December 2012 – An HOAleader.com reader asks, “My board had an issue where we had to vote on the dismissal of another board member. The bylaws clearly reflect that he violated his seat on the board. Here are my questions: 1. Does the person that we were voting on have a vote? 2. Out of the member votes, two abstained and three voted. So does the majority rule in this case, and we move on? 3. What does it mean when a person refuses to vote?”
Here we get answers to our reader’s questions, particularly the debatable issue of when and why board members might abstain from voting, and when it’s, frankly, a cop out.
First Things First: Can Boards Kick Off a Member?
Let’s take the easy questions first, with the caveat that our reader should first double–check his governing documents and state laws to ensure that the board has the right to vote on this issue.
“In Florida, you can’t do that,” says Alessandra Stivelman, an associate who specializes in community association law at Eisinger Brown Lewis Frankel & Chaiet in Hollywood, Fla. “Board members can’t vote each other out. Members are voted in by members, and they must be voted out by members. We do have provisions for automatic removal if board members are more than 90 days delinquent or convicted of a felony; then they’re removed. Otherwise, the only way to get them out is to do a recall vote.”
That’s also true in Arizona. “In Arizona, a board can’t remove a board member,” says Kristen L. Rosenbeck, a partner at the Mulcahy Law Firm PC in Phoenix, who advises many associations.
The question of whether the board member can vote in the decision to eject him from the board is essentially a judgment call, in particular because there could be a perceived conflict. Rosenbeck and Stivelman come down on opposite sides of that issue. Rosenbeck would advise the board member subject to removal not to vote.
Stivelman says it’s OK. “I don’t see where you’d be able to say the board member can’t vote,” she explains. “Even if there’s a recall vote, we say the person who’s being recalled still has the right to vote. Any time a board member votes on anything, it could be perceived as conflict. For example, if there’s a vote on a special assessment and the board member votes against it, it could be perceived that he voted against it simply for his own financial benefit.”
Next easy question: How to count votes. “Abstentions don’t count,” says Stivelman. “So if there were five board members, the two abstentions wouldn’t count, and the decision would be based on the majority of the remaining three votes.”
Know When to Abstain
Moving onto the more controversial question, under what circumstances should a board member abstain from a vote? Our reader should again check whether any state laws govern that question.
Take Arizona, for example. “We have two different statutes we look toward on the issue of when you should abstain,” says Rosenbeck. “In both the planned communities and the condo acts, provisions say that board members should consider abstaining if they have a conflict. They narrow it to a monetary conflict, like if that board member or a family member is going to have a fiscal benefit from a vote. Maybe the board is considering a new landscape company, and the board member’s brother owns the landscape company. For that board member to vote, the board member must disclose the conflict before the board discusses the issue, and then the board member will have the opportunity to vote. So the board member can vote.”
Arizona HOA board members are also bound by their fiduciary duties to their association. “You have to act in the best interest of your association,” adds Rosenbeck. “If you feel you have a conflict, you have to decide whether you’re meeting your fiduciary duties on a case–by–case basis. In this case, a conflict is more along the lines of you feeling like a vote might hurt your own pocketbook, but it benefits the whole community. Nothing says you have to vote or shouldn’t vote.”
Another example of a conflict that might call for a board member to abstain? “In my opinion, if board members have some kind of an interest in an issue,” explains Duane McPherson, the Carrollton, Texas—based division president at RealManage, an association management firm that oversees properties in Arizona, California, Colorado, Florida, Louisiana, Nevada, and Texas. “Maybe they know someone or have a personal interest in an issue. A board member’s son lives in the same subdivision and is delinquent in his assessments, and the board goes into executive session to talk about how the board will collect and whether it should file a lien. That board member should abstain because she has a personal interest. That would be the primary thing. If you have a personal interest that would affect your ability to be fair and impartial on that decision, you should always disclose and abstain.”
One more example, says McPherson, is when you don’t have enough information. “If there’s a brand new board member who doesn’t know anything about a subject and hasn’t had time to research,” he says, “I’ve seen those members abstain.”
When is Abstaining Wrong?
However, there are times when board members abstain to take the easy way out of a tough decision. Not cool, say our experts.
“Deciding whether to abstain because a decision involves your friend is a case–by–case issue,” says Rosenbeck. “But you’re a board member, and you need to act as a board member. When I’m sitting on the board, I shouldn’t be making decisions as Kristen, a neighbor and a friend, but as a board member acting in the best interest of the community.”
McPherson agrees. “Sometimes board members will use an abstention as a way to stay out of the fire,” he says. “If there isn’t a conflict and they’re aware of all the facts, they should make that decision. By running or being appointed, they’ve basically agreed to make the decisions that are best for the association, and they have to keep that at heart. If they abstain because they’re taking the chicken way out—that’s the way I’ve referred to it in the past—I think they’re violating their responsibilities as a board member.”
And owners have a way to deal with board members shirking their responsibilities. “Unfortunately, board members have that right to abstain,” explains Stivelman. “But if they don’t want to vote, it will be on the record, and unit owners will see that lack of vote. If unit owners are angry about board members not voting, they have the right to recall those board members or not vote for them in the future.”
Matt Humphrey is president of the Alameda, California-based HOAleader.com, from which this article was adapted.