Board Removal Elections
Board Removal Elections are controlled by the Arizona Condominium and Planned Communities Acts [A.R.S. §33-1813 & §33-1243]. For communities that are neither condominium nor planned community, the governing documents and/or Arizona Non-Profit Corporations Act would govern the process. I will address the statutory procedure later in this article, but first some commentary.
Reasons Removal Petitions Happen. Although sometimes justified, a removal election is never a good occurrence in a neighborhood and should be avoided where possible. These are the underlying reasons for the removal elections that my law firm has handled over the past 27 years:
- The Board made decisions that angered a number of homeowners (e.g., raising the assessment, installing speed humps, changing management company or firing a popular staff person, more diligent assessment collection).
- Board member sued HOA for lax enforcement of restrictions (and was then removed from the Board by the members).
- Board members are not acting in accordance with the governing documents.
- Board members are not holding meetings.
- Minority faction wants control due to its ongoing disagreement with Board actions and procedures.
Avoiding the Removal Petition. There are a number of cases where the removal effort may be misguided and is a strong reaction (bolstered by rumors) to a Board working on changes and improvements in the neighborhood. In such situations, there often is a split in members’ opinions on whether the improvement should be made (like building a new office for management staff or becoming a gated community). And, just as often, there is confusion on the part of the members on their rights to make decisions on behalf of the Association.
In these instances, many removal petitions can be avoided if the Board seeks owner input before moving forward with an expensive improvement project for the common area. Even if there is no basis for a vote of the members, it is advisable to take a non-binding advisory vote and hold one or more “town hall” meetings of the members to discuss the proposed project. The Board can then gauge community resistance to the project and adjustments that may need to be made.
In other cases, the removal effort is justified. For example, In the case of the removal petition that was being circulated because the Board had not held a meeting (including an annual meeting) for at least two years, I counseled the Board to call an immediate special meeting of the members, and have me there to provide guidance on proper procedure. The Board offered to step down, explaining that they stopped having meetings due to rampant apathy in the neighborhood, and were tired of doing all the work of this self-managed association. A transition plan was negotiated at the meeting with the community leaders who started the removal petition and the removal election was avoided.
It also seems that some Boards that are subjected to a removal petition have been lax in communicating with the members. To make matters worse, in such communities, there may be a dissident faction with a website and/or extensive e-mail list that is putting out more information to the members than the Board is. By the time the Board responds with its own rebuttal and information, it already is on the defensive and at a disadvantage. In the 21st century, a website is the best overall communication hub for a homeowners association, and allows the Board to keep the members up-to-date when there is a big (i.e., “expensive”) decision needing to be made. (For HOAs with small budgets, there are several organizations that offer free website set-up and training for an administrator; see Google or some other web browser.)
Procedural Difficulties. Once the removal petition is served, under the Condominium and Planned Communities Act, the Board has 30 days in which to hold a special meeting for the purpose of a removal election. Needless to say, there are difficulties caused right from the outset because the subjects of the removal election are responsible for organizing and holding the election. Oftentimes, the petitioners will make demands on how the removal and replacement elections are conducted. However, according to the statutes, the Board calls and provides written notice of the special meeting. There is no further guidance in the statutes on procedure; however, this is a meeting of Association members; therefore, the Bylaws provisions in this regard would govern. If the President is the subject of the recall petition, he/she probably will not want to lead the meeting. Thus, a manager or the Association attorney may do so.
If less than the entire Board is being recalled, the remaining Board members typically are authorized in the Bylaws to appoint any needed replacements. However, if the entire Board is being recalled, there often is confusion on how and when the replacements will be elected. Some Boards undertake a quick nominating process and send out a slate of replacement candidates for the members to vote on, with the understanding that the results will be counted only if the removal election is successful. Other Boards leave organization of a replacement election to be done at the removal meeting, if removal is successful, and plan the election in the same manner as the annual Board election. This can be tricky as all non-profit corporations must have boards of directors. Therefore, if there is not a manager in place to handle the administration of the Association on an interim basis until the new Board is elected, the old Board may need to stay in place until their successors are elected and qualified [A.R.S. §10-3805(E)]
Avoidance Techniques. This article would not be complete if I did not mention Association Boards who refuse to hold a removal election after being served with a petition. I have seen this happen on two occasions: in one case, there was a Bylaws provision that divested any member of his voting rights if he was in violation any provision of the governing documents. The Board took the position that many of the petitioners were in violation and, therefore, not eligible to vote or sign the removal petition. (A Superior Court Judge disagreed with this position.) In another case, the Board took the position that the members who signed the petition were given inaccurate information and, therefore, the petition was void. The petitioners opted not to take the matter to court, even though they believed (more than ever) that the petition was justified and valid. To avoid giving credence to this position, it is best if there is a concise statement of grievances on every page of the petition so signing members are all given the same information.
It is certainly understandable for a volunteer director, who gets wind of a removal effort against him to react negatively. However, in a perfect world, directors might avoid a removal election or mitigate divisiveness in the community by doing some self-examination and striving for better communication and understanding of dissident members’ position.
Written by: Carolyn B. Goldschmidt