The term is used to refer to the current holder of a position on the board, i.e., a sitting director. Some associations note the status next to candidates' names, other associations do not. The matter is one of preference.
Being designated as an incumbent does not violate Civil Code § 5135. Although such designations can be helpful to incumbents if people like the current directors, the designations can also be harmful if owners are unhappy with directors and want new representation.
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