Director Vacancy

Started by JanineR • 5 replies • 146 views

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JanineR (Tennessee)
Posts: 259

Posted:

We lost a great board director. He is no longer eligible due to selling his unit. Let's call him Director Dave.

He was voted in by members in October to start his second term of 2 years.

We now have 4 board directors, all voted in by members. We actually work well together! - touch wood.

The one positive of Director Dave leaving is that we will now get back into a 3-2 staggering of director terms.
We had become out of sync to 4-1 staggering.

The question is
Do we have to appoint someone to replace him, or can we ride it out until this year's annual meeting?

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Bylaws
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4 (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.
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*A special meeting takes months in our community to facilitate. And doing so won't help with our 4-1 staggering to change ideally to 3-2.
* Do you read 4(c) as saying we MUST fill the position until the next annual meeting, or can we ride it out for 6 months until the next annual meeting?
With nominations coming in 3 months from now.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By JanineR on 02/28/2024 8:10 AM

* Do you read 4(c) as saying we MUST fill the position until the next annual meeting, or can we ride it out for 6 months until the next annual meeting?

I do, with caveats. The main caveat is that if no nominee can win a majority of the current board's vote, then oh well. At least the board tried.

Competent HOA attorneys say that it is best to have all seats filled (where there is a fixed number, and not a range, of board seats).

Sometimes someone who is competent can have the fact that she/he only has to "stick it out for several months" dangled in front of her/him to get her/him to serve.

On the other hand --

Sometimes no one competent is willing to accept an appointment to the board. Appointing someone not competent (or who does not play well with others or similar) is a mistake and breach of fiduciary duty IMO.

As for achieving staggering of terms in this situation, it sounds like an amendment to the bylaws may be needed.

KerryL1 (California)
Posts: 14,550

Posted:

During my longtime service on my HOA's Board, we've experienced this situation many times. We have, indeed, left a vacancy open until an annual meeting & election for up to 6 months time*. And the main reason is yours, Janine: the remaining directors worked very well together, and we had no "deadwood" directors who did nothing. Our very seasoned HOA attorney did not advise otherwise.

You do not need to amend your Bylaws solely for this small matter. Our HOA counsel advised that at the next election with, say, three vacancies, the two top vote-getters serve two years and the 3rd serves one year. This re-establishes staggered terms. We've see others on this forum advise the same.

We did restate our entire Bylaws in '22 and here's the language advised by counsel:

"An election shall be held in any year that a director’s term is scheduled to expire. Four (4) Directors will be elected in each even numbered calendar year and three (3) Directors will be elected in each odd numbered calendar year to serve for a term of two (2) years so that the Directors on the Board shall be elected to serve in staggered two (2) year terms."

TimB4 (Tennessee)
Posts: 21,061

Posted:

My question would be, what is the number of directors you governing documents require?

Is it a range (3 to 5) or an exact number (5)?

If it's a range and you still have a quorum, then it's not an issue and the Board can decide.
If it's an exact number, and you still have a quorum, then the board should try to fill (but not worry if nobody volunteers).

If you do not have a quorum, as outlined in your governing documents, you must fill in order to conduct business.

TN corporate statutes, 48-58-103, require a minimum of 3 Directors (but defers to the governing documents if there should be more).
Corporate statute does not require filling of vacancies providing there are a minimum of three and you meet quorum requirements in your governing documents.

ElleN (Idaho)
Posts: 4,420

Posted:

Tn statute section 48-58-111 defers to the bylaws when it comes to filling vacancies.

KerryL1 (California)
Posts: 14,550

Posted:

What kind of "Special Meeting" does 4 (c) (2) specify? You'll need to refer back to your Bylaws to see what kind of special meeting, this means.

If this is a "special meeting of the members" (owners) and I were on the board, I'd say let's wait for the annual meeting. A special meeting of the members would be time-consuming, maybe involve ballots, etc and a quorum in attendence of owners?

Don't know about Janine's Bylaws, but in my HOA and in many states, there are two types of special meetings. One type is of owners; one type is of the Board.

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