Valid HOA Action Requires a Properly Functioning Board of Directors

Given the fact that nearly all homeowners associations are structured as corporate entities (corporations) that are created under the laws of the state in which the homeowners association is domiciled, it is mandatory that the association have a valid board of directors. The state corporation laws require all corporations to have a board of directors to exercise all corporate powers and conduct the activities and affairs of the corporation. While many corporate responsibilities and activities may be delegated to management personnel, managers are mere agents of the corporation and have no independent authority to conduct business on behalf of the corporation. Thus, even if the corporation employs management personnel, the corporation’s board of directors remains responsible and must oversee and prudently direct those people.

Without a properly functioning board of directors, a corporation cannot legally conduct its business. When an association’s business activities cease, there are resulting consequences including, but not limited to, such things as: homeowners stop paying their dues; the lapsing of insurance and necessary services; cessation of maintenance of common areas; no enforcement of governing documents; and loss of legal status and the ability to prosecute and defend lawsuits. Such consequences can ultimately lead to a collapse of the homeowners association and potential personal liability on the part of the last directors and individual owners.

Valid Director Actions Require a Quorum

The details concerning the required structure and operations of a particular homeowners association’s board of directors will be contained in the association’s bylaws (part of the association’s governing documents) which will specify a specific number of directors that are required for the association. In order to conduct any business other than the appointment of additional directors to fill vacant seats, there must be a “quorum” of the directors acting. A quorum is a majority of the total number of directors called for in the association’s bylaws. For example, if the bylaws specify a total of five board members, a quorum would be three directors. Thus, unless there are three directors available to participate in a meeting, there is no quorum and the directors cannot validly conduct business. Board decisions would then be made by a majority of the directors present after the quorum has been established. State statutes also contain provisions pertaining to corporations and homeowners associations and will impose additional requirements relative to a corporation’s board of directors.

If the required number of directors have been elected and/or appointed but are not at a particular meeting, the association cannot conduct business except to adjourn and continue the meeting to another date. If the composition of an association’s board of directors is less than the required quorum and the existing directors do not take the required action to appoint replacement directors to fill the vacant positions, the association’s members can call a special meeting to elect the required new directors. The procedure for membership special meetings is contained in the bylaws for the association and/or the state statutes.

Election of HOA Directors by Homeowners