New Pres, Down to 2 Board members, Reduce Quorum.

I am a new President & finished my 1st year. Within my 1st year, I have lost my Secretary & Treasury due to life changes & 8 plus years serving as board members. Due to lack of membership participation, we are down to 2. Each board member force to take on 2 roles. I am Pres/Treasurer, the other is VPres/Secretary. I know being Pres & Treasurer is not recommend due to checks & balances but the other doesn't want to be Treasurer. There is no restriction in our governing docs/bylaws & I have no choice.

Here is my problem, What does the Board do at this point? Especially regular meetings and HOA business matters. I need a quorum to have a valid meeting? Therefore, the Board vote to drop it down to 2 homeowners but was that the right decision?? We don't need a management company, we can take care of the HOA matters on the backend side. It is the formality & legality that I am worried about. Any input I would be greatly appreciated.

40 homeowners
16 year development
WA State
Quorum 2
No need for a management company

What you did was likely improper.

If you have less then a quorum, you can't simply say we will continue.
If you want to change the quorum requirement, you have to change the document that identifies the quorum.

My suggestion, appoint a spouse to the Board.
They can show up at the start of the meeting and then leave.
This will give you a quorum and the quorum will remain even if someone leaves.

It's not proper, but it will allow things to get done.

The other option is to place the fear of the courts into the membership.
Explain that without a quorum, the Board has no power but to pay existing contracts.
Without a quorum, the Board will be forced to petition the court for receivership which will place control of the Association with the receiver and the Association will incur additional assessments to pay for the receivers salary.

When I faced a similar issue within my Association, prior to people leaving, the Board passed a resolution empowering the Officers to renew contracts if needed and the authority to enter into contracts to pay for any needed repairs. This allowed the Officer to do the work without further approval of the board.

First, as was asked, how many Directors did you have, 5 or 3?

What does your Bylaws state as the number of Directors required, 3 or 5, or 3 up to 5. With an association of 40 units, 5 Directors can be overkill. If it is the later, and is only three, then you are fine.

My strong recommendation is get a management company to handle financials only. For a couple hundred dollars, they can send statements/coupon out, receive payments, pay bills and compile monthly financials. It is possible they can handle annual reviews and taxes. Then the Board can handle the day to day operation of the complex.

Don't appoint a spouse, call a member meeting and lay it on the line that someone needs to step up to the plate.

I am a small business owner. I got the business side of HOA taken care of. I really like to save as far as our HOA budget and get our reserves back. We did use separate management companies but both failed for some reason. Because of that, we lost most of our reserves. I just lacking experience on the board formality & legality side of Board meetings. I was they had President manual but I guess it would be a 1000 page book to cover these misc procedures.

Hi Kerry.

Is this true? Quorums are for Member meetings only and not regular meetings? This sounds too good to be true.

I agree with you. I just took over, we had 2 management companies and eventually they drop us after draining our reserves. They are very expensive and taking half of our assessments.

"Two board members are fine for board meetings according to your bylaws as they only require one.
The quorum of 5 is for MEMBERS meetings, which usually just are annual meetings and elections.
Not sure how you "lost reserves" paying a MC as that pay should have come out of your operations budget not your reserves."

Note, the basis for saying this is Washington State Corporate Law:

RCW 24.03.110

A majority of the number of directors fixed by, or in the manner provided in the bylaws, or in the absence of a bylaw fixing or providing for the number of directors, then of the number fixed by or in the manner provided in the articles of incorporation, shall constitute a quorum for the transaction of business, unless otherwise provided in the articles of incorporation or the bylaws.

Basically, the Board needs to appoint one person to the Board to make quorum (if you are down to 2 seated directors). It can be an uninterested individual who shows up to establish a quorum and goes home if needed.

Jay,

You have it.

However, reality is if you do what needs to be done that is likely not to be challenged (renewing/new contracts for services, collection actions, amendments by the membership, etc.) then there will likely be no issues. If you do things that may be challenged (fines, changing governing documents at the Board level) you run the risk of all of those actions being ruled null and void by the courts.

I hope so John. Just worried about liabilities. We can simply appoint our wives but they will not willing to do any such fiduciary duties in regards to what they are appointed to. We really need someone to commit and volunteer what is expected because of that.

But, very one, how do you t read this, which apparently is in Jay's bylaws: "The affairs of this Association shall be managed by a Board of one(1) Director but not more than five (5) Directors."

It looks as though 2 would be OK?????

That says to me one person can control. If two, then 2 agreeing works same two not agreeing works. One to one is a tie vote.

I agree with Douglas, Jay. You & the other director should spend a hour or less with an HOA lawyer to get a lot straightened out.

thanks all for seeing my dilemma. that's why I am these discussions. Need to get familiar with areas like this so I can ask the appropriate questions to our lawyer.

BTW-anyone knows a good HOA lawyer in WA State?? Just asking this brings up more questions regarding our existing lawyer with current fillings. Seems to be ongoing when you are new. I can see why 3 or odd number directors is required, to break a tie.
Any more advice I greatly appreciate, especially someone thinking outside the box. Just like to get more views regarding this situation.