Quorum and Recusal

GenoS (Florida)
Posts: 4,276

Posted:

We have 4 board members and 1 vacancy on our 5-member board. The vacancy has existed since February. One of the sitting board members has submitted an Architectural Application to install a patio in back of her home. That same board member is also the sole member of the Architectural Control Committee. Assuming she didn't purport to "approve" her own application before passing it on to the whole board for a decision (the usual way these things are handled), my understanding is that she should recuse herself from any discussion and vote on the matter at the next board meeting. Should she also leave the room during the discussion and vote? That in itself might be a problem since the next board meeting is scheduled to take place outside on our pool deck. Should she leave the area completely? I think she should.

After she recuses herself, that will leave 3 board members to discuss and vote on the patio. The 3 of them still constitute a quorum at the meeting, but would a 2-1 vote in favor of approval be enough to pass a motion on it? I think so but I'm confused about what, if any, effect a recusal might have on the quorum requirements. If a recusal effectively reduces the number of board members entitled to vote on a matter by 1 (from 5 to 4 in this case) then you'd need 3 of 4 to obtain a majority. Would that mean the non-recused board members would have to vote 3-0 in order to pass a motion?

FayeE (New York)
Posts: 49

Posted:

I first question is what does your ByLaws say? It all depends on what is said in your ByLaws. If someone was sick and had to pass a motion the vote was 3 to 1 it would win the vote. Only if the tie can not be broken then it is set aside til the next meeting according to our ByLaws. I would assume she can not vote on a project on her own place but then you have to read your Bylaws and bide by what they say.

Sorry I could not help more.
Faye

KerryL1 (California)
Posts: 14,550

Posted:

Having been wrong recently about a quorum question, I nonetheless think that 3 is a quorum and if the majority of quorum votes, 2-1, the ayes have it.

Put another way (I think), you don't need a majority of the number of directors that the Board is supposed to have in order to act and make board decisions.

But, as Faye points out, check your Bylaws.

I agree the applicant/director should leave the area while discussion and voting occur.

GenoS (Florida)
Posts: 4,276

Posted:

Thanks. I've been reading a lot on the subject. Maybe too much. I think I may be making it more complicated than it needs to be.

It just doesn't seem "right" that a non-Director submitting an application needs to meet the threshold of 3 board votes (out of 4) to approve his or her application, while a Director submitting the same application only needs to have 2 (out of 3) board votes to approve it because they've recused themselves from the vote. It seems counterintuitive that a board member has an easier threshold to meet than a non-board member. If anything, it should be more difficult to get a Director's application approved. Instead, it's easier.

It would change the calculus if the full complement of 5 Board members were in place. One recuses leaving 4. They'd still need 3 (out of 4) votes to appprove.

The Bylaws say nothing about recusal.

"Section 4: QUORUM. The Directors shall act only as a Board, and the individual Directors shall have no power as such. A majority of the Directors shall constitute a quorum for the transaction of business. The act of a majority of Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise provided by law."

I know what seems "right" doesn't always carry the day but this still bothers me. A better arrangement might be to prohibit Directors from serving on any committee that ultimately and regularly passes on recommendations about what to do with homeowner requests. Yeah... Bylaws again, I know.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I agree that the director making the request should recuse herself from discussion and vote, because she has a vested interest in the outcome. (Although this isn't as egregious as trying to hire her own company to do work for the association.)

Even if your bylaws allow it, I think that it's a good idea to avoid even the appearance of wrongdoing. If it looks "funny" and raises questions, then it probably shouldn't happen even though it technically isn't wrong.

Am I correct that your CC&Rs don't prohibit what she's attempting to do? Or are they unclear enough that the board needs to make a judgement call on this? If it's the latter, I think it's even more important for the director to recuse herself.

JohnC77 (California)
Posts: 562

Posted:

Unless there is a financial interest in the decision, I don't see a reason for her to recuse. If she were to recuse herself, I don't think they need to leave the room during discussion, unless national security ain't been discussed.

In regards to a vote, 2-1 is acceptable. You would need to indicate in the minutes if the director recused themselves, at what time and a time when they returned to continue to sit in on discussions.

GenoS (Florida)
Posts: 4,276

Posted:

The CC&Rs do not explicitly prohibit patios. They have general requirements for architectural changes which are subject to ACC and/or Board approval. They say the ACC/Board has a right to consider, "suitability, aesthetics, harmony and common character of the neighborhood and subdivision, and original plan of the association." The subdivision was originally planned out so that the design and construction of all the residences followed a similar style. It also says, "the list is representative and not all inclusive". I think that clause wouldn't fly today if challenged because a prospective owner should be able to evaluate a complete list of restrictions. The "not all inclusive" part leaves too many questions.

However, the "common character of the neighborhood" might be enforceable with respect to a patio because after 30 years there are no other patios in the neighborhood.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By JohnC77 on 09/17/2020 3:09 PM
Unless there is a financial interest in the decision, I don't see a reason for her to recuse. If she were to recuse herself, I don't think they need to leave the room during discussion, unless national security ain't been discussed.

In regards to a vote, 2-1 is acceptable. You would need to indicate in the minutes if the director recused themselves, at what time and a time when they returned to continue to sit in on discussions.

There are a myriad of references online regarding recusal that say things like,

"Finally, board of directors owe a duty of undivided loyalty to the association, and may not make decisions that benefit their own interests at the expense of the association and its members (i.e., conflict of interest)."

More than a few of the homeowners here, including myself, believe that once one patio is approved that they will spring up like weeds and the community will start to look shabby.

JohnC77 (California)
Posts: 562

Posted:

Quote:

Posted By GenoS on 09/17/2020 3:58 PM
The CC&Rs do not explicitly prohibit patios. They have general requirements for architectural changes which are subject to ACC and/or Board approval. They say the ACC/Board has a right to consider, "suitability, aesthetics, harmony and common character of the neighborhood and subdivision, and original plan of the association." The subdivision was originally planned out so that the design and construction of all the residences followed a similar style. It also says, "the list is representative and not all inclusive". I think that clause wouldn't fly today if challenged because a prospective owner should be able to evaluate a complete list of restrictions. The "not all inclusive" part leaves too many questions.

However, the "common character of the neighborhood" might be enforceable with respect to a patio because after 30 years there are no other patios in the neighborhood.

Were there any patios turned away?

KerryL1 (California)
Posts: 14,550

Posted:

I still agree with you, Geno. She recuses herself since she wants this patio for herself. And leaving the area allows directors to speak more freely than if she stays.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Geno

I would say BOD of 5 with one vacancy. One member recused from voting. Now three left so still a Quorum so the three vote. Three to zero swings it. Two to one swings it.

That said, as this is the first patio extension be very careful as you are setting precedence.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By GenoS on 09/16/2020 6:20 PM
After she recuses herself, that will leave 3 board members to discuss and vote on the patio. The 3 of them still constitute a quorum at the meeting, but would a 2-1 vote in favor of approval be enough to pass a motion on it? I think so but I'm confused about what, if any, effect a recusal might have on the quorum requirements.

I believe a recusal is similar to an abstention. Four are present. Three vote either yes or no. One recuses himself. Quorum is met by virtue of four being present. I think the one recusing herself should absent herself from both the discussion and the vote. But if she wants to stay, no big deal, as long as she only listens. Such is my take.

Quote:

Posted By GenoS on 09/16/2020 8:23 PM

It just doesn't seem "right" that a non-Director submitting an application needs to meet the threshold of 3 board votes (out of 4) to approve his or her application, while a Director submitting the same application only needs to have 2 (out of 3) board votes to approve it because they've recused themselves from the vote.

The director has the same rights as any member. The Bylaws say that,as long as a quorum is present, the majority in a vote wins. This is even when there are recusals/abstentions. I think what you describe happens a fair amount of the time in city councils and even the Supreme Court. For example, suppose a Justice of the Supreme Court recuses himself. E.g. in 1996, Justice Clarence Thomas recused himself in the Virginia Military Institute lawsuit vote. This was because his son was attending VMI at the time. The vote was recorded as 7-1. What if the vote had been 4-4? I understand the lower court ruling the holds. My point is that the 4-4 vote holds.

I think what is fair (to both other members and this director) in this HOA/condo situation is likely a matter of widely divergent opinion.

Quote:

Posted By GenoS on 09/17/2020 3:58 PM
The CC&Rs do not explicitly prohibit patios. They have general requirements for architectural changes which are subject to ACC and/or Board approval. They say the ACC/Board has a right to consider, "suitability, aesthetics, harmony and common character of the neighborhood and subdivision, and original plan of the association." The subdivision was originally planned out so that the design and construction of all the residences followed a similar style. It also says, "the list is representative and not all inclusive". I think that clause wouldn't fly today if challenged because a prospective owner should be able to evaluate a complete list of restrictions. The "not all inclusive" part leaves too many questions.

However, the "common character of the neighborhood" might be enforceable with respect to a patio because after 30 years there are no other patios in the neighborhood.

I agree with your concerns. The covenant is flatly vague. I'd err on the side of 'free enjoyment of land' when the covenants are ambiguous or vague. In other words and in general, courts interpret ambiguous or vague terms in contracts against the author of the contract. The author of the contract is the HOA/condo.

"The law is what the court says tomorrow."

JohnC77 (California)
Posts: 562

Posted:

Quote:

Posted By GenoS on 09/16/2020 8:23 PM
Thanks. I've been reading a lot on the subject. Maybe too much. I think I may be making it more complicated than it needs to be.

It just doesn't seem "right" that a non-Director submitting an application needs to meet the threshold of 3 board votes (out of 4) to approve his or her application, while a Director submitting the same application only needs to have 2 (out of 3) board votes to approve it because they've recused themselves from the vote. It seems counterintuitive that a board member has an easier threshold to meet than a non-board member. If anything, it should be more difficult to get a Director's application approved. Instead, it's easier.

It would change the calculus if the full complement of 5 Board members were in place. One recuses leaving 4. They'd still need 3 (out of 4) votes to appprove.

The Bylaws say nothing about recusal.

"Section 4: QUORUM. The Directors shall act only as a Board, and the individual Directors shall have no power as such. A majority of the Directors shall constitute a quorum for the transaction of business. The act of a majority of Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise provided by law."

I know what seems "right" doesn't always carry the day but this still bothers me. A better arrangement might be to prohibit Directors from serving on any committee that ultimately and regularly passes on recommendations about what to do with homeowner requests. Yeah... Bylaws again, I know.

The number of directors, in your instance, to achieve quorum is three. You have four directors show up, you have quorum. To pass anything, three of the four have to vote in the affirmative. One has to step out because of a perceived conflict of interest. Now you have three, still a quorum, and two of the three have to vote in the affirmative. Happens all the time

GeorgeS21 (Florida)
Posts: 3,808

Posted:

You start with all four directors- it is what it is.

One director, IMO, should and does recuse herself. You have three directors - it is what it is.

Two of the three directors vote aye. The motion passes - it is what it is.

A lot of other perhaps applicable points in this thread - but, given the circumstances - it is what it is.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By JohnC77 on 09/17/2020 4:33 PM
Were there any patios turned away?

No one has ever requested one. There's no selective enforcement going on.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By AugustinD on 09/17/2020 5:01 PM

Posted By GenoS on 09/16/2020 6:20 PM
After she recuses herself, that will leave 3 board members to discuss and vote on the patio. The 3 of them still constitute a quorum at the meeting, but would a 2-1 vote in favor of approval be enough to pass a motion on it? I think so but I'm confused about what, if any, effect a recusal might have on the quorum requirements.

I believe a recusal is similar to an abstention. Four are present. Three vote either yes or no. One recuses himself. Quorum is met by virtue of four being present. I think the one recusing herself should absent herself from both the discussion and the vote. But if she wants to stay, no big deal, as long as she only listens. Such is my take.

I think just by being present during the discussion someone could still influence the voting directors non-verbally. Facial expressions, glares, snickering, scanning the crowd looking to make eye-contact with the owners in attendance, etc. Avoiding all of that and just the possibility of that makes recusal something more than just abstaining from the vote.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By GenoS on 09/18/2020 2:15 PM

Posted By AugustinD on 09/17/2020 5:01 PM

Posted By GenoS on 09/16/2020 6:20 PM
After she recuses herself, that will leave 3 board members to discuss and vote on the patio. The 3 of them still constitute a quorum at the meeting, but would a 2-1 vote in favor of approval be enough to pass a motion on it? I think so but I'm confused about what, if any, effect a recusal might have on the quorum requirements.

I believe a recusal is similar to an abstention. Four are present. Three vote either yes or no. One recuses himself. Quorum is met by virtue of four being present. I think the one recusing herself should absent herself from both the discussion and the vote. But if she wants to stay, no big deal, as long as she only listens. Such is my take.

I think just by being present during the discussion someone could still influence the voting directors non-verbally. Facial expressions, glares, snickering, scanning the crowd looking to make eye-contact with the owners in attendance, etc. Avoiding all of that and just the possibility of that makes recusal something more than just abstaining from the vote.

Do not forget giving the the "bird".......LOL

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By AugustinD on 09/17/2020 5:01 PM
I agree with your concerns. The covenant is flatly vague. I'd err on the side of 'free enjoyment of land' when the covenants are ambiguous or vague. In other words and in general, courts interpret ambiguous or vague terms in contracts against the author of the contract. The author of the contract is the HOA/condo.

"The law is what the court says tomorrow."

I agree with all that. The issue gets more complicated when we consider that the HOA has installed underground irrigation lines and sprinkler heads all over the area where she wants the patio. Something the board is unlikely to do, but which is something I'd pursue, is the idea that the HOA should have a "prescriptive easement" over that section of her parcel. Those elements of the irrigation system have been in place for 25 years. She is the 6th owner of the home since it was built in 1996.

JohnC77 (California)
Posts: 562

Posted:

I know I feel this way and an HOA attorney also. If this were something discussed in executive session, I would agree. This is a ARC request, which, by law, should be discussed openly. So, the director could recuse themselves from the actual voting, but why would they be asked to leave the discussion, if it is to be held openly? Would you ask a regular homeowner to leave the discussion while the rest of the community listens in?

JohnC77 (California)
Posts: 562

Posted:

Quote:

Posted By GenoS on 09/18/2020 2:21 PM

Posted By AugustinD on 09/17/2020 5:01 PM
I agree with your concerns. The covenant is flatly vague. I'd err on the side of 'free enjoyment of land' when the covenants are ambiguous or vague. In other words and in general, courts interpret ambiguous or vague terms in contracts against the author of the contract. The author of the contract is the HOA/condo.

"The law is what the court says tomorrow."

I agree with all that. The issue gets more complicated when we consider that the HOA has installed underground irrigation lines and sprinkler heads all over the area where she wants the patio. Something the board is unlikely to do, but which is something I'd pursue, is the idea that the HOA should have a "prescriptive easement" over that section of her parcel. Those elements of the irrigation system have been in place for 25 years. She is the 6th owner of the home since it was built in 1996.

Do you realize how many homes have irrigation pipes underneath their driveways. I don't see the world coming to an end, but, then, away, maybe I missed the apocalypse.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By JohnC77 on 09/18/2020 2:27 PM
I know I feel this way and an HOA attorney also. If this were something discussed in executive session, I would agree. This is a ARC request, which, by law, should be discussed openly. So, the director could recuse themselves from the actual voting, but why would they be asked to leave the discussion, if it is to be held openly? Would you ask a regular homeowner to leave the discussion while the rest of the community listens in?

Because they have a personal interest in the outcome of a vote which potentially benefits only themselves.

From AAM, a Management Company in Arizona,

"Board members must not make decisions based on personal interest or gain."

That's part of the Duty of Loyalty, which is part of a Director's Fiduciary Duty. By leaving the room the chance of even the appearance of attempting to influence the rest of the Board's decision is minimized. Knowing the subject of your decision is sitting right there in the room can be more than enough to sway discussion.

GenoS (Florida)
Posts: 4,276

Posted:

Bad URL-fu today. That page is from AMM, a management company in Arizona.

Here's another view from Spectrum Management:

"When it is not possible for the board member to make a fair, unbiased decision, he or she should recuse himself or herself from the process. After a board member recuses himself or herself from a vote, he or she should leave the room and should not be present for any discussion of the item to be voted on, as their presence may unduly influence or inhibit the other members’ judgment. This could affect the discussion, and thereby influence the vote."

And Davis-Sterling says,

"Directors cannot use their position of trust and confidence to further their private interests. They must act in the best interests of the association even if at the expense of their own interests. This is more than just embezzlement of funds; it includes steering contracts to family members or taking actions that result in personal benefits to the director at the expense of the association."

JohnC77 (California)
Posts: 562

Posted:

Where is the expense to the HOA?

JohnC77 (California)
Posts: 562

Posted:

Please explain to the audience from the article you present from Spectrum Management how an ARC application fits into the below "conflict of interest" you cited.

There are two main types of conflict – direct and indirect:

Direct conflict occurs when a board member has business ties that will cause him or her to lose or gain money as a result of the proposed action.

Indirect conflict occurs when a board member has a material financial interest in any entity that is involved in a proposed action. An example of this is when a board member has an ownership interest, no matter how small, in a contractor’s company, and that contractor is putting up a bid for hire.

BTW, it is Stirling, not Sterling.

CrystalC1 (Arizona)
Posts: 2

Posted:

THE CORRECT LINK FOR THE AAM Article

https://www.associatedasset.com/hoa-resources/hoa-tips-blog/2019/7/5/fiduciary-responsibility-of-hoa-board-members/

CrystalC1 (Arizona)
Posts: 2

Posted:

Can you edit the link you provided to:

That's part of the Duty of Loyalty, which is part of a Director's Fiduciary Duty. By leaving the room the chance of even the appearance of attempting to influence the rest of the Board's decision is minimized. Knowing the subject of your decision is sitting right there in the room can be more than enough to sway the discussion.

Your original link is broken. Thank you.

GenoS (Florida)
Posts: 4,276

Posted:

Thanks Crystal. That was 4 months ago. Editing posts here isn't possible.