Director Resignation

Our entire board of directors sent out a written notice that they are all resigning. A couple days later they sent out a second e-mail communication stating that they had a change of heart and were rescinding their resignation. Can they do this?

In the board's first communication, did they specify a future date for their resignation to be effective? If not, then Arizona statutes say they have resigned and cannot rescind. The next step: Unless the bylaws or articles of incorporation say differently, per Arizona statutes the HOA would have to call a special meeting to elect new directors.

The law makes a distinction between officers and directors? This is important here. Did these people also say they were resigning as officers?

I agree with CathyA3 that focus should also be given to what led these directors to resign.

Their letter stated that they had no choice but to "resign immediately." This board is a nightmare not willing to listen, hold public meetings and answer questions. We are a non-profit corporation in Arizona.

Then these people attempting to rescind their resignations are violating the law and furthermore, perpetrating an unlawful HOA coup d'etat. See Arizona's Nonprofit Corporation statute, sections 10-3807 and 10-3811. However, realistically you would have to lawyer up to address this. Your best option is almost assuredly waiting until the next, regular annual election and meanwhile, campaign intensively to get a majority on the board who feel as you do.

Is this a condominium?

I'm with Shelia here. However wrong & illegal these directors were in their actions, so far they have done no harm to your HOA with their resignation conduct, is that right, Susan?

Look at your Bylaws to see how you may call a special meeting of the members (owners). It may require a petition. Invite the Board members and note that usually the board president presides. Ask them what issues are of such great concer that thy'd consider resigning?

If no directors show up, you other owners can discuss in a useful, adult way how your Board might be improved. You attendees might agree, for instance, to write a letter to the Board urging them to comply with AZ statutes (cite the statute #s) about the requirement to hold open board meetings and the requirement during these meetings, to permit owner comments on every agenda items. Does the Board fail to follow those statutes' requirements? Is that the main issue for owners?? Or is it something else?

Also at such meeting, see if you can learn who among you owners would be willing to serve on the Board. And, THEN, if needed, start campaigning for the next annual meeting and election. When is it, by the way? Does your HOA have a community/property manager?

What's worked best in my HOA when we had to dump bad boards (9 years apart) was to form a small group to study & learn our governing documents especially our Bylaws, and relevant state law so that we could throw the bums out.

Not sure, and I didn't do enough research into it. I did check out the website of a local receiver, although I didn't spot any HOAs/condos in his list of properties he handles/handles (there were a number of rental properties, though). I wasn't terribly impressed, frankly. But these folks appear to be on the ball: https://www.brouse.com/receiverships-101. It looks like they're talking mainly about commercial businesses that have run into financial difficulties. The article did note:

A receiver can be appointed to run the operations of the troubled company to liquidate assets, or any number of varying levels of involvement. Each receivership is unique which gives the parties and court a great amount of flexibility when crafting the order appointing the receiver. This flexibility can be a great benefit depending on the type of receivership required and what the goals of the receivership are.

It's a good question about the PMC. Maybe they could be helpful in certain cases, but it will depend on the details. Communities don't get themselves into receivership unless they're troubled in some way. Not having a board hints at drama that is probably beyond the scope of what a manager could do, and the manager may even be a contributing factor. On the other hand, if the cause of receivership is financial in nature, I could see areas where a manager's expertise could be helpful.

Thank you, Cathy and ElleN!

I guess one (nightmare) scenario I wondered about was a “predatory” PMC: they get hired on, gently ‘push’ the HOA/COA to receivership, and then are conveniently on-hand to ‘assist’ when things go to hell. If anyone wants to tell me this is impossible, I’ll be happy to try believe it. On the other hand: people have been doing unscrupulous things with property since just a few minutes after the concept of property was invented.

> BillD16, my pronouns are she/her/hers. They always have been.

Okay. I may well have not followed that somewhere. When it comes to people on the ‘net that I’ve never met and most likely never *will* meet or even have a clue what they look like, my mental picture of them is I think what the kids nowadays call ‘gender fluid’. There’s a long story behind this involving work in virtual worlds where I eventually stopped caring about people’s real-life gender. All of that said: you are one of the people in this forum that I hold in extremely high regard, and I’ll attempt to honor your stated pronouns. Although if you ask my son who was once my daughter, they’ll tell you I’m a huge eff-up in this regard.

Bill

I could see some unscrupulous PMs behaving this way, but I always come back to: what would they get out of it?

An association in receivership is an association that has failed in some way, and I can't see how that would enhance the PM's reputation. The wonderful management company we used previously would consider this a failure on their part as well, even if they had limited ability to steer the community in a different direction. It could also have affected the future prospects of the particular manager of that company, since the company owner looked at performance in determining raises, etc.

Maybe the PM is in cahoots with a particular receiver? I could see that, and wouldn't that be in interesting plot for a thriller/murder mystery! On the other hand, I would think that something like that could potentially have been the subject of litigation (meaning we probably would have heard about it). And the court has to determine if an association goes into receivership and who the receiver will be - as far as I know, the community doesn't have any input into this. Unless the judge is also in cahoots with the evil doers, I'd expect that any shenanigans would surface and careers would end as a result.

At any rate, this is why I said previously that if I were a receiver, I would lawfully terminate the contract of the community's current PM and handle those tasks myself - because you just never know. If my name is on the line for providing professional services, I want to be sure of the quality of those services.