The Board Quits en Masse...

Despite all our issues, I'm happy to say we've never had to resort to receivership - although we did publish a rather harsh letter in our newsletter warning of this if we didn't get any volunteers. That should be your first approach.

As you may know, when an HOA goes into receivership, it has to go to court, explain to the judge what's happening and then ask that the association be placed into receiveship. If granted, the judge will appoint someone to oversee the HOA's affairs. Basically, that person's responsibility will be to ensure that the bills are paid, so if that jacks up your asssessments, oh, well. And there won't be a damned thing anyone can do about it.

The receiver will have to be paid and in some cases, that can cost as much as $200 an hour or more. There's also the usual court costs and attorneys fees, and the homeowners will have to pay for ALL of that, in addition to the usual assessments to pay the property manager, if there is one, fund reserves, etc. Now you see why your assessments will go sky high, but you won't be able to do anything about it. By the way, the receiver only answers to the judge and they usually aren't interested in things like rules enforcement. You might be happy with that if you're interested in making whatever exterior changes you want without worrying about the pesky and unimaginative ARC committee, but if everyone does this, you may wind up with a really crappy looking neighborhood.

Oh, yeah, your property values will probably tank because no one wants to move into a community where they don't even get a say in who runs it. Who will be at fault? Each and every homeowner in that community.

There are assorted conversations on this website about receivership and the main takeaway is it's a horrible idea, so the board needs to do whatever it can to try and stave it off. In your case, your board has been at it for 8 months and fidicuary duty demands that you take steps to try and right the ship before jumping off. To begin, why not have an executive session where you can discuss the pros and cons of receivership, how you got to this point and appointing board members to replace you. Start with reading your documents - you should already know what they say about board elections, resignations, etc.

You mention burnout, so everyone needs to be honest about what they've done and whether they may have bitten off more than they can chew - or are too nit-picky. Do you have a property manager? He or she should be responsible for daily operations - are some (most of you) getting in the way by dictating this and that? Read the contract to see what the property manager is supposed to do - if you want him/her to do more, you'll probably need to adjust the contract to add those services and be willing to pay for it.

Your documents will also tell you (again) what board members are supposed to do. You do have lives outside the association, so it may be it's time for you to put your foot down and explain that to homeowners. If they want certain things to be done, it may be time for the board to establish a committee or several who will oversee those areas under the board's direction, and then those homeowners can volunteer for a spot. Otherwise, it won't get done. There are older conversations on this website about board member burnout - lots of us (uncluding moi) have dealt with it in different ways. Bring your questions back to this conversation so you'll get updated information.

After the executive session, call a special homeowners meeting and tell the homeowners what's at stake - the board should also send a letter to everyone with that information. It's ok to set a deadline - if the January meeting doesn't produce any volunteers to replace this board, the next step will be receivership. The current board will stay on until, say, March or April to ensure a smooth transition (such as it'll be).

Buckle up and hang on to your knickers - this is going to be a helluva ride and I wish you the best.

Thanks for the reply....I am not on the board at this time and some of your ideas are applicable. Everything I see about receivership is that it is a nightmare.

The burnout I mention is probably self inflicted although the majority of the board and owners in the building live in other states and the management company is pretty marginal at helping on day to day issues....so yes, maybe an upgrade to the contract is due.

Thanks Again,
K

See if you can volunteer for a spot - everyone else may jump at the chance to have you replace them, but they can argue over who that will be. I'd hate for you to be the last one standing, but remember, you should be able to appoint board members if it comes to that. Why not talk to your neighbors to see if some of them would be willing to help out. Then all of you can approach the board - and tell them what you expect as far as transactions go. They don't get to bail and yell "good luck", but should spill their guts on where association affairs stand. If they can't or don't want to do that, you'll have to decide if you press on or sit back and watch the world catch fire.

That would include an introduction to the property manager - after everyone reads the contract, have a meeting with him or her to see what can be changed now. You didn't say where you were as far as your annual budget is concerned - if your fiscal year begins Jan. 1 and the 2025 budget has already been approved, you may need to work with it as best you can to prepare for 2026.

That special homeowners meeting will still be necessary - you can include a poll where homeowners can identify what issues are most concerning to them, and the new board can set some priorities on what needs to be addressed sooner rather than later.

Sounds like a great time to sell.

It makes no sense for a community that small to have a 5-person board - no wonder everyone is burned out. I'm actually surprised that the bylaws call for this. DO they call for it - or has some board in the past decided to expand the board without amending the bylaws?

My 74-unit condo community has a 3-person board, and that is plenty.

If your unit is on the market, pray that it sells before things get really dicey. If your community is well maintained and located in an attractive area, investors may be interested - but they also would not want to buy in a community that's headed for receivership.

I hope the current board members realize that their lives will get worse if they resign.

Two of my non-Florida associations came close to this.

Per FS 718, when a board lacks sufficient directors to constitute a quorum, any one owner may file a petition for receivership. What is interesting to me is that the FS 718 required preliminary steps force the association to advertise bigly what it is facing. See FS 718.1124 at http://www.leg.state.fl.us/statutes/index.cfm?App_mode=display_statute&URL=0700-0799/0718/0718.html

Some here have argued that a director who leaves the board without a lawful board in place has a fiduciary duty to arrange for receivership prior to resigning. As a matter of law and ethics both, I disagree with this. If a recently resigned director wants to seek receivership pursuant to FS 718, okay. But this is legally quite different from someone who is still on the board, possibly without a quorum, using HOA funds to seek receivership and more.

Kerry, the five positions are: President, Vice-President, Treasurer, Secretary and Director. I've been told we can run with a 3 person board by our Property management company but getting even 3 will be tough. I am also hearing that since my unit is up for sale I may have conflict of interest by being on the board.

K

KS,

Keep in mind that Officers and Directors are two different positions (even if filled by the same individuals).

Directors make the decisions for the board by majority vote at board meetings.

Officers, implement those decisions, do not vote at board meetings and handle the day to day tasks of running the Association.

Therefore, the management company is correct, you can run with three people serving as Directors.

If need be, double up the officer positions (some State statutes and your governing documents may limit which officer positions can be combined).

Prior to resigning, I would publish to the membership what receivership is and how it works. Explaining that if nobody steps forward, the last act of the board would be to petition the court for receivership. Most courts don't look favorably on large associations that don't have volunteers stepping forward.

KS9

A BOD of a single person can avoid Receivership. Convince one member of your existing BOD to stay or have the BOD appoint one person to the BOD. That one person can rebuild a BOD. Do not play with receivership. Look up some stories of receivership and forward them to people.

Mind you, the board would still need a quorum to make decisions.
Corporate statutes allows a board to appoint others to the board even if a quorum doesn't exist. However, that is the only decision they can technically make.

In my last association, we had a similar issue where the board was going to be less than a quorum.
Prior to that happening, the board made several motions to allow the single individual to get things done:

The [officer position] may enter into contracts for trimming and removal of trees without further approval from the board.
The [officer position] may xyz without further board approval.
etc.

Here is a link to that corporate statute:

FL 617.0809 Board vacancy.

Which says, in part:

(1) Except as provided in s. 617.0808(1)(f), any vacancy occurring on the board of directors may be filled by the affirmative vote of the majority of the remaining directors, even though the remaining directors constitute less than a quorum, or by the sole remaining director or, if the vacancy is not so filled or if no director remains, by the members or, on the application of any person, by the circuit court of the county where the registered office of the corporation is located.

Yes, legally it matters.

But it's very common for the directors to fill the board positions - for example, a 3-person board with 3 officer positions (president, secretary, and treasurer). Occasionally you can have a bit of a mismatch if the number of directors is different from the number of officers. In the latter case, you may have some officer positions filled by homeowners who are not on the board (more officers than directors) or some directors filling more than one officer position (fewer directors than officers).

But the first example (3 and 3) is why so many people confuse directors with officers or think that they are one and the same. My community has a former board president who still doesn't get it right after eight years...

officer positions, not board positions.

Too bad there is not an edit feature on this forum.