Director serves after term ends

Q: It has been suggested that one of our board members appointed by the builder in August 2007 should not have continued his appointment once our homeowners association became homeowner-driven. He was the only homeowner on the board consisting of all-builder representatives until our transition in January 2009. Not only has he passed the two-year maximum term (per our covenants, conditions and restrictions), he has also been granted a special dispensation by our property manager to continue his term until March 2010.

According to our property manager, the board member is continuing his term because our association hasn't had a regular annual meeting and election date and our HOA was incorporated in March 2005. When it was pointed out that our HOA held a meeting and election in January 2009, we were told it was a special election to bring our board up to three homeowners. At that time, two homeowners were elected by the general membership and the original homeowner appointed by the builder remained on the board and served as president.

I understand that what should have happened was that an election should have been held by the general membership and the appointed person should have ended his term.

That said, we are wondering if the builder-appointed board member should not have continued in the position once our HOA became homeowner-driven. I haven't been able to locate anything in our CC&Rs. Is there something stated to this effect in NRS 116.

We are over 75 percent sold out and still selling. However, once we passed the 75 percent criteria, the builder turned over everything to our HOA.

Meanwhile we recently held a board meeting and the president in question decided to reorganize officers. It was on our agenda and I was nominated to assume the position of treasurer. To my surprise, he decided to switch positions with the other member. The other member is now president, the person in question is the secretary and I am the treasurer.

This person (former president) will still be serving well over the two year limit. What do you think of this?

A: First, no president has the authority to assign officers' positions. Officers' positions are for a year period that is separate and distinct from their terms as directors on the board. The board nominates and elects its officers. Often, it is an informal process as the directors are asked who is interested in serving in what position and all are in agreement. In theory and in practice, the members of the board can nominate each other for officer positions and vote by secret ballot.

Most governing documents allow the board to remove any of its directors as officers of the corporation at any time by just voting on the issue. Note, this is not removing the person as a board member because only the homeowners can remove a director. The action that you are discussing taking is the person's office position away and electing another director to take his place in that officer position.

At your next meeting, you could have a motion to place an agenda item for a director's meeting (can be done within the next 10 days so you can give homeowners' notice of the special board meeting) to change the officers' positions on the board. If that motion passes, then at the special board meeting, you all could nominate and elect the officers of your association. At that time, the developer's director could be remove that position.

Now addressing the issue of this person as a director of the association. At the 75 percent transition time, the control of the association should have been turned over to the homeowners. The developer's director should have been replaced by a homeowner. This director has never been elected by the membership.

You should check with the association's attorney but it would appear to me that the director could be removed by the board as opposed to being removed by the homeowners, which would be the normal process of a director who had been elected by the homeowners in the first place. In any case, there should be an election held for that position for a homeowner member.

Barbara Holland, certified property manager, is president and owner of H&L Realty and Management Co. To ask her a question, e-mail support@hlrealty.com.