FILLING VACANCIES ON THE BOARD

In light of the death of Ruth Bader Ginsburg on Friday and the controversy surrounding filling the Supreme Court vacancy, I thought it best to discuss the procedures required by our laws when there is a vacancy on a condo or HOA board of directors.

 

For condominiums and HOAs:

Unless otherwise provided in the bylaws, any vacancy occurring on the board before the expiration of a term may be filled by the affirmative vote of the majority of the remaining directors, even if the remaining directors constitute less than a quorum, or by the sole remaining director. In the alternative, a board may hold an election to fill the vacancy….. Unless otherwise provided in the bylaws, a board member appointed or elected under this section shall fill the vacancy for the unexpired term of the seat being filled.

 

So does the board have to fill the vacancy?  I think it does, unless the bylaws say otherwise.  The statute makes the board choose one way or the other to fill the vacancy.  Either the remaining directors agree on who is going to fill the vacancy and appoint him or her to the Board, or if they cannot agree, the choice is to be left up to the unit owners in an election to fill that vacant seat.

 

Suppose there are so many vacancies that there is no longer a quorum of Board members?  You don’t want to know the answer.

 

For both condos and HOAs:

(1) If an association fails to fill vacancies on the board of directors sufficient to constitute a quorum in accordance with the bylaws, any member may give notice of the member’s intent to apply to the circuit court within whose jurisdiction the association lies for the appointment of a receiver to manage the affairs of the association. The form of the notice shall be as follows:

 

NOTICE OF INTENT TO

APPLY FOR RECEIVERSHIP

 

YOU ARE HEREBY NOTIFIED that the undersigned member of   (name of condo or homeowners’ association)   intends to file a petition in the circuit court for appointment of a receiver to manage the affairs of the association on the grounds that the association has failed to fill vacancies on the board of directors sufficient to constitute a quorum. This petition will not be filed if the vacancies are filled within 30 days after the date on which this notice was sent or posted, whichever is later. If a receiver is appointed, the receiver shall have all of the powers of the board and shall be entitled to receive a salary and reimbursement of all costs and attorney’s fees payable from association funds.

 

(name and address of petitioning member)

 

(2) The notice required by subsection (1) must be provided by the member to the association by certified mail or personal delivery, must be posted in a conspicuous place within the condo or homeowners’ association, and must be provided to every member of the association by certified mail or personal delivery. The notice must be posted and mailed or delivered at least 30 days prior to the filing of a petition seeking receivership. Notice by mail to a member shall be sent to the address used by the county property appraiser for notice to the member.

(3) If the association fails to fill the vacancies within 30 days after the notice required by subsection (1) is posted and mailed or delivered, the member may proceed with the petition.

(4) If a receiver is appointed, all members shall be given written notice of such appointment.

 

(5) The association shall be responsible for the salary of the receiver, court costs, and attorney’s fees. The receiver shall have all powers and duties of a duly constituted board of directors and shall serve until the association fills vacancies on the board sufficient to constitute a quorum and the court relieves the receiver of the appointment.

 

Trust me — you really don’t want a receiver appointed for your association.  Board members serve for free — receiver don’t, as you can see.  If you think you have money problems now —- the cost and expense of a receiver can make it worse.  It is imperative to do your best to get a quorum of board members to serve.

 

We’ll discuss some other election and budget issues in the next few weeks as we approach budget and election season.

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