Board Member Eligibility

Started by DavidG45 • 13 replies • 388 views

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DavidG45 (Delaware)
Posts: 994

Posted:

Our current bylaws are silent regarding eligibility for the Board, other than they been Lot Owners. We are considering a Bylaw change that would prevent people who are behind on their assessments being eligible. Several questions:

* Is this common?
* Does someone have sample verbiage so such an eligibility clause?
* Does anyone know what typically happens if a Board Member becomes ineligible during their term?

SheliaH (Indiana)
Posts: 6,964

Posted:

Your documents don't cover this??? Guess the developer didn't do enough cutting and pasting like they usually do when setting up documents. F8gures.

Anyway, it's quite common to prohibit delinquent homeowners from serving on the board.. as a practical matter,, they willing be making decisions that involve spending association money- why shouod people who can't even pay their fair share have a say in the decision making? Note, this isn't the same as voting for a special assessment 3v3ryone needs to vote on that, although one could guess what a delinquent homeowner will say.

There are some communities who also state the board member can't have any pending legal disputes involving the association, either as the plaintiff or defendant. I've also see associations ban people who've been convicted of certain felonies within a certain number of years (five can be a place to start, but I think the felonies should be specific.)

You can leave the verbiage to the attorney, but in our documents, it says the homeowner must be in good standing in order to serve on the board, followed by a definition on what good standing means. For us, that means current in all assessments - we've never had to address people with legal action against the association because those people don't get involved in association affairs anyway.

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

ElleN (Idaho)
Posts: 4,420

Posted:

The Delaware Common Interest yada statute does have a bit to say on this:

-- The bylaws must state the qualifications of board members.

-- The board cannot impose such an amendment by itself. The owners must vote on this amendment. (I think you know this, but just saying.)

-- The statute may be saying that the HOA has to offer anyone delinquent the chance to pay up before suspending the owner's right to run for and serve on the board. Even if the statute does not say this, then I think that the amendment should say as much. Being able to serve on the board is an extremely important right. Serving on the Board is thee way the courts want to see owners solve problems. Do not take this right away casually. (Not that you would.)

-- I think the bylaws should say that, if a director gets behind by more than __ days, he/she is off the board. He/she cannot get back on the board unless the board appoints him/her or unless he/she wins election at the annual meeting or a special meeting.

KerryL1 (California)
Posts: 14,550

Posted:

CA only requires that candidates and board members be members of the Assoc. I'm stating ours since I recall that DE statutes are vey similar to CA. CA HOAs are permitted to add a couple of others. IF your board will have owners vote one on amendments to your bylaws, there might be others to consider

(b) Additional Requirements for Candidacy. In order for a person to be eligible for nomination and election to the Board (and to serve on the Board) such person must meet the following
Candidate Qualifications:

Not be delinquent [defined in CC&Rs] in the payment of regular or special assessments,... and, later "As provided in Section 3.8(c), this Section shall also apply to a sitting Director who fails to remain current in the payment of all regular and special assessments,... who shall then be subject to removal from the Board by the majority of Directors who are current in such payments, after a due process hearing is held."

Owner must own one year before being eligible to run.
Not having a criminal conviction that would prevent the HOA from buying a (required) fidelity bond.

Not serve, or run for election as a Director if, on election, Co-Owners of the same condominium(s)...would be serving on the Board concurrently.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By KerryL1 on 04/18/2024 11:28 AM
CA only requires that candidates and board members be members of the Assoc. I'm stating ours since I recall that DE statutes are vey similar to CA.

No, this is not accurate. It is also a major digression.

California statutes continue to permit HOAs to have bylaws that prohibit delinquent owners from serving on the board, under certain conditions. See https://www.davis-stirling.com/HOME/C/Candidate-Qualifications-in-HOA-Elections.

Delaware statutes have nothing like this. Zip. Nada. Bupkis.

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By ElleN on 04/18/2024 10:32 AM
The Delaware Common Interest yada statute does have a bit to say on this:

-- The bylaws must state the qualifications of board members.

-- The board cannot impose such an amendment by itself. The owners must vote on this amendment. (I think you know this, but just saying.)

-- The statute may be saying that the HOA has to offer anyone delinquent the chance to pay up before suspending the owner's right to run for and serve on the board. Even if the statute does not say this, then I think that the amendment should say as much. Being able to serve on the board is an extremely important right. Serving on the Board is thee way the courts want to see owners solve problems. Do not take this right away casually. (Not that you would.)

-- I think the bylaws should say that, if a director gets behind by more than __ days, he/she is off the board. He/she cannot get back on the board unless the board appoints him/her or unless he/she wins election at the annual meeting or a special meeting.

The proper wording would be, “The board shall suspend all membership rights and privileges of an owner more than $500 delinquent on assessment, late fees, fines or other charges. Such rights and privileges include, but not limited to, use of all common areas and serving on the Board, as an officer and on any committees of the Association.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By DeanJ on 04/18/2024 12:54 PM

Nope, not good enough. Inter alia, "suspend" implies the person gets the right back after correcting the delinquency. But that means the board holds the seat for the person, in the expectation he/she will correct the delinquency.

Try again.

CathyA3 (Ohio)
Posts: 6,299

Posted:

You don't want to include a dollar figure - otherwise you won't keep pace with inflation.

Instead use something like a percentage or time range (eg. for condos, two months worth of assessments in arrears).

FWIW, our bylaws don't say anything about this, but our CC&Rs require the board to suspend voting privileges of anyone whose account is not $0. This surprises me somewhat since voting is a fundamental right of membership. Serving on the board is not. You get to serve only if the membership elects you or the current board appoints you to a vacant position - and the membership can remove you for any reason they choose.

Also, the simpler the language of the amendment, the easier it will be to implement and the less likely anyone will figure out how to game the system.

ElleN (Idaho)
Posts: 4,420

Posted:

Googling on the following turns up what looks like some helpful wording:

"eligibility" "board" "owners' association" filetype:pdf

Real-life examples:
=============
2.3. QUALIFICATION. The following qualifications apply to the election or
appointment of persons to the board.
...
2.3.3. Delinquency. No person may be elected or appointed as a director if any assessment against the person or his lot is more than 30 days' delinquent at the time of election or appointment, provided he has been given notice of the delinquency and a reasonable opportunity to cure it.

======
Article VII Elections
...
Section B 1. Any Key Ranch Estates property owner's association member in good standing and
without a felony conviction is eligible to hold office in the Association and may declare himself or herself
to the election committee as a candidate for election to the Board and must be included on the ballot.
Under no circumstances shall more than one member of a household serve on the Board at any one
time.

Section B 2. The definition of "good standing” throughout these bylaws shall mean the member is paid
current of membership dues and is not currently in violation of the deed restrictions.

=====
Article III Membership
...
3.2 Membership privileges shall be contingent owners remaining in good standing. A member is in good
standing for eligibility to vote in Board elections and to the amend the By-Laws, or to nominate or be a
candidate for a Board position if the member is current in the payment of initiation fees, annual dues and
assessments when due, as well as late payment charges and attorney’s fees assessed on delinquent accounts.
A member is in good standing for all other privileges if in compliance with the foregoing, and in compliance with
the rules and regulations of the Association.

=====
From FS 718.112 (2)(d)(2) (a Florida Condo statute section):
A person who has been suspended or removed by the division under this chapter, or who is delinquent in the payment of any assessment due to the association, is not eligible to be a candidate for board membership and may not be listed on the ballot. For purposes of this paragraph, a person is delinquent if a payment is not made by the due date as specifically identified in the declaration of condominium, bylaws, or articles of incorporation. If a due date is not specifically identified in the declaration of condominium, bylaws, or articles of incorporation, the due date is the first day of the assessment period.

KerryL1 (California)
Posts: 14,550

Posted:

Agree the Dean's suggestions don't work and perhaps may not comply with Ohio codes where I think he's written his HOA is.

The ONLY statutory requirement in Calif. for someone to be an HOA director is that they be an Owner.

There are a FEW other qualis that are permitted to be in the HOA's Bylaws or election rules in CA. I listed above the ones our Board chose when we amended our Bylaws, which were authored by experienced HOA attorneys, and which were approved by Owners with their votes.

In Calif, the wording "in good standing" is no longer permitted because Owners who owe fines or have uncured violations may still be candidates.

Delinquent. The person is delinquent in the payment of regular and special assessments unless (i) paid under protest, (ii) entered into a payment plan, or (iii) was not offered Internal Dispute Resolution (IDR) by the association. (Civ. Code § 5105(c)(1) & (d).)

Since DE statutes suggest Owners may have a chance to repair their delinquency, I'd only use wording about this in amended bylaws chosen by a qualified DE HOA attorney.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By KerryL1 on 04/18/2024 7:35 PM

In Calif, the wording "in good standing" is no longer permitted because Owners who owe fines or have uncured violations may still be candidates.

Ca statutes do not prohibit this wording, but if "good standing" is not defined, or is defined in certain ways, the Bylaws-listed (or Board-created rule?) qualification certainly might violate the statute.

DavidG45 (Delaware)
Posts: 994

Posted:

Quote:

Posted By ElleN on 04/18/2024 2:53 PM
Googling on the following turns up what looks like some helpful wording:

"eligibility" "board" "owners' association" filetype:pdf

Real-life examples:
=============
2.3. QUALIFICATION. The following qualifications apply to the election or
appointment of persons to the board.
...
2.3.3. Delinquency. No person may be elected or appointed as a director if any assessment against the person or his lot is more than 30 days' delinquent at the time of election or appointment, provided he has been given notice of the delinquency and a reasonable opportunity to cure it.

======
Article VII Elections
...
Section B 1. Any Key Ranch Estates property owner's association member in good standing and
without a felony conviction is eligible to hold office in the Association and may declare himself or herself
to the election committee as a candidate for election to the Board and must be included on the ballot.
Under no circumstances shall more than one member of a household serve on the Board at any one
time.

Section B 2. The definition of "good standing” throughout these bylaws shall mean the member is paid
current of membership dues and is not currently in violation of the deed restrictions.

=====
Article III Membership
...
3.2 Membership privileges shall be contingent owners remaining in good standing. A member is in good
standing for eligibility to vote in Board elections and to the amend the By-Laws, or to nominate or be a
candidate for a Board position if the member is current in the payment of initiation fees, annual dues and
assessments when due, as well as late payment charges and attorney’s fees assessed on delinquent accounts.
A member is in good standing for all other privileges if in compliance with the foregoing, and in compliance with
the rules and regulations of the Association.

=====
From FS 718.112 (2)(d)(2) (a Florida Condo statute section):
A person who has been suspended or removed by the division under this chapter, or who is delinquent in the payment of any assessment due to the association, is not eligible to be a candidate for board membership and may not be listed on the ballot. For purposes of this paragraph, a person is delinquent if a payment is not made by the due date as specifically identified in the declaration of condominium, bylaws, or articles of incorporation. If a due date is not specifically identified in the declaration of condominium, bylaws, or articles of incorporation, the due date is the first day of the assessment period.

Thanks.

BillB17 (South Carolina)
Posts: 92

Posted:

A note of caution. Typically any change to your governing documents (By Laws, Declaration, etc) would require an amendment approved by the Membership. I suggest you check your docs regarding how an amendment can be passed.

Considering that your docs only require association membership to serve on the board, adding a carte blanch requirement that Board Members be in good standing on their assessment payments would be more restrictive than your docs currently allow. That is a big no-no IMHO. Not to mention the fact that amending your By Laws likely takes membership approval.

MarshallT (New York)
Posts: 414

Posted:

Hi,

It is not uncommon for associations to have bylaws that prevent owners who are not in good financial standing with the association from running for a seat on the board.

I think the other board members could vote to remove a board members if they became ineligible during their term.

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