Here’s a question our law firm often receives from boards: a director resigns from the board because he/she sells his/her home or the director no longer wishes to serve on the board. How should this vacant board position be filled?
The board should first check its bylaws to determine the procedure to fill the board vacancy. In most cases, the bylaws state that a board vacancy can be filled by a majority vote of the remaining directors.
Prior to voting on appointment of a new board member, the board may want to ask all owners if they want to volunteer for the open board position to ensure that all owners are aware of this situation and have the opportunity to participate. It can’t hurt to send out a quick email to let owners know what is going on and give them an opportunity to participate if they want to.
I’m often asked if this vote to appoint a new director can be done during an executive session meeting of the board. In my opinion, this discussion, nomination and vote of new board members needs to take place at an open board meeting (and that open meeting should be properly noticed with 48 hours’ notice to the membership by conspicuous positing or any other reasonable means – such as website posting or an email to all owners). A great majority of our clients are now meeting via Zoom (virtually) to ensure the safety of all parties during the ongoing pandemic. Planned Communities: A.R.S. 33-1804 & Condos: A.R.S. 33-1248.
The only topics that can be discussed by the board during executive session are the following:
1. legal advice from an attorney for the board or the association; 2. pending or contemplated litigation; 3. personal, health and financial information about an individual member of the association, an individual employee of the association or an individual employee of a contractor for the association; 4. matters relating to the job performance of, compensation of, heath records or specific complaints against an individual employee of the association or an individual employee of a contractor of the association who works under the direction of the association; and 5. discussion of a unit owner’s appeal of any violation cited or penalty imposed by the association except on request of the affected unit owner that the meeting be held in an open session. Planned Communities: A.R.S. 33-1804 & Condos: A.R.S. 33-1248.
Appointment of board members, in my opinion, does not fall under 1-5 above. Before entering executive session, the board is required to identify the section above (1-5) that authorized the board to close the meeting. This should be verbally announced, placed on the agenda and included in the meeting minutes.
The only exception to this vote to appoint directors being taken place in an open board meeting would be if there was a true emergency and the board needed to get two board members in place immediately to handle the emergency. In most cases, a board vacancy is not an emergency and proper open meeting formalities need to be followed (48 hours notice, nominate and vote in an open board meeting). It is important to note that if a board does have an emergency meeting, only emergency matters may be discussed, minutes must be taken, and those meeting minutes must be read and approved at the next regular board meeting. Planned Communities: A.R.S. 33-1804 & Condos: A.R.S. 33-1248.
Below are links to our Cheat Sheets on Board Meetings (these have a lot of helpful information on compliance with the open meeting law for HOAs and condos in Arizona):
Please contact Beth Mulcahy, Esq. with any questions on this topic at email@example.com.