Q. Our small condo association is having a difficult time getting enough volunteers to satisfy the leadership requirements of our Master Deed. I’ve heard from other condo owners that there seems to be a lack of interest in running for these positions, as long-time owners want to retire from those duties and younger owners really don’t seem to understand the potential consequences of not having the required board membership. It may be a sign of the times, or maybe people just don’t want the hassle — but we may be near a breaking point, and need to know: What happens if an association simply fails to field a team of trustees? We can’t force people to serve on the board, but my understanding is that we can’t operate without enough board members.
—Looking for Leaders
A. “Unfortunately, it is not uncommon for a condominium association to have trouble convincing unit owners to serve on the board,” says Heather Gamache, a principal at Moriarty Troyer & Malloy in Boston. “When unit owners do not volunteer to fill vacant seats on the board, it creates a significant problem for the association. The association cannot operate without a board that meets the minimum threshold requirements established in the governing documents of the condominium. The board has the sole control and management of the common areas and facilities and the common funds and profits of the condominium. The board sets and collects common fees, pays association bills and contractors, manages association bank accounts, and transacts business on behalf of the association. Without the board, none of these essential functions can be fulfilled on behalf of the condominium.
“The governing documents of the condominium will provide a roadmap for handling a vacancy in the board. The documents will establish whether the board can operate with a vacancy, whether there is a limited time period during which the board is permitted to operate with a vacancy, and the steps that must be taken to fill the vacancy. In the event board positions cannot be filled, the governing documents should provide a mechanism for unit owners to call a special meeting that would provide an opportunity to persuade unit owners to volunteer to serve on the board.
“If efforts to persuade unit owners are ultimately unsuccessful, unit owners of the association can initiate a lawsuit and seek the appointment of a receiver to manage the business of the association. After confirming that unit owners are unwilling to serve on the board, the court will appoint a receiver to assume the board’s responsibilities. The receiver will remain in place until a board can be established meeting all the requirements of the condominium documents.
“Significant consequences arise for the association if it becomes necessary for a court to appoint a receiver. The fees associated with a receiver can be quite expensive and the fees charged by the receiver in fulfilling the duties of the board will be passed on to unit owners as a common expense. The charges associated with the receiver will very likely lead to increased fees and/or special assessments. Additionally, placement in a receivership may negatively impact unit sales and lending. Buyers and lenders will not look favorably on the receivership, or the associated assessments. If unit sales stall or decline and lending is adversely affected, it may lead to decreased property values.
“If your association is headed down the path of having an insufficient number of board seats filled, enlist the assistance of an experienced condominium lawyer to advise the existing board—and unit owners—of the importance of maintaining an operational board and the resulting negative consequences if that is not achieved.”
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