By Ryan D. Poliakoff / Published September 2017
As you may already know, a number of amendments to the Condominium Act were passed this year, and they became effective on July 1. While many of the changes are complicated and are still being interpreted by lawyers, one change in particular has created confusion concerning its implementation—the laws regarding director term limits.
For many years, condominium directors have been limited to serve no more than two-year terms, but there has been no overall limit on the number of consecutive terms they could serve. The new law, however, states that a board member may not serve more than four consecutive two-year terms “unless approved by an affirmative vote of two-thirds of the total voting interests of the association or unless there are not enough eligible candidates to fill the vacancies on the board at the time of vacancy.” Initially, it’s important to recognize that this is a limitation only on consecutive two-year terms—directors serving one-year terms can presumably serve indefinitely.
The first obvious question is whether terms served prior to the passage of the new law count toward the limit. Our firm had originally interpreted the law to measure service at the time the director is next up for election, in which case their prior service would count toward the limitation. But, I was recently informed that the Division of Condominiums is informally taking a different stance and has stated that they will begin counting terms toward the limit beginning on July 1, 2017. (The Division reportedly has not yet decided if terms existing on that date will count toward the limit, or only terms that begin after that date.) The legal debate over whether this term limit should count prior terms is too complicated to debate in this column, but suffice it to say that the Division’s position is the one that will count. So, even if directors on a condominium board have already served four or more two-year terms, they will be given at least another six years before the term limits begin to kick in.
The second question relates to how term-limited directors would be elected. The statute says that they may not “serve” unless they are approved by a supermajority of the members. Does that mean they can still be candidates, but they cannot be elected unless they get the sufficient supermajority vote? Or does it mean they are not entitled to be candidates unless they are approved to serve as a director by a vote at a separate meeting? And, if that is the case, what if the controlling members of the board refuse to hold a meeting to allow this term-limited board member to be approved for an additional term? Would the membership then have to demand a special meeting on the issue? None of these questions are expressly addressed in the statute. It seems that the simplest solution would be to allow anyone to be a candidate, but to simply not count a term-limited director as being elected unless that director secures a two-thirds membership vote (a very unlikely threshold to reach). It is also not clear what happens if the term-limited directors are not elected but, as a result, there are then open seats on the board. Can the then-existing board members appoint the term-limited directors to the board because there were not enough candidates to fill the board? It seems likely that these issues will need to be clarified by the Division, by the courts, or by the legislature in future amendments. Given the way the Division is interpreting the measurement of terms, however, we have at least six years before a final answer is needed.
The president of our association is my recently estranged brother. He has been president for more than 10 years, and he thinks he can do just about whatever he wants. Our documents state that any changes to the common areas must be approved by a majority of owners. Two things have been done that make me think the board violated that section of our documents. They have installed speed bumps at several places in our compound—some with no warnings at all and in fairly dark areas. Secondly, a couple of years ago our roadways had a minor repair. My brother, the board president, had the contractor dump and roll the remaining blacktop over most of our storage area, which is also common area. There was nothing to seal it or hold it down. Now, a couple of years later, we have loose blacktop all over and it is a danger, especially for motorcycles. Am I right to see these changes as a violation of our documents?
I’m sure it is difficult when family issues cross over with homeowner association issues. If your governing documents have the extremely broad language that you state in your letter, I think it reasonable to argue that the speed bump project and the application of blacktop to the storage area required membership approval. The question, however, is whether the punishment for not getting approval is worse than the crime. It is very unlikely that your brother or the other directors would be held personally liable for these projects. So, you would need to begin with a mandatory demand for pre-suit mediation (I am assuming that you live in a community governed by an HOA), and then, if mediation is unsuccessful, you would need to sue the association to enforce the covenants (assuming, of course, that these projects were done in recent years, and that the statute of limitations has not expired). If you win, the association would need to spend common funds to reverse the projects—and possibly to pay you back for your reasonable attorney fees. If, instead, you lose, you might be obligated to pay the association’s legal fees. And, either way, the board members would not be personally liable for having ignored the covenant. If you feel strongly about this issue, you might be better off getting yourself and some like-minded owners elected to the board so that you can undo the unapproved alteration without the additional legal battle.
Ryan D. Poliakoff
Partner of Backer Aboud Poliakoff & Foelster