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DanielH5 (Florida)
Posts: 1
Posted:
I am currently serving on an HOA BOD in Florida that has experienced several resignations within the past few years. Both the bylaws and the Articles of Incorporation state that the affairs of the association shall be managed by a board of 3 directors. The first 3 directors are named in the AOI, then the next paragraph defines how directors are to be elected at the first annual meeting to staggered terms.

The issue is that the staggered term paragraph states the following:
"At the first annual meeting the members shall elect 2 directors for a term of 1 year, 2 directors for a 2 year term and 1 director for a term of 3 years; and at each annual meeting thereafter the members shall elect, for a term of 3 years, the number of directors to replace the director or directors whose terms have expired."

Therefore, the AOI describes how 5 directors are to be elected, not 3. It is my understanding that the original board that re-initiated the HOA about 15 years ago had an attorney review the documents and the recommendation was to proceed with 5 directors as it was deemed easier for the growing community. A board of 5 directors has been maintained up until last year when 2 of the directors resigned. Now, the community is very established and two members of the current BOD disagree on how many directors should manage the association going forward.

Unfortunately, there is no record of a letter from the attorney that originally reviewed the documentation and recommended 5 directors manage the affairs. One belief is that the staggered term paragraph was copied from AOI from another association and is a typo, since both the AOI and bylaws state the association shall be managed by a board of 3 directors. Another thought is that the number of 3 was to allow for the 3 original founders to be named for managing the association until the first annual meeting at which time the intent was for 5 directors to take over.

So, does anyone have past experience in a similar situation where the AOI is contradictory in terms of the number of directors managing the association and the number of directors elected?

The HOA has very limited funds for engaging an attorney for legal guidance so any insight or recommendations are appreciated.

Thanks!
GenoS (Florida)
Posts: 4,276
Posted:
It may not be something easily resolved. My HOA's bylaws say the association shall be run by a board consisting of "at least 3" directors, with no language at all about a maximum number or staggered terms. Somewhere along the line we devolved into a 7-member board with staggered terms of 2 years each. We have frequent resignations. Replacements, if the remaining directors even bother to select them, don't serve out the original term, they serve until the next annual meeting. Eventually that negates the purpose of the staggered terms. In January we'll have 1 board member with a year left on his term and 6 open seats all of which will begin new 2-year terms. That's if we get enough people to volunteer for all the open seats.

At any given point in time we have anywhere from 4 to 7 directors. I'd suggest you amend your bylaws with detailed language that covers every eventuality. The only problem with that is few will be able to understand it after it's written and they'll be loathe to vote in favor of the amendment.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By DanielH5 on 11/16/2015 6:52 PM
Unfortunately, there is no record of a letter from the attorney that originally reviewed the documentation and recommended 5 directors manage the affairs. One belief is that the staggered term paragraph was copied from AOI from another association and is a typo, since both the AOI and bylaws state the association shall be managed by a board of 3 directors. Another thought is that the number of 3 was to allow for the 3 original founders to be named for managing the association until the first annual meeting at which time the intent was for 5 directors to take over.


I would strongly suggest reviewing statutes to determine what is required in your AOI as opposed to what is actually in it. (In my state, I can form a corporation with a one-page AOI but when attorneys draw them up they normally have about 8 pages. Clearly, seven of those pages are not necessary.) Amend your AOI to remove all extraneous verbiage.

It is common practice to copy an existing document rather than create a new one from scratch. The problem is that unneeded material is often copied. In my own association the developer was too cheap to hire an attorney and copied a lot from other associations.

The missing letter from the lawyer has no legal weight so lose no sleep over it. It appears that no one objected to the five-person board.

Quote:

The HOA has very limited funds for engaging an attorney for legal guidance so any insight or recommendations are appreciated.


If I lived in your association I would feed you to the alligators for making that statement. Legal guidance is a necessary and normal business expense for any association. There is no excuse for a board to fail to budget funds for legal advice.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Our Covenants call for no less than 3 and no more than 5. The prior BOD had and suggested 5 but never "formalized" it. We presently have 3.

For scope. 113 patio homes. No amenities. Use a MC company. $60K budget.

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