Normally, bylaws establish qualifications for serving on the board of directors. (Corp. Code §7151(c)(3).) Beginning January 1, 2020, associations are limited to mandatory and permissive candidate qualifications as set forth below.
Mandatory Qualifications. Associations are required to disqualify anyone who is not a member of the association at the time of the nomination.
Permissive Qualifications. There are only four candidate qualifications associations may adopt. They are as follows:
- Criminal Conviction. A past criminal conviction that would either prevent the association from purchasing the fidelity bond coverage required by Section 5806 should the person be elected or terminate the association’s existing fidelity bond coverage as to that person should the person be elected.
- Delinquent. The person is delinquent in the payment of regular and special assessments unless (i) paid under protest , (ii) entered into a payment plan, or (iii) not provided Internal Dispute Resolution (IDR).
- Joint Ownership. If the person, if elected, would be serving on the board at the same time as another person who holds a joint ownership interest in the same separate interest parcel as the person and the other person is either properly nominated for the current election or an incumbent director.
- Owner Less Than 1 Year. If that person has been a member of the association for less than one year.
Qualifications No Longer Allowed. Following are some of the candidate qualifications many associations previously adopted which are no longer allowed:
- The person must be in good standing. Now, a person can have significant architectural and rules violations and unpaid fines and get a seat on the board.
- The person must not be in litigation with the association. This creates conflicts of interest and confidentiality problems.
- The person has been convicted of a felony in the past ten years. As long as the association's fidelity bond is not affected, violent felons can serve on the board.
- The person is a second or third tier registered sex offender.
- The person meets minimum age and residency criteria. This affects 55+ communities. It means a 25-year old who owns a unit through inheritance can serve on 55+ boards.
- Term limits are voided since they prevent members from being nominated.
Director Removal. In addition to qualifications for election to the board, many associations include conditions under which directors can removed from the board. For example, bylaws often state that a director's seat can be vacated by the board if the director misses three regularly scheduled meetings in a row or four in a twelve month period. Associations can continue to use removal provisions provided they are reasonable and provided they do not conflict with the mandatory and permissive qualifications described above. See Director Removal.
Qualifications Via Rule Change. Even though the bylaws may be silent on director qualifications, the court of appeal in Friars Village v. Hansing ruled that boards can adopt director qualifications in their election rules provided the qualifications are "reasonably related to the performance of the Board and will serve to protect its overall mission--protecting the best interests of the Association." The court's decision was based on a particular set of circumstances and the language in the association's governing documents so it is unclear if the decision allows associations to freely adopt director qualifications via rule changes. Accordingly, whenever possible, candidate-director qualifications should be implemented via an amendment to the bylaws.
ASSISTANCE: For assistance establishing director qualifications for your association, contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.