Reader Questions - An Empty Board

Mr. Richardson,

What happens if, with all the risks of being on a board of directors of a HOA, all the members choose to resign and there is no one else on the board to serve and no other homeowners volunteer?

D.J., Orange County

Dear D.J.,

If every single director resigns, it leaves the association in a difficult position. I hope that doesn’t happen to your association. If at least a quorum will stay on the board, they can fill the vacancies in an open board meeting. If less than a quorum remains on the board, under Corporations Code Section 7224 the remaining directors can act unanimously to appoint sufficient directors to achieve quorum. If even one director remains, that director can appoint remaining directors. Either way, the appointment must be in an open board meeting, with four days advance agenda notice. With one remaining director, that can seem a little awkward, but at least the association can have directors appointed properly.

On the other hand, if the association has no directors, the members would have to hold a membership meeting to elect a new board. Professional guidance from a veteran manager or an attorney would be advisable.

I am asked sometimes if an association can operate without a board. It cannot. Without a board, the association would need to go to court to appoint a receiver. A receiver would charge for the decision making services previously accomplished by the board, usually on an hourly basis. The receiver would hire a manager and a lawyer to advise the receiver. Needless to say, the exercise would be very expensive for the association, almost guaranteeing a sizable increase in budget and assessments.

Often, the root cause of the question is a community who is discouraged from board service. Sometimes members are intimidated by the amount of work, or conflict, or the association is poorly managed and people have given up. Don’t give up. These problems are repairable. For example, a good manager can help reduce the workload, because often boards work too hard by not letting the manager manage.

Tip for board meetings

Open forum is an important part of your meeting. Have a reasonable time period for speakers — 2 or 3 minutes is normal and sufficient. This is the time for homeowners to speak… and for the directors to listen. It is not a time for dialogue – that takes away from the homeowner’s time. Directors should listen and take notes. Once open forum is concluded, the chair should determine which open forum matters require a response: committee inquiry, manager input, future agenda item, or, if available, an answer to a member question.

Effective open forum is helpful to a board, providing information and perspectives which otherwise might not be known.

Kelly

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.