Who is qualified to be a director or officer of a condominium association or homeowners association? Who elects them? How are they replaced?
Qualification for Directors
The Michigan Condominium Act does not establish any qualifications for directors or officers. Therefore, the Michigan Nonprofit Corporation Act governs both condominium associations and homeowners associations. It is important to note that directors and officers do not automatically have to be members of the association. MCL 450.2501(1) states:
(1) The business and affairs of a corporation shall be managed by or under the direction of its board, except as otherwise provided in this act or in its articles of incorporation. A director is not required to be a shareholder or member of the corporation unless the articles of incorporation or bylaws so require. The articles of incorporation or bylaws may prescribe qualifications for directors.
In practice, most condominium master deeds and HOA declarations require that all directors be members of the association. However, there are two common exceptions. First, a co-owner or homeowner may be something other than a natural person: a corporation, LLC, partnership, or trust. For that reason, most governing documents extend qualification to the directors or officers of a corporation, members or managers of an LLC, partners of a partnership, or trustees of a trust. Second, some governing documents will extend qualification to a person who is not themselves on title but is the legal spouse of a co-owner or homeowner.
Qualification for Officers
For officers, some governing documents require all officers to be members of the association. Other documents require only the president to be a member of the association and member of the board of directors. This leaves open the possibility of professional officers. Examples include an association appointing its community manager as secretary, or its CPA as treasurer.
Electing Directors
Community association elections are different than local elections, where a candidate runs directly for mayor, treasurer, or clerk. The association membership votes for a single class of position: director, also known as board member. Associations have at least three, usually five, or sometimes more directors.
Electing Officers
Associations also have officers: president, secretary, treasurer, and sometimes other officers such as vice president. The membership does not vote for the officers directly. Instead, the board of directors meets within ten days after each election and appoints these positions. Directors who do not receive an officer title and duties are known as members-at-large, or simply directors.
Removing Officers
Boards of directors sometimes find the need to remove an uncooperative officer. Because the board of directors appoints the officers, it may also remove or replace officers, normally with or without cause. The board may hold a special board meeting and vote to remove an officer’s title and duties. The officer must have the opportunity to speak at the meeting. The board may then immediately appoint a new officer. It is important for the association to always have a designated president, secretary, and treasurer. If necessary, one individual may hold multiple offices.
Removing Directors
However, the board, acting alone, cannot completely remove a director from the board. An officer whose loses their title and duties remains a director and retains their vote as a board member. To completely remove a director from the board, the full association membership must vote for removal at a special meeting called for that purpose, or the annual meeting. The director must have the opportunity to speak at the meeting. The membership may then immediately elect a new director.
Expired Director Terms
Sometimes a director’s term will expire, without them being immediately reelected or succeeded. This may occur because the association fails to meet quorum for an election, or because there are no nominees. In that case, the director temporarily remains in place. MCL 450.2505(4) states:
(4) A director shall hold office for the term for which he or she is elected or appointed and until his or her successor is elected or appointed and qualified, or until his or her resignation or removal. A director may resign by written notice to the corporation. A resignation of a director is effective when it is received by the corporation or at a later time if a later time is stated in the notice of resignation.
The director carries on until the association until there is a proper election, or until the director resigns.
Vacant Director Positions
When a director resigns, sells their property in the community, or dies, it creates a vacancy. When there is a vacancy for any reason other than removal, it does not necessarily immediately trigger an election. Neither must the position necessarily remain vacant until the next election. The most common procedure is for the remaining directors to temporarily appoint a replacement director. Governing documents may authorize the remaining directors to make these appointments, even if the remaining directors are less than a quorum of the board. The appointed director serves until the next election. An association’s governing documents may require directors to have staggered terms. A vacancy and appointment may disrupt the normal term expiration. In that case, the association should investigate re-staggering the terms at the next election.
We Can Help
Do you have questions about qualifications, election, and replacement of directors and officers? We have years of experience with these matters and many other issues facing condominiums and homeowners associations. Please reach out to us at (248) 349-6203 or email us using the contact form.
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