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Director v. Officer Removal in the Residential Association Context

by | Jun 30, 2023 | Firm News |

At least once a year I receive a call from a board member or property manager in which I am informed that the board of directors has voted a fellow director off the board. When I inform the caller that this is probably not possible in the typical residential association setting, often I am pointed to a provision in the governing documents that relates to removal of an officer, which leads to a discussion regarding the difference between an officer of the association and director of the association and the requirement that directors be removed by a vote of the members of the Association. This blog addresses this not-uncommon confusion about the removal of directors v. removal of officers.
Residential associations are comprised of “members” who are typically owners of units or lots. Directors are elected at the annual meeting of the Association by the members of the Association to sit on the board of directors, which, importantly, directs the affairs of the Association and is charged with enforcing the governing documents. Accordingly, while a board of directors may be able to appoint a director to fill a vacancy on the board (for instance due to death or resignation), it makes sense that, since it is the members that elect directors, it is the members that may remove a director. A circuit court may also remove a director under the Michigan Non-Profit Corporations Act (the “Act”), MCL 450.2514. It’s worth pointing out that, while the board of a residential association typically would not be able vote to remove a director, it could for a valid reason such as illness, improper conduct, or a reasonable majority view that a director is not acting in the best interests of the Association, vote to request that a director resign. There is typically a provision in the governing documents that specifically addresses the process for removal of director of an association. That process often requires the removal to take place at a meeting of the members of the association and that notice of the removal action be included in the notice of the meeting. The director whose removal is proposed must typically be allowed an opportunity to be heard at the meeting of the members at which their removal is on the agenda.
Officers of the Association—minimally a President, Secretary, and Treasurer, but also usually a Vice-President—are typically voted into office from among the directors by the directors at a meeting of the board immediately or shortly after the election of a new board of directors. The governing documents may provide for additional officers and more than one person may typically hold more than one office (with the usual exception of president and vice-president). Officers have certain duties and functions as outlined in the governing documents. Since officers are appointed by and serve at the pleasure of the board, they may usually be removed by the board with or without cause. This is provided for in the Act, MCL 450.2535. The governing documents may provide for additional procedures to be observed when removing an officer.
The need to remove an officer or director is often accompanied by disagreement over Association management or other underlying significant issues that require the attention and advice of Association legal counsel. We are experienced in helping associations navigate those matters. Please reach out to us at (248) 349-6203 or email us using the form below.
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