An Effective Strategy for Dealing with “Out-of-Control” Board Members

It is not uncommon for homeowners associations to have certain volunteer members that appear to have control over the entire operations of their homeowners association. This typically occurs when such members have been elected to the board of directors year after year. In addition, those people are frequently elected, or reelected, to an office such as the president of the association, thereby placing him or her in a position of yielding a great deal of influence over the association. While this situation is more prevalent in smaller homeowners associations that have more difficulty getting volunteer members to run for board positions, it also occurs in larger associations. Frequently, the net effect of such a situation is that the board member and/or officer becomes more like a sheriff who thinks that he or she unilaterally runs the association, and that person eventually becomes “out of control”. While other board members may have different thoughts about how the association should operate, they are frequently intimidated and stifled by the actions of the sheriff and as a result, are reluctant to stand up to him, or her, thereby perpetuating the situation.

Allowing assertive individuals to gain control over your homeowners association can be very damaging to the association. Aside from discouraging other members from becoming involved in the operations of the association, it promotes continued operations that may not be properly authorized and/or are in violation of laws and the association’s governing documents. Homeowners associations must be controlled by the collective action of their board of directors and not one individual that appears to have taken control because he or she has occupied a position of power within the association for a long period of time and no one else has been willing to challenge them.

Associations that are experiencing issues due to an out-of-control board member have different options on how to regain control and put an end to the unilateral decision making and acts of one person that are not authorized by the collective action of a majority of the directors. In situations where the association has specific qualifications for their directors that are contained in the association’s governing documents, the board may take action by a majority vote, to declare vacant the seat of a director who fails or ceases to meet the required qualifications. Absent provisions in the governing documents that specify director qualifications and the power of the directors to remove a director that does not meet those qualifications, the removal of a director generally requires either action by the members, or an order from a court having jurisdiction over the association. State statutes generally contain provisions that empower a court to remove a director from his or her position upon a showing of fraudulent or dishonest acts, or gross abuse of authority or discretion concerning the operations of the association.

As a practical matter, absent the ability for the remaining directors to remove a single director from their position as a director due to a failure to remain qualified, the removal of that director through action by the association members or a court can be difficult, quite costly and time consuming. As a result, interested directors and association members tend to shy away from getting involved in the process of trying to remove the out-of-control director and the undesirable situation is allowed to continue due to inaction. Associations that experience such a situation should consider alternative actions that are calculated to regain control and prevent the continued improper actions of one person.

Generally, the control that is exercised by one person comes from that person’s actions in a capacity that is different from or in addition to that of a director. In taking unilateral action, the person may be acting as the president or some other officer of the association, or the chairman of a committee, or the person who controls the association’s finances through bank account authority and/or interaction with vendors who may have an allegiance to the person. Because it is typically through such additional capacities that the individual is able to exercise control and cause problems for the association, by stripping the person of all such additional capacities and the powers that are associated with those positions, the person can be brought under control and their powers limited to their individual vote as a member of the association’s board of directors. Thus, an association that is dealing with an out-of-control board member should, through decisions made by a majority of the directors at a valid meeting of the directors, take action to limit the power of the director by taking action such as: (i) removing the person from their position as an officer and/or committee member (officers and committee members serve at the pleasure of the board); (ii) removing and replacing that person as an authorized signor on association bank accounts (this requires appropriate resolutions that are provided to the bank); and (iii) notifying all management personnel and vendors that provide services and products to the association, in writing, that the person is no longer authorized to act on behalf of the association and further notifying them of the new person that has been authorized by the association to interface with them.

By taking away the authority that any one individual has been abusing and limiting their participation in the association to that of an individual board member, that person should no longer be in a position to unilaterally control the operations of the association. As such, there should be more involvement in the association by other members and improved management operations for the association. The director that has experienced the loss of control could then serve the remainder of his or her term as a director without causing the same problems that were previously being experienced as a result of the additional authority and powers that he or she had enjoyed. To successfully accomplish this, the association needs to have properly elected directors who are willing to participate by attending meetings, addressing the issues that the association is confronted with, and taking the appropriate collective action that is necessary to successfully operate their homeowners association.