Reader Questions - Board Size, Tenure and Compensation

board members h o a homefront reader questions Aug 10, 2015

Good Morning Mr. Richardson,

Our association wants to amend our bylaws to increase the number of persons elected to the board. Do you have to fix the number to be elected or is it permissible to say “up to” a certain number of board members.

We have a small association and may not be able to fill a fixed number on the board.

Thank you,

J.T., Anaheim

Dear J.T.,

Under Corporations Code Section 212, bylaws must state board size, which must be at least 3. The section allows a variable number of directors, so long as the board cannot double. In other words, a board could vary from 5 to 9 directors but could not vary to 10, which is double the minimum board size. Many boards are too large for their communities. I frequently encounter boards which are 20-25% of their entire community. There is no hard and fast rule, but I think for up to about 25 members, 3 directors is fine, and for about 50 or more members, 5 directors is usually sufficient. Only the largest associations benefit from a 7 member or larger board. As to variable board size, I am not a fan. Allowing fluctuation of the board’s size could allow a future board to decide to shrink or expand the board to help their political aims in the community. Pick an appropriate board size, and stay with it.

Best regards,
Kelly

Dear Kelly,

At our last annual meeting there wasn’t a quorum to elect directors. Our current CCR’s and Bylaws do not mention what should happen when there isn’t a quorum. What happens now? Does the present board continue until the next annual meeting or must another meeting have to be held?

J.S., Encino

Dear J.S.,

Corporations Code Section 7220(b) says that directors are elected or appointed to serve their term and hold office until a successor has been elected. So, unless and until there is a quorum sufficient to elect their replacement, or to reelect them, the directors continue to serve.

Hope this helps,
Kelly

Mr. Richardson,

I am the VP of my HOA. I noticed that everyone except the board members get paid for their time. I understand I volunteered, but I also know involved, fiscally prudent board members work many hours outside of normal meetings. Can HOA board members vote themselves a stipend and if so how would you gauge the amount (title, amount of time spent, etc.), or can board members vote themselves a waiver of dues for the months they attend meetings?

Thank you for your time. I enjoy reading your column. Sincerely,

K.S., Chula Vista

Dear. K.S.,

The law does not prohibit some form of compensation for HOA directors or officers. However, here is what it will cost you: The loss of your immunity as a volunteer under the Business Judgment Rule; the loss of your immunity under your directors and officers insurance under Civil Code 5800; and the loss of the good will of your neighbors, who will question whether you are working for the good of the community or just to get paid. Any form of compensation, whether cash or assessment credit, is not worth the harsh consequences. Stay a volunteer, and help build the culture of volunteerism.

Thanks,
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®.