Non-Board Member Officers

Started by DavidG45 • 23 replies • 648 views

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DavidG45 (Delaware)
Posts: 994

Posted:

Our new community will be electing its first residents' board next spring. According to our by-laws, all members of The Board must be lot owners in the community. The Board must elect officers, and our bylaws state that officers (other than President) do not have to be members of the board (see verbiage below), which might be handy for a position such as treasurer. At a townhall meeting last night our Property Manager, who was reviewing the upcoming election, stated that officers must be members of the board. When I corrected him, he insisted that it would not be possible for officers to not be members of the board, because they would not be able to attend executive sessions. So, for instance, a Secretary would not be there to keep minutes.

Reviewing our bylaws, they seem to be silent on who is allowed to attend an Executive Session. I'm curious how this works in the real world. Is it highly uncommon for officers to be not board members? If it does happen, are they not allowed in Executive Sessions?

Section 1. Designation.
The principal officers of the Corporation shall be the President, the Vice President, the Secretary
and the Treasurer, all of whom shall be elected by the Executive Board, The Executive Board
may appoint an assistant Treasurer, an assistant Secretary and such other officers as in its
judgment maybe necessary. The President shall be a member of the Executive Board. Any other
officers may be, but shall not be required to be, members of the Executive Board.

SheliaH (Indiana)
Posts: 6,964

Posted:

There are some associations where the officers aren't board members - consider that the secretary, for example, is there to take board meeting minutes (regular board meetings that is, and maybe special homeowner meetings), but if there's an executive session, that would be attended by board members only. You don't need a secretary to take those minutes - just designate one of the board members to do it.

Your documents give you the option of selecting officers who aren't on the board itself, although I personally think it's better for the board to select officers from among themselves. However, you may find no one wants to be president or treasurer, whereas there's another homeowner who has major skills to do the job of treasurer, for example, but doesn't necessarily want to be on the board. That can work because the treasurer can be more objective in focusing on how effective actual costs are in line with the budget, whereas the board can concentrate on the why (why did line items for X and Y exceed the budget?)

So don't overthink this - you could ask board member candidates if they're comfortable with also serving as an officer and if so, which one. If someone really wants to be president, the rest of the board will vote for him or her - or not.
The duties of the position don't change, so the rest of you can keep that in mind when evaluating how well he/she does the job.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

MichaelS56 (Minnesota)
Posts: 859

Posted:

I am confused with officers that are not Board members. Do the officers vote and make decisions, spend Association money, or do the officers make recommendations to the Board members who were elected by residents to make final decisions? It sounds to me that it is possible to be an officer and yet not be elected by the residents.

AugustinD
Posts: 3,698

Posted:

DavidG45, what, if anything, do your Bylaws say about who can attend Executive Sessions?

Perhaps the manager needs to be reminded that hearings on owner violations are sometimes handled in executive session, with the accused owner attending. From the Delaware Uniform Common Interest yada statute:

(c) After the period of declarant control ends, all meetings of the executive board shall be open to the unit owners except for executive sessions held for purposes of: (i) consulting with the association’s lawyer regarding, or board discussion of, litigation, mediation, arbitration or administrative proceedings or any contract matters; (ii) labor or personnel matters; (iii) discuss matters relating to contract negotiations, including the review of bids or proposals, if premature general knowledge of those matters would place the association at a disadvantage; or (iv) discussion of any complaint from or alleged violation by a unit owner, when the executive board determines that public knowledge would violate the privacy of the unit owner.

Does the HOA manager think he/she should be allowed to attend executive sessions? If yes, based on what reasoning?

DavidG45 (Delaware)
Posts: 994

Posted:

Quote:

Posted By MichaelS56 on 12/16/2021 6:29 AM
I am confused with officers that are not Board members. Do the officers vote and make decisions, spend Association money, or do the officers make recommendations to the Board members who were elected by residents to make final decisions? It sounds to me that it is possible to be an officer and yet not be elected by the residents.

Only Board Members vote.

Yes, they are not elected by the residents; they are elected by the Executive Board.

My reading of the by-laws suggests they do not even have to be Lot Owners or residents in the community.

DavidG45 (Delaware)
Posts: 994

Posted:

Quote:

Posted By SheliaH on 12/16/2021 5:59 AM
There are some associations where the officers aren't board members - consider that the secretary, for example, is there to take board meeting minutes (regular board meetings that is, and maybe special homeowner meetings), but if there's an executive session, that would be attended by board members only. You don't need a secretary to take those minutes - just designate one of the board members to do it.

Your documents give you the option of selecting officers who aren't on the board itself, although I personally think it's better for the board to select officers from among themselves. However, you may find no one wants to be president or treasurer, whereas there's another homeowner who has major skills to do the job of treasurer, for example, but doesn't necessarily want to be on the board. That can work because the treasurer can be more objective in focusing on how effective actual costs are in line with the budget, whereas the board can concentrate on the why (why did line items for X and Y exceed the budget?)

So don't overthink this - you could ask board member candidates if they're comfortable with also serving as an officer and if so, which one. If someone really wants to be president, the rest of the board will vote for him or her - or not.
The duties of the position don't change, so the rest of you can keep that in mind when evaluating how well he/she does the job.

Thanks! Those are good thoughts.

DavidG45 (Delaware)
Posts: 994

Posted:

Quote:

Posted By AugustinD on 12/16/2021 6:56 AM
DavidG45, what, if anything, do your Bylaws say about who can attend Executive Sessions?

Perhaps the manager needs to be reminded that hearings on owner violations are sometimes handled in executive session, with the accused owner attending. From the Delaware Uniform Common Interest yada statute:

(c) After the period of declarant control ends, all meetings of the executive board shall be open to the unit owners except for executive sessions held for purposes of: (i) consulting with the association’s lawyer regarding, or board discussion of, litigation, mediation, arbitration or administrative proceedings or any contract matters; (ii) labor or personnel matters; (iii) discuss matters relating to contract negotiations, including the review of bids or proposals, if premature general knowledge of those matters would place the association at a disadvantage; or (iv) discussion of any complaint from or alleged violation by a unit owner, when the executive board determines that public knowledge would violate the privacy of the unit owner.

Does the HOA manager think he/she should be allowed to attend executive sessions? If yes, based on what reasoning?

That verbiage is exactly what is in our By-Laws. I did look for anything that says who can and cannot attend Executive Sessions, and honestly it doesn't seem to say. It seems to me that this says Lot Owners must be allowed to attend meetings unless it is an Executive Session, but is silent on who the Board may allow to attend an Executive Session.

Whether or not the property manager may attend an executive session is a good question for me to pose to him.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

It can help to view officer positions as job descriptions. All board members have equal authority when it comes to voting, but they can have different areas of responsibility depending on their officer positions.

Officers are not elected by the membership, they're appointed by the board.

Typically non-board member officers don't have any independent authority: they serve at the pleasure of the board, can be removed with or without cause, and do not vote. They may serve as advisors only, or they may actually perform work (for example, a community without a PM may appoint the Treasurer to handle the bookkeeping tasks often performed by the PM).

Many boards simply select the officers from among the elected board members. Easy-peasy. There can be reasons not to do this, though: for example, if you're self-managed and your elected board members don't have the necessary financial skills, you may want to appoint a homeowner who does have the skills. Or your bylaws may list more officer positions than board positions. In the latter case, you can appoint a single board member to hold multiple officer positions (for example, Secretary/Treasurer or VP/Secretary) rather than appointing a homeowner as an officer.

The bottom line is that you want people with the necessary skills performing various tasks, and bylaws generally allow the flexibility to make this happen.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By DavidG45 on 12/16/2021 7:05 AM
... snip ...

Whether or not the property manager may attend an executive session is a good question for me to pose to him.

I'm in a different state, but our PM attended our executive sessions with our attorney's blessing.

AugustinD
Posts: 3,698

Posted:

I support the PM and anyone attending executive sessions when requested by the board. For one, the board has a duty to consult experts and invite them to bona fide executive sessions. For another, the board has a duty to talk at length with candidate vendors as needed. In many states, this should be done in executive session. And so on.

I think one advantage of non-directors serving as officers (when allowed by the Bylaws) is that it reduces the work load on directors and officers alike. For example, I think a person serving as a non-director treasurer will have a much easier time compared to serving as a director-treasurer and is less likely to burn out. Serving as a non-director Treasurer instantly takes off the plate of the treasurer like 90% of the issues that arise and consume board time.

ND (PA)
Posts: 792

Posted:

Something to think about in regard to this decision of Board Members also serving as Officers versus Board Members and separate Officers is the total number of HOA Members available/willing to serve in either capacity.

A large HOA might have no issue with routinely having enough people willing and able to fill all seats on a Board as well as any number of additional Officer positions (Pres, VP, Treasurer, Secretary, and any other positions defined).

However, a small HOA will quickly run through any/all available volunteers if Board and Officers are all different people. This is the issue impacting my HOA (of 60 homes) on an annual basis. They insist on having an Executive Board of 3 people and separate set of up to 4 people to serve as Officers. In a few short years we've burned through everyone willing to volunteer and it's an annual threat of having to hire professionals and significantly increase assessments before others reluctantly step up. However, if the Board would also serve as the Officers, then that is fewer people that need to be involved at any given time. In theory, this will be fewer people cycling through (and getting burned out) in the same amount of time, and hopefully more willing availability of people in the future. While it does slightly increase workload of those few people, we are a small HOA with limited responsibility, so not a whole lot going on anyway . . . definitely not anything worthy of 7 different people helping to run the association.

KerryL1 (California)
Posts: 14,550

Posted:

Shelia and Cathy make good points.

Except for president, our Bylaws also allows the Board to choose non-directors as officers, which we did when no directors wanted to serve as treasurer and the woman we appointed, who we invited to attend executive sessions, became a director a few months later upon a director resigning.

So far as I know, David, anyone whom the board invites may attend executive session. Our full-time onsite PM always does as she takes minutes and gives the Board background on the status of delinquencies, for example, and other info.

Our Bylaws also permit the Board to appoint officers beyond, prez, VP, Sec'y and treasurer that they "deem necessary." I didn't seek reelection to the board after 7 -2 year terms, but we were finishing a long project to rewrite our ca. 2000 CC&Rs. I met with the president and VP and we crafted the officer position of Assistant Secretary for me to lead finishing the CC&R project with the Board and then work on some other docs that need updating. We agreed that I'd not attend ex. session unless invited, would report to the president, would not sit at the table with directors during open meetings and would have no board vote--all my preferences. The Board approved my appt. at the Organization Meeting following our annual meeting & election last month.

So far it's been good for everyone. I did sit with directors for a Town Hall on the CC&Rs with our attorney last week and will Zoom meet with the Prez, treasurer (the only director interested in the rewrite) & attorney today to work on final touches.

If others' bylaws have this option, consider appointing a non-director for a year who has special skills for a particular specified project. We require 3 on a committee and it can be cleaner and less for the Board and PM than a committee.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

A few questions for all to give their answer to:

1. Allow non-owners as BOD Members? Yes or No
2. Allow non-owners as BOD Officers? Yes or No
3. Allow non-owner BOD Members or BOD Officers to vote? Yes or No

DavidG45 (Delaware)
Posts: 994

Posted:

Quote:

Posted By KerryL1 on 12/16/2021 9:49 AM
Shelia and Cathy make good points.

Except for president, our Bylaws also allows the Board to choose non-directors as officers, which we did when no directors wanted to serve as treasurer and the woman we appointed, who we invited to attend executive sessions, became a director a few months later upon a director resigning.

So far as I know, David, anyone whom the board invites may attend executive session. Our full-time onsite PM always does as she takes minutes and gives the Board background on the status of delinquencies, for example, and other info.

Our Bylaws also permit the Board to appoint officers beyond, prez, VP, Sec'y and treasurer that they "deem necessary." I didn't seek reelection to the board after 7 -2 year terms, but we were finishing a long project to rewrite our ca. 2000 CC&Rs. I met with the president and VP and we crafted the officer position of Assistant Secretary for me to lead finishing the CC&R project with the Board and then work on some other docs that need updating. We agreed that I'd not attend ex. session unless invited, would report to the president, would not sit at the table with directors during open meetings and would have no board vote--all my preferences. The Board approved my appt. at the Organization Meeting following our annual meeting & election last month.

So far it's been good for everyone. I did sit with directors for a Town Hall on the CC&Rs with our attorney last week and will Zoom meet with the Prez, treasurer (the only director interested in the rewrite) & attorney today to work on final touches.

If others' bylaws have this option, consider appointing a non-director for a year who has special skills for a particular specified project. We require 3 on a committee and it can be cleaner and less for the Board and PM than a committee.

Thanks!

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By JohnC46 on 12/16/2021 10:24 AM
A few questions for all to give their answer to:

1. Allow non-owners as BOD Members? Yes or No
2. Allow non-owners as BOD Officers? Yes or No
3. Allow non-owner BOD Members or BOD Officers to vote? Yes or No

It will all depend on what the governing documents allow.

HenryS7 (Pennsylvania)
Posts: 336

Posted:

Our bylaws also allow for non-voting non-homeowner officers.

I keep trying to convince my wife that she should become an officer of the board. She can't be on the board because she is my wife, but there is no prohibition on her being an non-voting officer of the board.

KerryL1 (California)
Posts: 14,550

Posted:

Can you cite your Bylaws language on this point, Henry?

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Per my bylaws:
1. No
2. No
3. No

BenA2 (Texas)
Posts: 1,273

Posted:

It is ridiculous to suggest executive sessions are limited to members. Unless your governing documents or state law say otherwise, the board can invite anyone to attend. In fact, it is often necessary to have non-members attend, e.g. an attorney when discussing litigation or a contractor when discussing contract negotiations. We don't have a manager but I would think the manager would be required to attend most executive sessions.

HenryS7 (Pennsylvania)
Posts: 336

Posted:

Quote:

Posted By KerryL1 on 12/16/2021 12:16 PM
Can you cite your Bylaws language on this point, Henry?

The bylaws say that the board may appoint officers of their choosing. Since the by-laws don't restrict WHO can be an officer, it means that anyone is eligible to be an officer.

The bylaws / CC&Rs clearly say that only owners can be board members and no two spouses may be on the board at the same time.

MichaelS56 (Minnesota)
Posts: 859

Posted:

I support CathyA3.

VictorL2 (CA)
Posts: 16

Posted:

Quote:

Posted By CathyA3 on 12/16/2021 7:16 AM

Posted By MichaelS56 on 12/16/2021 6:29 AM

Typically non-board member officers don't have any independent authority: they serve at the pleasure of the board, can be removed with or without cause, and do not vote. They may serve as advisors only, or they may actually perform work (for example, a community without a PM may appoint the Treasurer to handle the bookkeeping tasks often performed by the PM).

The bottom line is that you want people with the necessary skills performing various tasks, and bylaws generally allow the flexibility to make this happen.

I agree with this. We had an association manager who did not know how to handle accounting and bookkeeping task. The board appointed a non-board member who happened to have an accounting background and was willing to serve as a non-board treasurer.

VictorL2 (CA)
Posts: 16

Posted:

Quote:

The answer is NO to all of the above according to the bylaws of every association that I have been a member of. However, a non-board owner can serve as a board appointed officer.

VictorL2 (CA)
Posts: 16

Posted:

Quote:

Posted By AugustinD on 12/16/2021 7:50 AM
I support the PM and anyone attending executive sessions when requested by the board. For one, the board has a duty to consult experts and invite them to bona fide executive sessions. For another, the board has a duty to talk at length with candidate vendors as needed. In many states, this should be done in executive session. And so on.

I think one advantage of non-directors serving as officers (when allowed by the Bylaws) is that it reduces the work load on directors and officers alike. For example, I think a person serving as a non-director treasurer will have a much easier time compared to serving as a director-treasurer and is less likely to burn out. Serving as a non-director Treasurer instantly takes off the plate of the treasurer like 90% of the issues that arise and consume board time.

We did exactly this at our association. A non-board member was appointed by the board to serve as our treasurer. No elections took place.

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