Agents of Corporations on Board

California HOA. Single Family Homes. Covered by the Davis-Stirling act.

Our By-laws require that to serve on our BOD, a director must be 'a member in good standing" in the community (ie, be named on the property title and have their dues paid up).

One of our lots is owned by a private company (they snatched it up in a tax sale, in order to get the water rights). That private company wants to name one of their officers as an "agent of the company", and have that person elected/named to serve on the BOD.

DS states that HOA's may enact rules as to who can serve, and provides examples of typically legal rules. Ours seem to comply with that.

Reasonable Qualifications. Associations may amend their bylaws to establish reasonable qualifications for directors. Reasonableness is determined by whether the requirement is rationally related to the protection, preservation or proper operation of the association. (Laguna Royale v. Darger.) After homeowners assume control of their association, they frequently amend their documents to require director qualifications. Some of the more common qualifications include:
• membership in the association,
• good standing,
• not in litigation with the association,
• not a co-owner with another director,
• attending a minimum number of meetings as a director, and
• not a convicted felon.
For a full list of director qualifications, see "Nominations" in the Election Menu.

SD also says this about Corporations: "Corporations. A corporation is defined in the law as a "legal person" and has all the rights of a natural person in an association. As such, a corporation may appoint a representative to attend meetings, vote and run for office."

In looking for information on whether an Agent of a Company must abide by the rules of the HOA in order to serve, I came across this FAQ on the Stirling-Davis site:

QUESTION: My mother owns a condominium. As her son, I was given durable power of attorney and conservatorship and would like to run for the board. The HOA says I am not eligible since I am not an owner. My power of attorney allows me to represent my mother's interest in all matters. The condominium is her largest financial asset. Our Trust/Probate attorney believes the HOA is obstructing my lawful authority under provisions of the power of attorney.

ANSWER: Your power of attorney allows you to conduct your mother’s business but it does not allow you to run for the board. If ownership is a requirement for serving on the board, you’re either on title or you’re not. By analogy, running for President of the United States requires that you be a natural born citizen and at least 35 years of age. If you are a 20-year old Canadian holding a power of attorney for a 40-year American citizen, your client can run for President, but you cannot.

Authorized Agent. The same analysis applies to "agents" of the owner. If the agent does not meet the qualifications of a director, he/she cannot run for the board.

So: my question

It appears that a Company that owns property in an association CAN name an agent that can Vote their ballot, attend meetings, and even "run for office". However, must that Agent meet all the other rules applicable to any other person, in order to be able to be elected? Must they reside in the association? Be a member in good standing? Or does being a member in good standing apply to the company themselves (ie, company name on the title, dues paid, they can name someone to be elected).

Is the agent of an owner different than the agent of a corporation?

our current HOA attorney is an idiot.

I've shown him to be wrong on at least four occasions in the past. That's four reasons we will not be using him in 2016.

So, until such time as we find a new, competent attorney, yeah, I'll take advice from people here, research what they present, and see if I can find a legal answer.

If I can't, then we'll pay someone $400 to answer it.

And honestly, even then, I'll research their answer, because attorneys aren't always right.

Well there may be a caveat to this that would allow this to happen. A dedicated person to represent that corporation may indeed be considered the "member". Are they an LLC? LLC are Limited Liability Corporations that often buy up properties like this. They then "pass the buck" amongst each other as who is responsible. I like to call it "The one who will go to prison" for the corporation basically. That is the person that would be the designated representative of ownership and allowed to run for the board if they wish. They still have to be elected to your board. Unless there are some other election process I am not aware of.

Your meetings are open? If so, then they can attend the meetings. They will have the same voting power as any other general member. Which doesn't have much influence as it is one vote. That is usually just cast for elections and changes. Another issue is that you may need to verify in your documents what defines a member. Some HOA's when they change their documents sometimes neglect to define membership or allow non-members to be members. What I mean by the second part is that whenever the developer was in charge of your HOA, they could use their employees as board members. They were NOT homeowners in the DEVELOPER controlled HOA. Which kind of throws a bit of shade into your situation. This person is an employee designated to represent.

So I am happy you are smart enough to believe your lawyer. Any lawyer who tells you "I will do whatever you want/tell me to do" is full of crap. The fact is that this group may be able to designate person to represent them. That person may then qualify to run for the board. However, their company still has to be up to date on their dues and in good standing. I hate dealing with LLC's. You will find there are other issues when it comes to filing liens/foreclosures too.

Brian

Essentially, it would be "chain of title". The corporation is on title with the someone listed as the registered agent of the corporation or LLC on file with the Secretary of State. A power of attorney only speaks for that person, acts for that person, but does not give them any ownership rights.

You could always amend your CCRs to allow a POA to run for the Board.

Based on your citations, Brian, an officer of a corporation could be a member of your board.

If that person meets your qualification of being in good standing, Homeowners can elect her/him.

One of our 7 directors, as required by our bylaws, is a member of the corporation that owns the commercial component of our urban high rise. The corp. just appointed anew commercial director. Two of the three have v been cope. officers, one was a high-ranking employee.

Looks like the only way you can keep a member of the corporation out, Brian, would be to amended your bylaws so only owner/occupants are permitted to serve.

That seems logical. It seems incongruous to me, however, that a corporation can so designate someone to wield all the power and rights of an individual owner while, as in the example above, an otherwise human-being owner cannot designate someone else to act for them via a perfectly legal Power of Attorney. That doesn't seem right.

yeah, that's a head-scratcher.

A person can't designate someone else to act in their stead and serve on a board, but a corporation, because they are a person, can.

Great question Brian.

The distinction is stupid but it does exist.

If you don't have specific restrictions in your docs that would prevent a corporate representative from serving on your board, then you must put that person's name on the ballot.

But there's nothing to prevent you from campaigning against that person getting elected. In your shoes, I would hand-deliver a notice to every door-step explaining why your current board members think that a non-resident corporate representative would not make decisions that would benefit the entire community.

I would hand-deliver rather than mail it because there's a good possibility that the corporate representative might never see it.

It makes no sense. But it is the law, or the result of several laws together. Don't hate the laws. Hate the lawmakers.