Treasurer’s term up in 2021 or 2022?

Started by JanineR • 19 replies • 550 views

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JanineR (Tennessee)
Posts: 259

Posted:

Treasurer’s term up in 2021 or 2022?
------------------------------------------------
We have five Directors in our HOA.
October 2020 was our annual meeting. Last year the President and Treasurer’s terms were up.
There was no quorum, allegedly, so the Treasurer and the President re-filled those vacancies.
This year’s 2021 annual meeting is coming up in August.
The Vice President, the Security and the Member at Large terms are up.
The President has resigned.
The question is about the Treasurer, who has been on the board for about 8 years now. Out of all the Directors, I was really hoping that this person’s term was up as she is unprofessional with the handing of the association’s funds, particularly insurance money, and does not uphold our governing documents.
It would be a lot cheaper for this director to be replaced than engaging in a lawsuit, and was hoping that time was on our side.

So the question is,
According to our Bylaws below, does the Treasurer have a two year term starting from 2020 ending in 2022?
Or a one year term as she was filling a vacancy between annual meetings?

Tennessee, 145 units, condos, not in developer control

Bylaws
-------------------------
(b) At the first meeting of the members of the Association following the Developer Control Period, three (3) persons shall be elected to serve as the Board of Directors. The term of office of those elected shall be two (2) years. The election shall be by ballot and by a plurality of the votes cast, each member voting must cast his or her vote(s) for as many .nominees as there are· vacancies to be filled, but there shall be no cumulative voting.

[Later filed Amendment]
Change paragraph (b) to section 4: “At the first meeting of the members of the of the Association following the Developed Control period, five (5) persons shall be elected to serve as the Board of Directors.

(c) Except ·as to vacancies provided by removal of Directors by· members, vacancies in the Board of Directors occurring between annual meetings of members shall be filled by the remaining Directors until the earlier of (i) the next annual meeting of the members, and (ii) the date of a special meeting called pursuant to these Bylaws for the purpose of filling the vacancy, at which time a Director shall be elected to fill the remaining term of any such vacancy.

-------------------------------------
Compliance with Statute
These Bylaws are intended to comply with the requirements of the Horizontal Property Act of Tennessee, Chapter 27 of Title 66, Tennessee Code Annotated, as it may be amended from time to time. If any of these Bylaws conflict with the provision of that statue, then the provisions of the statute will apply.

-------------------------------------
quick search: § 66-27-403

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Janine

What you quote are Terms on the BOD, not positions. The BOD can call for an Officer Election any time they desire and vote for new Officers from among BOD Members. Hopefully such an election will remove her from being Treasurer but she will still be on the BD>

AugustinD
Posts: 3,698

Posted:

JanineR, I am going to be thoroughly snotty and say that you should get back to this forum when you can define the difference between a HOA officer and a HOA director. Because as JohnC46 indicates, you are missing the boat.

DouglasK1 (Florida)
Posts: 2,046

Posted:

What John said is true for almost all (or maybe even all) associations, the members vote people onto the board, but not into specific officer positions. The board then elects the officers. While board positions typically have a specific term, officer positions do not, and the board can replace the officers at any duly noticed meeting. Depending on state law, this might need to be on the published agenda. Note that the former officer is still on the board, just not in their officer position. All that needs to happen is that a director makes a motion to elect a different treasurer, it gets seconded, and passes by a majority of the board.

What do your bylaws say about officer position elections?

Escaped former treasurer and director of a self managed association.

JanineR (Tennessee)
Posts: 259

Posted:

I understand that I did not word it correctly, and that members don't vote on positions.
I did do the research on Directors vs Officer first, based on reading these forums over the last few years.
I really did mean to edit it before posting, as I am using some of the language from the property manager.

Based on the Bylaws, does this particular Board of Director's term expire in 2021 or 2022?
She filled the vacancy in 2020 due to no quorum, but was not voted in.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I think this question has come up before.

Unless your bylaws or state law address this explicitly, my take on it is that associations have staggered terms (ie, one term expiring each year) for good reasons. Doing it this way helps preserve corporate memory and helps prevent a situation in which all directors are inexperienced newbies.

For that reason, any method of dealing with a missed election should preserve the staggering, and this should take precedence over any board member's "right" to serve a full two-year term. For what it's worth, I don't believe any such "right" exists - although I'm sure there are board members other there who are clinging to their positions come heck or high water and who would disagree with me. The reason I believe the "right" does not exist is because directors serve at the pleasure of the homeowners and may be removed from the board with or without cause. No one is entitled to serve on the board, only to seek election.

Anyway, at this point I'd be tempted to just act like 2020 didn't happen and essentially replay what should have happened last year (hopefully you'll have your quorum, and if not your bylaws have provisions for reducing the quorum and giving it another shot). In other words, any term that expired in 2020 will now expire in 2021, and the term scheduled to expire this year will now expire in 2022.

I second John's comment about removing the problem director from the Treasurer officer position.

MaxB4
Posts: 3,513

Posted:

Officers position are for one year and re-appointed or re-elected by the Directors on an annual basis. There is a difference between a director position and an officer position.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By JanineR on 06/21/2021 11:18 AM

Bylaws
-------------------------
(b) At the first meeting of the members of the Association following the Developer Control Period, three (3) persons shall be elected to serve as the Board of Directors. The term of office of those elected shall be two (2) years. The election shall be by ballot and by a plurality of the votes cast, each member voting must cast his or her vote(s) for as many .nominees as there are· vacancies to be filled, but there shall be no cumulative voting.

[Later filed Amendment]
Change paragraph (b) to section 4: “At the first meeting of the members of the of the Association following the Developed Control period, five (5) persons shall be elected to serve as the Board of Directors.

-- Add the following from the Tennessee Nonprofit Corporation Act:
===
48-58-105. Terms of directors generally. —
...
(c) Except as provided in the charter or bylaws:
(1) The term of a director filling a vacancy in the office of a director elected by
members expires at the next election of directors by members; and
(2) The term of a director filling any other vacancy expires at the end of the
unexpired term which such director is filling.

(d) Despite the expiration of a director's term, the director continues to serve until a
successor is elected, designated or appointed and qualifies, or until there is a
decrease in the number of directors.
===

I am homed in on this from the Bylaws: "The term of office of those elected shall be two (2) years." Call the director, who also happens to be Treasurer, "Director Sally." In 2020, Director Sally was not elected (due to a lack of quorum). But per the Tn Nonprofit Corporation Act, she continues to serve "until a successor is elected." The Bylaws do not set a new term for someone neither elected nor appointed. Her term is expired. If this went to court, I would argue that Director Sally must run for office again in August, 2021, just a couple of months from now.

Of course, you are not in court. It would cost a fortune to go to court. And no doubt the fairly legally illiterate directors either won't know what to do, or they will steamroll anyone demanding Director Sally run for re-election again. You can try to get the COA attorney to rule on this. God willing the COA attorney agrees that Director Sally needs to run for re-election in August, 2021.

JanineR (Tennessee)
Posts: 259

Posted:

AugustinD, I just rewrote my original post calling her "Director Jane", but Sally is better.

Director Sally has been the treasurer for so long that we tend to call her by her officer position, and I should have edited that before posting my original post.

Sally keeps serving and serving and serving as a Director based on no quorum. And in the same officer position each year.
The no quorum seems to be intentional, particularly with her friend the property manager who's husband works for the GC that Sally signs the checks. To the tune of over nine million in 2020.

Example of no quorum last year includes, property manager not understanding that our quorum is actually 30%, not 51%. Not understanding proxies. Not understanding that if one member owns 6 units, that counts as 6 votes not 1 vote. Sending out the wrong zoom link. Sally's face lit up on last years call when the PM said there was no quorum again.

This year, members have wised up, and intend on having a quorum, and questioning the quorum count.

I believe that Director Sally needs to put her name on the ballot, but Director Sally and her PM friend will resist that and say she does not have to.

In which case, it looks like it will be the responsibility of the next Board to remove her.

It's really messy over here.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By JanineR on 06/21/2021 1:06 PM
AugustinD, I just rewrote my original post calling her "Director Jane", but Sally is better.

Director Sally has been the treasurer for so long that we tend to call her by her officer position, and I should have edited that before posting my original post.

Sally keeps serving and serving and serving as a Director based on no quorum. And in the same officer position each year.
The no quorum seems to be intentional, particularly with her friend the property manager who's husband works for the GC that Sally signs the checks. To the tune of over nine million in 2020.

Example of no quorum last year includes, property manager not understanding that our quorum is actually 30%, not 51%. Not understanding proxies. Not understanding that if one member owns 6 units, that counts as 6 votes not 1 vote. Sending out the wrong zoom link. Sally's face lit up on last years call when the PM said there was no quorum again.

This year, members have wised up, and intend on having a quorum, and questioning the quorum count.

I believe that Director Sally needs to put her name on the ballot, but Director Sally and her PM friend will resist that and say she does not have to.

In which case, it looks like it will be the responsibility of the next Board to remove her.

It's really messy over here.

Completely irrelevant!

Directors and Officers are two separate entities and how each are elected are in two different parts of the Bylaws.

JohnT38 (South Carolina)
Posts: 1,631

Posted:

It sounds like you have a secondary issue and that is the board doesn't know how to manage or reign in the property manager.

AugustinD
Posts: 3,698

Posted:

Quote:

From my own hard experience, I think it's important to remember that, when the number of people present in person or by proxy is being correctly counted, and still no quorum is reached, it's not Director Sally's fault. It's the membership's fault. One is battling the membership far moreso than the Board. And unless one has enough members, this battle against the membership will fail.

I think one of the hardest lessons for anyone involved with COAs/HOAs is recognizing that often, what one is up against is not a bad board, but a membership that is "fine" with the status quo.

You can send letters to the Board quoting your understanding of the Bylaws and law, and asking for the COA attorney to weigh in. You could subsequently threaten suit, but more and more, I do not think even a threat is worth it, because retaliation is so common. Your best bet may be to wait another year until 2022, when no one can rationally claim that Director Sally's term has not expired.

Thank you for patiently explaining that you do understand about officers vs. directors et cetera, in response to my admittedly not-so-patient snotty-ness.

KerryL1 (California)
Posts: 14,550

Posted:

Soooooooo. why can't/doesn't the Board vote to remove Sally from her position as treasurer, Janine????

Agree with Max that officers (like treasurers ae generally voted to serve for one year. But that depends on your Bylaws or state studies.

JanineR (Tennessee)
Posts: 259

Posted:

That may even be the the primary issue.

The complex is 90% short term rental so most owners live off-site or even out of state.
There is a big disconnect between what is being reported by the property manager and what is actually happening.

JanineR (Tennessee)
Posts: 259

Posted:

That was in response to JohnT38 's comment.
I pressed reply, but seems like I did not do it correctly.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By JanineR on 06/24/2021 6:18 PM
That was in response to JohnT38 's comment.
I pressed reply, but seems like I did not do it correctly.

If you want to reply to a particular post, click the Quote link on the upper right-hand corner of that post. That will put the original post in a quote box, as with your comment above.

JanineR (Tennessee)
Posts: 259

Posted:

Quote:

Posted By CathyA3 on 06/25/2021 4:53 AM

Posted By JanineR on 06/24/2021 6:18 PM
That was in response to JohnT38 's comment.
I pressed reply, but seems like I did not do it correctly.

If you want to reply to a particular post, click the Quote link on the upper right-hand corner of that post. That will put the original post in a quote box, as with your comment above.

Thank you CathyA3

JanineR (Tennessee)
Posts: 259

Posted:

Something new has come up on this topic.

There were two director vacancies in last years meeting.
Director Sally and Director Kelley
Since there was "no quorum" they both filled the vacancies.
(I put no quorum in quotes as there was actually a quorum, but it wasn't counted correctly)

My original question was whether Director Sally is to have another two year term, or just one year to fill the vacancy until the next annual meeting.

This is the new part:
Since Director Kelley resigned, there are four vacancies to vote on this year.
The Board has said that in addition to Director Sally staying on for another year, one of the new four people voted in by members will only have a one year term since Director Kelley already did one of those years.

Our Bylaws say "the term of office of those elected shall be two (2) years"

What are your thoughts on the Boards decision that one of the newly elected directors can only do one year term, and how would that be decided who that person is?

JanineR (Tennessee)
Posts: 259

Posted:

From the Board:

"Also, please be aware that notifications of the annual owners meeting scheduled for August 12th have been sent via mail to all owners. We are sorry to say that [Director Kelley] has resigned her board seat. Given that, there are now 4 board seats open for election. If you have interest in serving either the balance of [Director Kelley's] 1 year term or one of the 3, two-year terms open, please submit your nomination per the communicated process to... [etc] ..."

KerryL1 (California)
Posts: 14,550

Posted:

Your bylaws should state how long a director serves when there's a resignation.

Some say the new director serves the remainder of the term. Some Bylaws say until the next election.

We had this situation last fall and there were 3-two-year terms available, and one 1-year term to fill a vacancy caused by a resignation. The lowest vote getter is serving the remainder of the resigned director's term.

Wait! On reviewing your post Janine, you answered your own question:

"(c) ...vacancies in the Board of Directors occurring between annual meetings of members shall be filled by the remaining Directors until the earlier of (i) the next annual meeting of the members, and (ii) the date of a special meeting called pursuant to these Bylaws for the purpose of filling the vacancy, at which time a Director shall be elected to fill the remaining term of any such vacancy."

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