Real Estate & Property Law

How Many Board Members Does It Take To Pass a ???

Boards have considerable power in HOAS. They are elected officials. They are not always 100% in agreement, but perhaps a more pervasive and common problem is that not all of the board members are even interested in what is going on, or are independent thinkers. Thus while decisions are seemingly made by boards, they are often made by a few influential people. These people may be bossy, aggressive or assertive, offensive, or manipulative directors, or bossy or assertive managers, or may simply be good consensus builders. The decision makers may be managers or board presidents who cannot get a rise out of the other board members. I have worked with boards of all sizes. A long time ago I worked with an association that had a board of 15 in a retirement community. About 11 or 12 of the directors had some kind of ?challenge? that got in the way of meaningful participation on the board. For example, some had regular golf games that conflicted with actual service, some had bridge, some engaged in pre-meeting ?imbibing? on medication or alcohol, one had narcolepsy, and I think a couple were on the verge of dementia. Thus the decisions always came down to the big 3 or maybe 4, one of which was a definite ?yes? man, meaning I never heard an independent thought escape from his mouth. But, 3 or 4 active participants was better than none.

So here?s the reader?s question:

?First I wanted to say I so appreciate all your efforts with the condo guru website. Its informative, interesting and a breath of fresh air in the HOA world.

I had a question that I thought might be good for the forum but didn't know exactly how to send it so I figured email would be the best.

I am a Board member of a 350 unit common area interest community in Southern California. We have a five member Board. Some are busy with work, some just are not interested in their Board position. The management company takes the path of least resistance and will do whatever the most aggressive Board member or two dictate.

My question has to do with Board quorum and approval of expenditures. It was my understanding that the Quorum for the Board is Three of the Five for conducting a meeting and approval of expenditures. So if two of the five are not present, the three can conduct a meeting. If a vote on an expenditure is split 2 to 1, it does not meet the three of five member quorum requirement. Is that correct??

I cannot really answer this question without reviewing the governing documents to see what they say about board quorum and board action. Some say a decision of a majority of the board is what it takes for a valid action, in which case it would be 3 of 5. Some say a board action can be taken by a majority of board members at a board meeting and whether stated or not, a board meeting would not be valid/legal if there was not a quorum present. So in this case, quorum would require at least 3 for a legal meeting but the action would be valid with a vote of 2 of those present if there were 3 in attendance. If there were 4 or 5 present, a majority of directors needed for action would be 3.

Some bylaws say that ?interested? directors cannot vote and that the quorum is based on ?disinterested? directors. Sometimes the bylaws say that if a quorum is present at the board meeting but someone leaves, the meeting is still legal, which begs the question as to whether a majority of those ?remaining at the meeting? is enough for the action.

In any case, all board members need to be notified of board meetings. A ?quorum? cannot get together and hold a meeting without notifying the others.

I know it sounds complicated. I did not make up the rules. The document language is critical in determining the parameters of when a quorum is important, and whether action requires a majority of the board members, a majority of a quorum of the board members, or a majority of ?interested? directors.

In this case, the author of the question mentioned that a very few directors approved a very large expenditure that was not in the budget or reserve study. In such a situation, owner approval may be required. If there will be an assessment to pay for the expenditure that exceeds the legal limits of Civil Code Section 1366 (California law on assessment limitations), then the board could not impose the assessment without member approval. Then the question becomes can the board even POSE the assessment to members for a vote by majority, majority of a quorum, of the board, etc.

Yes, it?s complicated. That?s why we lawyers make the big bucks!

Full post as published by California Condo & HOA Law on November 05, 2010 (boomark / email).