What Happens If All Board Members Resign?

This is almost comical. Myself, and 4 others, took over the BOD last year from the outsourced management company the HOA once employed. Because we had to issue a fine against a homeowner this year, that homeowner (we found this out tonight) is walking around and trying to get a petition signed to have me removed as the president. Honestly, it does not bother me. This is a thankless job that offers no compensation but I was doing it to make improvements in the HOA. Now, I am still unsure if a petition could have me removed (and am confident not enough people would sign it anyway) but if I were removed, the 4 other board members have indicated they would resign.

This would mean no more board so who steps in and takes over? I certainly do not want to turn over access of our bank accounts to the disgruntled homeowner that has started this whole thing.

Your thoughts?

Gregg,

First, if the petition were written that you should be removed as president, that petition would only be a recommendation. Officers (Pres, VP, etc.), are appointed by the Board and serve at the pleasure of the Board. Therefore, the membership has zero authority to remove you as President.

If the individual wants to remove you as Director, they would have to follow the requirments within your governing documents and applicable laws for a recall. Typically, this requires a petition to call a special meeting of the membership for the purpose of a recall. If the petition does not say those words, the petition might be considered invalid. A vote at the special meeting would determine the outcome of the recall.

If the recall is successful, there should be an immediate election to elect someone to serve the remainder of your term. If there are no candidates, then the Board may appoint whom they desire to fill the remainder of the term (even you, but I wouldn't recommend it).

If the entire Board resigns, prior to resigning, they should hold a special meeting of the membership for an election to fill the remaining seats OR, appoint others to fill them effective the date of the resignation.

If nobody steps up to serve and everyone resigns, the last act of the Board should be to petition the court to have the Association placed into receivership (something I do not recommend unless absolutely necessary).

My suggestion is to publish an article in your newsletter on what the Board has accomplished to date. Include the enforcement of covenants (but do not mention names). This way, the membership can make an informed choice (as they would have heard both sides). I believe that an informed choice is often the right choice (even if it's not the outcome you wanted).

Hope this helps,

Tim

I appreciate the words of encouragement. I have heard back from a few home owners and so far, everyone seems very happy with our performance. I also believe the person floating the petition around stopped after being turned away by a few homes. Regardless, we did let the HOA attorney know about it and I'm sure he will address their attorney tomorrow. If anything, they've just added even more onto their existing legal bill with us.

GreggK2, this occurred at my former HOA some years ago. All board members resigned. Gov docs often do not treat this. But generally speaking: At this point one person has to step up and slowly re-build the board via her or his appointments. Alternatively the HOA can effectively stagnate, but legally must remain in existence, until a HOA member asks the court to appoint an administrator to run the HOA per the gov docs. The latter is extremely expensive to the HOA. Try to avoid this at all costs. As long as there is one volunteer member willing to run the joint, this is legally defensible, with some caveats.

Years later an attorney for the HOA confirmed this was the correct process to follow. Should some annoying member take the lack of a full slate of board members to court, then the, "We're doing the best we can" defense is employed. My understanding is the courts understand and will not hold anyone liable during the time of transition.

I think there is an argument that the board members have a fiduciary duty to make at least a little effort to try and find someone to fill the positions they soon plan to resign.

Do ask your question at an online legal forum where some bona fide attorneys, acting pro bono, and others with specific experience in matters like yours, participate. False information about the law is routinely posted here at hoatalk.com .

Where might one find such a forum and how do you know whether you are dealing with a bona fide attorney?

"The problem with the Internet is that people are not always who they claim to be." Abraham Lincoln



No one on this forum claims to be an attorney. Any responsible board member would seek out the advice of an attorney (a real one) before taking action. This forum merely suggests what may or may not be possible based on the experiences of its members.

Yes, but he was quoting Aristotle.

Google for many such forums. The real attorneys give identifying information such as using email addresses consistent with their law firm web site, which can further be confirmed with various online registries of attorneys. Most importantly, it's common for several lawyers to participate. In many situations, they give the same answer.

NpS, you are welcome to disagree with anything anyone posts here. I encourage you to encourage others to check out my or anyone's legal suggestions at forums where attorneys participate pro bono.

NpS, 1. I thought my response was clear that my warning applies to my own statements about the law. 2. (a) This is not what I said; and (b) see my other post recently where I do the work I really expect you should have done when I said go see the Rules of Professional Conduct 3. I think it's discourteous of you not to support people getting actual attorneys' viewpoints.

AugustinD,

If you read most of the threads on this forum you will find that many seeking help are aware that they need the services of an attorney but for various reasons refuse to engage one. The most common excuse being "We can't afford it." Obtaining legal advice is a necessary and normal expense for any corporation and raising the funds to pay for the operation of the corporation is the job of the Board of Directors. Whenever a director cries that they cannot afford to hire an attorney my first question is always, "Whose fault is that?"

As to your statements about websites where lawyers work "pro bono," you wrote, "The real attorneys give identifying information such as using email addresses consistent with their law firm web site." The State Bar of Arizona cautions the public against contacting lawyers by email and providing details as the attorneys may already have a conflict of interest in taking on a new client. In addition, pro bono usually means working for individual clients who otherwise cannot afford counsel or, in some cases, charities. An HOA is not a needy individual nor is it a charity. You were the one claiming that such sites exist yet you refuse to provide any URL's. If any such site exists, it is most likely to be a scam.

You are in rare form

The two remaining are the Board. They should immediately appoint additional board members, and continue to serve the community.

Don’t make it hard - there is no other solution as being a Board member is voluntary.

CA corporations code is the same or similar to FL's 720.

That's a wise move on your part. Glad to hear the situation has not been escalated.