BY TOM MURRAY, EADS MURRAY AND PUGH P.C.
In my 30 years of representing community associations of all sorts, one issue that comes up frequently is to distinguish between a director and an officer. In almost all governing documents for community associations, and more particularly, the bylaws, the homeowners only elect the members of the board of directors. The board members then appoint those who will serve as the officers of the association. Typically, the officers will consist of the president, vice president, secretary and treasurer. Not surprisingly, those officers must also be board members themselves, but we’ve seen some bylaws that permit the treasurer or secretary to not be board members, but instead they only need to be owners. This means that at a community association’s annual meeting, the homeowners do not elect a president, vice president, secretary and treasurer. Instead, they only elect the board members based upon the open positions that are to be filled. After the board members are in place after the election, they then will decide which of them will serve as the officers.
The most common number of board members is five, but that totally depends upon the association’s bylaws. We have some associations that have three board members, while a few have a much higher number. We frequently are asked whether there should really be only four board members since there are usually four officers’ positions on a typical five-member board of directors. This is a good question. However, that is not a mistake. The explanation is that one of those five board members will not be an officer. It is common to refer to that fifth board member as a “board member at large.” In some community associations, that fifth board member is the chairman of an important committee, such as the architectural control committee. If the documents state there are only to be three board members, they may still say there are the four officers’ positions of president, vice president, secretary and treasurer. In that situation, it is common for the secretary’s and treasurer’s position to be served by the same person. Alternatively, the bylaws might state that there is no vice president’s position such that there are only three officers.
There is also confusion when the bylaws state that the officers are elected annually, but the same bylaws state that board members serve more than a one-year term. Many bylaws state that the board members are to serve two- or three-year staggered terms. We are often asked whether this is a mistake. Granted, this seems odd, but it is quite common for homeowners associations and condominium associations. For example, if the directors are elected for three-year terms, and if Jane Doe is appointed by the board to be the president of the association in her first year on the board, she is only president for one year. At the beginning of her second year, she can continue to serve as president only if the board of directors reappoints her.
Another issue that occasionally comes up is whether there should be term limits. Some community associations have board members who have continuously served for more than a decade. Often, that is only because there are no other owners willing to serve. (Sound familiar?) We’ve also heard some long-tenured directors say, “Well, if I don’t do it, I’m afraid of who will be elected.” Change in leadership is a good thing for a healthy community association, so there is some merit to considering term limits on board members as part of the bylaws. However, if your association is like most where owner apathy is a big problem, then term limits probably are not a good idea.
Each officer has specific duties. For example, the president presides at all board meetings and homeowners’ meetings. The president also carries out the decisions of the board. The vice president presides at meetings in the absence of the president. The treasurer accounts for the income and expenses. The secretary is responsible to keep the minutes of the meetings as well as to send notice to the members for upcoming meetings. Contrary to the misconception that some people have, the president does not have the power to make unilateral decisions. Rather, the president oversees that the decisions made by the board are implemented.
Many of our homeowners association and condominium association clients do not hire a property management company to help them. Instead, the officers and directors perform all the required tasks themselves on a volunteer basis. Often, for such boards, the most difficult and time-consuming job is not that of the president, but the treasurer, especially in a community where there is a high delinquency rate. Sending late notices and coordinating with the association’s attorney can be quite a challenge.
Being a member of a board of directors can be a rewarding experience, but also often challenging. Don’t expect to be showered with thanks and gratitude from your neighbors. However, find comfort in the fact that you are serving your community to not only preserve and enhance property values, but also to make a place where the homeowners can enjoy their time at home.