct election of Officers by the Membership

Started by GenoS • 22 replies • 1543 views

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GenoS (Florida)
Posts: 4,276

Posted:

Our nominating committee has reported that there are a few new faces willing to run for officer/director positions in January. BUT they are only willing to do so if "the Bylaws are followed". It turns out that one woman wants to "run for president" and her neighbor wants to "run for vice president". We contacted them and explained that that's not how it works. We were surprised to hear their responses that claimed that's how our bylaws say it should work. I got out the bylaws and to my horror, they are right! Our bylaws call for the direct election of Officers by the membership at the annual meeting. What's more, Florida law seems to allow it.

Our bylaws say in Article 7, Section 1: "The Executive Officers of the Association shall be a President, Vice President, Secretary and Treasurer, who shall be elected by the membership at the annual membership meeting. They shall take office immediately after election. The officers of the corporation shall be members of the Board of Directors."

We were incorporated under FS 617 and that chapter says, "A corporation shall have the officers described in its articles of incorporation or its bylaws who shall be elected or appointed at such time and for such terms as is provided in the articles of incorporation or the bylaws."

FS 720 (Florida's HOA Law) has supplanted much of FS 617 but 617 generally holds unless 720 says something different (FS 617 is general not-for-profit corporation law). Curiously, FS 720 is almost silent on the subject of Officers. There's a lot in there about directors, but hardly anything about officers. So FS 617 would seem to hold and it defers to the organization's bylaws.

Our bylaws contain a section devoted to the Annual Meeting and sets forth an order of business (which may be modified or changed at any meeting by the president). Number 8 on the list is "Election of Directors and Officers". That's at the Annual Meeting where, apparently, the members can vote for the officers directly.

Just getting a ballot/proxy prepared for this situation seems like a nightmare scenario, not to mention the actual in-person voting at the annual meeting. How does one prepare for an election like that? Has anyone ever heard of such a thing?

LarryB13 (Arizona)
Posts: 4,099

Posted:

Democracy run amok.

Officers are supposed to serve at the pleasure of the board to carry out the board's policies. I have long opposed the practice of electing officers from among board members as the the line between master and servant is blurred when the same person is both a board member and an officer.

Having the members elect the officers makes a bad situation even worse. The board would have no control over its officers, each of whom would be free to set their own agenda. Suppose the board sets a policy to aggressively collect past-due accounts but the elected president wants to go easy and counsels owners to disregard those notices from the board. Since they were elected by the members the board would have no means to remove a troublesome officer. You would, in effect, have a bus with two steering wheels; the board would steer their way and the officers would steer whatever course they wished.

I use city governments and school boards as the model for an HOA. The elected city council hires a city manager to carry out its policies. A school board hires a superintendent to carry out its policies. Both bodies hire just a single person to report to council/board and that single person then delegates the work to others as needed. If the city manager/superintendent of schools fails to perform, he becomes toast. BTW, I have never heard of voters in a school district or city electing their superintendent or city manager.

I normally do not advocate doing this but here the end result would be so catastrophic that I feel the following advice is justified: Tell them No. Tell them that despite the bylaws you will not go along with electing officers. Let them sue if they wish (they won't when they find out the cost). Get legal advice and do whatever is necessary to amend that clause out of the bylaws.

Hold the presses! I just noticed this from your bylaws: "The officers of the corporation shall be members of the Board of Directors." Therefore, one must successfully run for the board before they may be elected to any officer position. This is still a bad idea due to the fact that the officer would have no duty to follow the dictates of the board; the master would have no control over its servant. So I would still tell them No!

TimB4 (Tennessee)
Posts: 21,059

Posted:

Interesting.

Did you also notice that, as Larry pointed out, all Officers are to be Directors?
This is typically not an issue (as that is what normally happens) but it could become one.

KerryL1 (California)
Posts: 14,550

Posted:

Sounds like a real mess in formation, Geno! What is required to amend your bylaws?

SheliaH (Indiana)
Posts: 6,964

Posted:

In our association, the homeowners elect the directors and the directors chose officers from among themselves. It's worked fairly well - when I was on the board, we usually chose officers if a director had served at least one term (we have terms of 2 years), with another year or more for president and treasurer. For the most part, it's been easy to remove someone if he/she turned out to be a jackass because officers are required to do certain stuff and we knew quickly if it didn't get done. The membership can still re-elect or recall the director, but the ones who really don't do anything usually stop showing up to meetings (you miss 3 consecutive meetings and you're off the board)

It'll make for a longer ballot, but maybe you can set up your ballot in such a way that you list everyone who's running, noting who's also interested in being an officer. The homeowner would have the option of voting for that person as a director only or perhaps circling his/her name to also vote for that person as an officer. At the meeting, count ballots for board members first - if someone wanted to be an officer, but didn't get enough votes to even serve on the board, that's that. If there's a tie for an officer position, another vote could be taken at the meeting (that may give people more incentive to actually show up).

Better yet, I'd announce that officers will be elected at the meeting via a show of hands or voice vote and after you know who won, whichever one who's interested for a position can speak up at that time.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

GenoS (Florida)
Posts: 4,276

Posted:

Thanks for the replies. The 2014 annual meeting essentially went as expected. Since there were as many candidates as positions available, there was not an election per se, and the newly seated board elected the officers for the year. That's the normal and sane way to do it.

I read the minutes of the 2012 annual meeting and it was a mess. It was a combination board/members meeting and apparently the members in attendance voted once for directors and once the directors were in place the nominations for officers were made by the board and then the members voted by a show of hands. It wasn't contentious but it just reads like it's from another planet the way the meeting and elections were conducted.

I'm going to recommend Larry's advice to the other board members with regard to the two women I mentioned in the original post. I think we should just tell them "No". I don't even want to think about going through that as the Secretary. I think I would resign first.

As for amending the bylaws, there's this Article X:

"These bylaws of the Association may be amended, altered or rescinded, only by majority vote of the Board of Directors of the Association and by the affirmative vote of the majority of Members who are voting in person or by proxy at a meeting of the Members at which a quorum has been attained (e.g. at a regular/annual or special meeting of the Members of the Association). Alternatively, these bylaws may be amended by an instrument signed by not less than a majority (i.e., 50% plus one) of the Members, provided no amendment can effect or change the voting rights of members or qualifications for membership."

That's a fairly low bar that was set for amending all of our primary governing documents (CCRs, Articles and Bylaws) a few years ago. There's basically no time to prepare an amendment before the annual meeting since there's only 1 board meeting scheduled between now and then. Even a fairly simple change will have some of the owners demanding that our attorneys be involved and that's not going to happen in 2 months. So maybe next year it will be something to address.

SheliaH (Indiana)
Posts: 6,964

Posted:

It's not a bad idea to have the attorney involve because you want to make sure the language is on point and that the change will stand up in court if challenged.

Now may be a good time to have your attorney do a legal audit of your documents - basically, it's a review to see what's outdated, what's unenforceable and the attorney can also make suggestions on what the association really needs to be compliant with changes in state and federal law. It's also a good idea for the Board to charter a committee that will go through the documents and see what the association might need. Part of their job could be to conduct a poll among the homeowners to see what they'd like to add, clarify, subtract etc.

From there, prioritize what needs to be changed sooner rather than later and concentrate on that - like developing a more comprehensive way to amend the documents (personally I wouldn't change the 51% requirement). The attorney can help you craft the wording, the proposals could be sent to the homeowners for their comments, incorporate some of them into another rewrite, send the revisions out for more comment (with an explanation why some ideas were rejected), and finally put the whole thing to a formal vote.

This takes longer than 2 months and it should because as someone else has said on this forum, CCRs are the contract between the homeowner and the Association, and it's too important to make changes on the fly without considering the pros and cons.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

SueW6 (Michigan)
Posts: 814

Posted:

Geno

Your bylaws say:
"The Executive Officers of the Association shall be a President, Vice President, Secretary and Treasurer, who shall be elected by the membership at the annual membership meeting. They shall take office immediately after election. The officers of the corporation shall be members of the Board of Directors."

Gee, that sounds like the FIRST meeting of the corporation, when the developer turns over the corporation to the association.

When were these bylaws adopted? Are they the first bylaws (after the developer)?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Geno

While I am use to the BOD elects its own Officers my initial blush is I am not opposed to the owners doing it. I was in one private club where one could run for President only but if others also ran for President, only the top voter got the position and a place on the BOD. Those that ran for President only and lost, did not get a place on the BOD. Others ran for the BOD alone. The BOD then elected the rest of the officers.

In your situation, it might make for a cumbersome ballot but I suppose it could be done. One votes for the person to be on the BOD then also for what Office the person holds. First count is for those elected to the BOD regardless of Officer position they were voted to. Meaning, not elected the cannot be an Officer. This will have to be made clear. The second count of the ballots is for the Officer positions those elected to the BOD are to fill.

The question also arises if one runs for a specific office and does not get it, are they still on the BOD?

As I said, it would require a convoluted ballot but it could be done. Overall much easier for the BOD to elect its own officers.

KerryL1 (California)
Posts: 14,550

Posted:

Sue asks a good question, Geno!

LarryB13 (Arizona)
Posts: 4,099

Posted:

John,

Your question raises a lot of new issues that would be avoided entirely if Geno's HOA sticks to the tried and true method of having members elect the directors and let the directors decide who holds what office.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By SheliaH on 11/04/2015 4:10 AM
It's not a bad idea to have the attorney involve because you want to make sure the language is on point and that the change will stand up in court if challenged.

Now may be a good time to have your attorney do a legal audit of your documents - basically, it's a review to see what's outdated, what's unenforceable and the attorney can also make suggestions on what the association really needs to be compliant with changes in state and federal law. It's also a good idea for the Board to charter a committee that will go through the documents and see what the association might need. Part of their job could be to conduct a poll among the homeowners to see what they'd like to add, clarify, subtract etc.

That was done 5 years ago and the attorneys provided a 10-page analysis of our documents that made 14 recommendations for changes. Only 1 of those was acted on and the others, addressing just the type of things you outlined, were ignored. None of the recommendations even touched on the annual meetnig voting procedure. That sane law firm assisted in the preparation of 2 amendments since then, one reducing the required voting percent to a simple majority, and the other regarding the CCRs and the board's authority with respect to insurance matters. They screwed the 2nd one up (as written it replaces text that did not exist in the original) and the board at the time just let it go (or more likely never noticed the mistakes). I would be hesitant to use their services again, but that's another story. It's a large firm and the mistakes were not something I would be comfortable with considering the amount they charged.

Quote:

Posted By SueW6 on 11/04/2015 10:46 AM
Gee, that sounds like the FIRST meeting of the corporation, when the developer turns over the corporation to the association.

When were these bylaws adopted? Are they the first bylaws (after the developer)?

The bylaws were re-stated immediately after turnover in 1994. Previously to that the developer controlled the board but apparently the members still voted for the officers. The original bylaws were bizarre in that respect and the language that deals with the election of officers is largely unchanged.

Quote:

Posted By JohnC46 on 11/04/2015 1:38 PM
The question also arises if one runs for a specific office and does not get it, are they still on the BOD?

As I said, it would require a convoluted ballot but it could be done. Overall much easier for the BOD to elect its own officers.

That's the $64,000 question. What if the women who want to be president and vice president are elected to the board and decide they don't want to be on the board if they don't get the offices they want?

I suppose it could be done but I agree 100% that it's easier to just let the board decide who the officers should be.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Geno,

Since the governing documents specify that the Officers are also Directors (i.e. Part of the Board), the ballot is simple:

Vote for 1 Director/President:
___ Name
___ Name

Vote for 1 Director/Vice President:
___ Name
___ Name

Vote for 1 Director/Secretary:
___ Name
___ Name

Vote for 1 Director/Treasurer:
___ Name
___ Name

Vote for 1 Director
___ Name
___ Name

Note: Any Director/Officer position that is vacant due to lack of candidates will be filled by appointment by the newly elected Directors.

Candidates will have to indicate which position they are willing to run for and take their chances.
This way you can comply with your governing documents until you can amend them

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Geno

That's the $64,000 question. What if the women who want to be president
and vice president are elected to the board and decide they don't want to be on the board if
they don't get the offices they want?

Assume anyone elected to the BOD then decides not to take their seat. How would the BOD fill the vacancy?

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By TimB4 on 11/04/2015 8:52 PM
the ballot is simple

No, Tim. That ballot and the idea behind it (members electing officers) is so incredibly bad that nothing should be done to promote it or assist it. The bylaws need to be revised asap to remove that provision that allows members to vote for officers.

Your ballot suggestion complicates an already bad situation by combining and intertwining what should be two separate votes into a single ballot.

But if you think this is such a good idea, why don't you propose it for your association? Better yet, lobby the legislature to pass a law requiring all associations to adopt this convoluted scheme for electing directors and officers at the same time.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Larry,

I didn't say that having the membership elect officers was a good idea. I, like others, think it's a bad idea.

Gwen said that according to minutes, when this was last done in her Association the issue was "a mess." She added that "It wasn't contentious but it just reads like it's from another planet the way the meeting and elections were conducted. "

I was providing a simpler way of handling the election with the current Bylaws.

As others have said, and I agree, the Bylaws need to be changed to make Officer appointments a Board issue. However, until that is done, the Board is obligated to comply with the current Bylaws as written.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By JohnC46 on 11/05/2015 5:35 AM
Assume anyone elected to the BOD then decides not to take their seat. How would the BOD fill the vacancy?

The board would probably select a replacement from the remaining candidates who did not win or an outgoing board member willing to fill the spot. There's nothing that says the board has to pick from the loser candidates in the election. The person who decided not to take their seat would have to submit a resignation in writing first I imagine.

SueW6 (Michigan)
Posts: 814

Posted:

Our HOA elects officers first, and then 5 directors.

EACH position is voted on, one after the other, beginning with the presidency. The reason is that if the loser for any office wants to run for another post, or even as a general board member, then he/she can.

After all the officerships are filled, the general board is elected. The top 5 voters get the positions. There are usually 7 to 10 running.

Crazy, but it's worked since 1948.

One year no one wanted to run for Secretary. The Treasurer offered to take the job, but then someone spoke up and put their name in.

I think this is a dangerous way to get a board and officers.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By TimB4 on 11/05/2015 7:03 AM
L
Gwen said . . .

My apologies.

It was Geno who provided that information.

GenoS (Florida)
Posts: 4,276

Posted:

Thanks for all the replies, suggestions and insight. It sounds like we operate much like SueW6's association. TimB4, I agree that we should follow the bylaws until such time that they are amended, but I don't see the current pattern changing in the near future.

GenoS (Florida)
Posts: 4,276

Posted:

Hmm... I just found this in our Articles of Incorporation:

"The affairs of the Association shall be administered by the officers designated in the Bylaws of the Association. Said officers shall be elected by the Board of Directors annually at its meeting following the annual meeting of the members of the Association and may be removed or replaced at the pleasure of the Board of Directors."

I wouldn't have expected to find that sort of thing in the Articles but our docs are a jumble and riddled with inconsistencies.

So after all that it looks like the bylaws lose to the articles of incorporation in the hierarchy of governing documents.

Thank you once again to everyone who replied. I've got another question about Annual Meeting procedures but I'll pose that in another thread.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By GenoS on 11/08/2015 5:14 AM

So after all that it looks like the bylaws lose to the articles of incorporation in the hierarchy of governing documents.

What you need to do is point out the conflict and explain the hierarchy.
Otherwise, you will have some members who will simply think it's a power play.
Additionally, bring in citations of applicable corporate and HOA laws that defer to the articles.

KerryL1 (California)
Posts: 14,550

Posted:

Jeez, I wouldn't have expected it to be in the articles either! Good on you for reviewing them, Geno. And I'm glad the two women will just have to run to be directors and confusion is avoided.

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