Officers and Directors

Source: Adrian J. Adams Esq.

QUESTION: Our bylaws require that directors be members of the association. They also state that officers “shall be a President and a Vice President, both of whom shall at all times be Directors, a Secretary, a Treasurer and such other officers as the Board may from time to time by resolution create.” This has been interpreted to allow renters to serve on the board as long as they are not president or vice president. This seems to be an incorrect interpretation of our bylaws.

ANSWER: You’re right, it’s incorrect. People often get tangled up over the distinction between directors and officers. Homeowners elect directors, and directors elect officers. The qualifications for one can be entirely different from the other. Moreover, directors can vote, while officers cannot. When the president votes, he is not voting as president, he is voting as a director.

CC&R Interpretation. In your case, renters can serve as secretary and treasurer. As such, nonmember officers can attend meetings to fulfill their duties (taking minutes and giving financial reports) but cannot sit on the board because they do not meet director qualifications. Accordingly, seven people attend meetings: five directors (two of whom are officers) and two renters (both of whom are officers) but only the five directors make motions, deliberate and vote. For more information see: Director-Officer Differences.

Cumulative Voting

Source: Adrian J. Adams Esq.

QUESTION: Thanks to cumulative voting, an attorney whose home was heading into foreclosure got herself elected to the board. She then sued the board for failure to enforce the CC&Rs. She then demanded the association’s insurance represent her as she was doing this “for the good of the community.” Our insurance company declined with the explanation that “We don’t pay for people to sue us.” It makes one wish there was some kind of entrance exam before becoming an HOA owner.

ANSWER: As someone once noted, “Common sense is like deodorant–the people who need it most never use it.” The scenario you describe is exactly why associations should amend their bylaws to eliminate cumulative voting. It helps to keep some of the more ethically challenged owners off the board. Or, if they happen to get elected, they can more easily be removed by the membership.

New Roof For Daughter

Source: Adrian J. Adams Esq.

QUESTION: My daughter recently purchased the condominium next door to me. The issue of a new roof for that unit in on the agenda for our next meeting. I have no financial interest in my daughter’s unit. Do I need to recuse myself from voting on the roof for her unit? I am president of the board.

ANSWER: Even though you may be fulfilling your duties to the association by approving needed roof repairs, you do not want to give the appearance of impropriety. If you don’t recuse yourself from the vote, people will assume you are inappropriately using association monies to benefit your daughter. Whenever faced with an apparent conflict of interest, the safest course of action is to step out of the meeting and let the remaining directors vote on the issue. It insulates you from accusations from those who like to stir the pot.