Q: What happens under North Carolina law if a homeowners association cannot form a board of directors due to a lack of volunteers?
An HOAs primary function is to maintain property values for the homeowners by maintaining the common elements, which requires the collection of assessments from owners, and enforcing the communitys restrictive covenants (or CCRs).
An HOA acts through its board of directors. If there is no board, then the HOA basically ceases to function. Without a board, there is no one to collect assessments, hire vendors to maintain and repair common elements, purchase insurance coverage against liability or property damage, or to address violations of the CCRs.
However, this does not mean that the CCRs go away or that the HOA is dissolved. It simply means that theres no one to make decisions and issue orders.
I am asked occasionally if an HOA can continue to function if all but one of the board members resigns. The answer is typically yes, unless there is language in the bylaws that says otherwise.
Typically, board vacancies are filled by the majority of the remaining directors appointing persons to fill the vacancies, and this is true even if there is just one remaining director.
Nevertheless, having a one-person board is certainly not a good thing, since it turns what is supposed to be a democratic entity (directors elected by members) into a monarchy.
Q: One of our board members sent an e-mail to the membership endorsing a certain candidate for the upcoming board of directors elections.
In the e-mail, the sender identified himself as a resident of the community, but not as a current member of the board. At no point in the e-mail did he claim to endorse this candidate on behalf of the sitting board. Is it a conflict of interest for a sitting member of the board of directors for an HOA to endorse a candidate for the board?
There is nothing in North Carolina law that prohibits a member of an HOA or any other non-profit corporation from endorsing someone as a candidate for the board of directors.
Whats unusual in your case is that the endorsement came from a sitting board member. While such an endorsement does not violate any law, it might be considered misleading because some members might view this endorsement as having come from the board of directors.
The more transparent way for this to be handled would have been for the board member to disclose in his e-mail that, while he is currently a member of the board, the endorsement was being made on behalf of him personally, and not on behalf of, nor authorized by, the HOAs board. Full disclosure and transparency in the boards dealings and communications with members will go a long way to eliminate mistrust and contempt.
Charlotte attorney Michael Hunter represents community and condominium associations for the firm of Horack Talley. Email questions to firstname.lastname@example.org.
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