Board Member Qualifications

Expecting that you are not under developer control, per California statutes Civil Code § 5105, you are correct.

From the Davis Stirling Website:

(b) An association shall disqualify a person from a nomination as a candidate for not being a member of the association at the time of the nomination. An association shall disqualify a nominee if that person has served the maximum number of terms or sequential terms allowed by the association. A director who ceases to be a member shall be disqualified from continuing to serve as a director.

(1) This subdivision does not restrict a developer from making a nomination of a nonmember candidate consistent with the voting power of the developer as set forth in the regulations of the Department of Real Estate and the association’s governing documents.

(2) If title to a separate interest parcel is held by a legal entity that is not a natural person, the governing authority of that legal entity shall have the power to appoint a natural person to be a member for purposes of this article.

This can vary by state, but I have seen some exceptions where a non-owner is acting as the agent for the owner and has the authority to vote and even sit on the board.

Where I've seen it occur: 1) the owner is an LLC or other corporate entity and has appointed a person to act on its behalf; 2) the unit is owned in trust and the agent is a trustee or beneficiary; 3) the owner is disabled and unable to act for him- or herself, and the agent has been legally appointed to act on the person's behalf; 4) the owner has died and the unit is in probate.

This is probably not one of those cases, but it's possible that the real estate person has been legally appointed to act on behalf of the owner in some capacity - example: the owner is a service member stationed overseas. The issue is whether or not "in some capacity" includes serving on the board. And if it's an informal arrangement, then no - the real estate agent is not qualified to serve.

I'd be questioning this, too.

(Side bar: Some years back we had a discussion about non-person owners of units and whether or not the agents of those owners can vote or sit on the board. Some posters insisted that they couldn't, which I found strange. It was especially strange because we were talking about a state with a high percentage of investment property/rentals. I'm shocked that the developers in that state would have gone along with such a law and would not have spread around a lot of that "protected free speech" in order to convince lawmakers to see things the developers' way. But what do I know...)

For one, state nonprofit corporation statutes that sometimes (always?) require that directors be "natural persons." Whence one has to dig deeper in the governing documents and state law to identify whether say an LLC-owned condo unit can designate a natural person representative of the LLC. (Related aside: Under the law a corporation can be a "person." The descriptor to use when one wants to refer to a flesh and blood human being serving on boards is "natural person.")

Where the laws and covenants say that a natural person must serve and this person has to be an owner, IMO it's about LLC owners et cetera having less skin in the game (due to say LLC liability protections) compared to a natural person owner who has title to a home.

One interesting wrinkle is that an owner can start out as a owner-occupant and rent their place out later, and vice versa (and change the ownership status of the unit to an LLC and back). Both of these changes have happened in my community. Does the owner actually lose or gain rights by virtue of those changes?

Not looking for an answer, just noting that there are potentially some troublesome legal issues in here.

I agree about the LLC owners having less skin in the game, if you define "less skin" limiting their financial risk to the value of their asset (ie, their other personal assets are protected). On the other hand, they may be relying on a stream of income where other owners are not. More examples of the ways in which the interests of landlords and owner-occupants do not coincide.

In my experience, that's never kept a landlord from going cheap on his/her unit's/home's maintenance. Quite the opposite. They want the dues to stay low.

I wish I knew. I only recently got on the Board and this is the situation I found. I might not have paid as much attention until I joined. He is the Board President and runs the meetings with a "strong hand". The other Board members really like him because he is seen as decisive and knowledgeable. But I feel as if maintenance is being deferred and don't see him as having a vested interest in maintenance and/or enhancement. Hmmm. I lightly mentioned this to another Board member when I heard he didn't own and was blown off. My plan now is to write a query, cite relevant codes, and ask him to prove status or resign. Or be removed as per the law.

I found this. Thanks for your help.

As provided for in Civil Code § 4160, membership in a community association is coupled with an ownership interest in a common interest development. This requirement is frequently mirrored in an association's governing documents, i.e., members must be owners of real property (lots or units) subject to the association's CC&Rs. In short, a person must be on title to be a member.

Please excuse me if already stated but if a director is found to no longer qualify according to criteria in place when he was elected, the director’s seat is declared vacant by the board.

CA Corp Code sec 7221 (b) As provided in paragraph (3) of subdivision (c) of Section 7151, the articles or bylaws may prescribe the qualifications of the directors. The board, by a majority vote of the directors who meet all of the required qualifications to be a director, may declare vacant the office of any director who fails or ceases to meet any required qualification that was in effect at the beginning of that director’s current term of office.

You can just go to your county recorder’s office and get a copy of deed. And check Sec of State website business search. Officer can be non-director but can’t vote as a director can.

Be sure and read your Declaration and Bylaws for director qualifications in case they differ from your election rules. I just found some discrepancies in ours.

Thanks for the reminder Terri!
Unless unusual, HOA directors hold two year terms. Elections are held every year. Has there been no election since you were elected? Were you elected at an annual meeting of the members (owners), or appointed by the Board?

Other qualifications do not matter to you at this moment, Patti. Only Civ. 5105 (b): directors must be owners.

So, ask your PM in writing for the published election results when “Ed”was "elected" by the owners. These are required by state law to be in subsequent open meeting minutes an/or a newsletter. If Ed was appointed by the Board, ask in for the minutes of the meeting when he was appointed.

Request in writing from your PM the Membership List of your HOA. It will tell you who the owner of record is. You don’t need to go to the county records office. IF this lot is owned by an LLC, in Cali, there is quite a complicated procedure that must be followed for Ed to be a director**

State law Civ. says he must be an owner to serve as a director. It’s also possible your Bylaws—please read them— state that not only must directors be owners, so must the Board president.* Note the big difference between directors & officers. Officers are the prez; VP, Treasurer, sec’y. They are appointed by the Board. Directors are elected by the owners (members) unless a Board vacancy occurs.

Being so new, I urge you to view some of the Webnivars at Davis-stirling.com.

You’re in a tricky spot with all other directors kowtowing to Ed. But if he is serving illegally, the Board MUST, by law, declare the director/board position vacant. IF your bylaws require that the president be an owner, your Board also MUST declare that position vacant and immediately elect a new president. If they won’t declare the position vacant, request you all get your HOA attorney’s advice. I suspect you’d all be liable if an owner came after the board for any little thing.

I also worry about Ed’s relationship with your PM. Do they do whatever he wants?? Does the latter have an office on your premises? Please request a copy of your HOA’s contract with the management company.

*You most likely will NOT see director or officer qualis in your CC&Rs.

** An Owner’s daughter & SIL occupy the unit in our HOA. The owner gave his SIL power of attorney or some such to attend Board meetings, which was sufficient. His dad & SIL wanted to be a Board candidate using the same document, which our Board had the HOA attorney review. It was not sufficient.

A few cautions:

* If this person is well liked, then you're going to have an uphill battle regardless of what your CC&Rs/bylaws say. If you're the odd man out on the board, then the reasons behind it won't matter - you'll get a reputation as a trouble-maker and the rest of the board will tune you out.

* You may get some of the membership behind you if your community is falling apart and people are already upset. But... fixing this means raising assessments, and that's never a popular opinion unless the roofs all have tarps on them and people are damaging their cars in the torn up streets.

* As another poster noted, replacing this person means someone else has to be willing to serve. People can be all hot to trot about fixing a problem until they have to do some of the heavy lifting themselves - and then they're nowhere to be found.

I agree that this issue needs to be addressed. But you need to be prepared for a long, hard slog unless you already have plenty of allies who see things your way. Also be prepared to fail. I'm constantly surprised at what people are willing to live with and what they think is OK. In your position, I'd be building allies first and laying the groundwork for getting those assessments raised to the proper level. This latter issue is the bigger problem IMHO, and it's the most difficult to fix - especially if it's the result of long-term under-funding.

Supposing a director is well liked but is harming the association (in our case, spending 40% of assessments without board approval?) I guess the answer is the same?

BUT, Cathy, if "Ed" is NOT a owner/member of the HOA, per CA Civil 5105b, AND he wasn't correctly/legally appointed by the owner --who or whatever that may be-- this Board is making decisions that are illegal and, possibly, cannot even be enforced. If not in the positions and of president of director legally, the Board must declare the positions vacant. Or this HOA can be in a far great world of hurt than just un-down common areas.

Isn't that true, Cathy, no matter how well "Ed" is liked?"

Yes, I did mention above how Patti must tread carefully and I'm also worried about "Ed's" relationship with the PM, which might make getting the info I advise difficult.

One caveat: if your state has something like an ombudsman where homeowners can bring their complaints and have a third party step in, then you have more options. Unfortunately many of us have to rely on fixing things ourselves or take formal legal action of some kind. Fixing things ourselves is faster and cheaper since board members serve at the pleasure of the membership and may be removed with or without cause.

I'm not trying to hijack Patricia's issue. We have similar problems. I hope she will keep us apprised of her progress.

You know what... maybe start a new thread about financial controls. We've gotten off topic and issues like this come up periodically, especially for communities that are self-managed.

I agree that this is a bad situation. But an issue that is easily summarized does not necessarily translate into an issue that is easily fixed. That's all I'm saying. If people think it's in their best (short term) interest to go along with something, they will do so regardless of the consequences. They probably won't even be aware of the consequences (one of my usual rants).

The one thing that the large majority of homeowners are unaware of is the extent to which community associations are regulated by law. This means that issues that give experienced board members the heebie-jeebies won't even register with homeowners. They'll wonder what all the noise is about.

So yes, in the long run, unenforceable board decisions can end up costing a lot of money - depending on what the decision was and how likely owners are to lawyer up over it.

But I guarantee that most homeowners will see the poorly maintained community as the bigger problem. At least to them personally. And it's more understandable, where abstract discussions of legal whatsits are not.

(Some other time I'll talk about what happened when one of our board presidents, who should have been up for re-election at the previous annual meeting, casually mentioned that she'd just stepped into the new three-year term instead. I about had a nervous breakdown.)

I won't get off topic. The issue is how to get rid of a problem officer or director who is well liked since some people don't seem to care about the law.

I'm reviewing - our CC&Rs say:
6.01 Governing Body. The Association shall be the governing body for all Owners with respect to the management, administration, maintenance, repair and replacement of the condominium development.
6.02 Membership. Membership in the Association shall be composed of and limited to Owners. Each owner, shall automatically be a member of the Association and entitled to vote. Membership shall be appurtenant to and may not be separated from ownership of a condominium. Upon termination of ownership, an Owner's membership shall automatically terminate and be automatically transferred to the new Owner of the condominium. No member may resign his or her membership.

Earlier an Owner is defined as: "Owner" means the record holder, whether one or more persons or entities, of a fee simple title to any condominium and the contract vendee under a recorded contract of sale. "Owner" shall not include any person or entity who holds an interest in a condominium merely as security for the performance of an obligation or as a tenant.

Even more I feel he should not be there. It presents a legal concern. We have a management company. I think the position needs to be vacated. I don't think the Board needs to vote him out. He just shouldn't be there.

But yes, I need to see what paperwork was submitted when he was elected to the Board (these are elected positions).

IMO .....

Yes, I also conveyed to you, Patti, the. entire Board Will be liable if "Ed" is not a legal member of it.

CA Civ.5105(b) IS what matters the MOST. and takes precedence over your CC&Rs. Luckily, your CC&rs do not conlifct with State statute.

But we STILL do no know if Ed is legally a member of your Board and you will NOT know until you see election results or meeting mixture that VERIFY how he was appointed or elected to the Board.

Sorry if I missed this, but won't the PM simply tllyou how ed cam to be on the Board??

No it does not. Whether this HOA President is also a director depends on other things.

The president, vice president, treasurer and secretary are all officers. Often (but not always) the president is simultaneously a director.

By my reading California statutes do not require officers to be owners in the HOA.

Do your bylaws require the HOA officers to be owners?

I didn’t notice if this was mentioned already but does the president/rental agent represent other members? And does your board have a conflict of interest or similar policy?

Kerry, I think posters can determine for themselves whether or not information is useful to their situation.

And I am disgusted with board members who believe they are superior to non-director homeowners!