HOA/COA Boards Term Limits: Everything You Need to Know
The stability of a Condominium Owners Association (COA) or Homeowners Association (HOA) ensures a decent environment and proper maintenance of properties within the community. It's advisable to change the board members regularly to improve accountability and offer a different approach to service delivery. As such, HOAs/COAs should hold elections regularly to fill in vacant board positions and usher in new leadership. Some HOA/COA bylaws include varying term limits to nurture succession planning and smooth transition. Let's explore the different arguments for term limits.
Advantages of Term Limits
- Multiple Leadership Opportunities: The term limits create positions when the term of the current board members expires. It opens a doorway of opportunities for homeowners to exercise leadership, implement ideas, and solve community challenges.
- Injecting Fresh Ideas: A community with term limits can benefit from the unique strengths, qualifications, and networks of incoming board members. If HOA bylaws require a change of the president after five years, it's an opportunity for change. A community can benefit from a resident who just obtained an engineering or landscaping certification. Ultimately, the association benefits from unique qualifications and diverse thoughts from different board members.
- Opportunity to Audit: Undefined terms can create a comfort zone for the current crop of leaders, who in turn can misuse resources. To that end, the regular change of board members is a caution to the existing board. The incoming board members bring ideas from a neutral perspective that puts a check on previous potential mismanagement.
- Breaks Potential Autocracy: Just like nations, the health of HOA/COA comes from democracy and consensus. The lack of term limits can create a board with absolute power leading to poor services, lack of transparency, and a disgruntled community.
Disadvantages of Term Limits
- Loss of Valuable Board Members: It takes time and a bit of luck to find board members who offer value and serve with dedication. Unfortunately, when their term expires, the members go with the ideas, experience, and commitment. That said, the community can benefit from a relatively long term because it offers stability and enough time to implement plans.
- Lost Momentum: Anytime there is a change of guard, and a new board comes in, there is a disconnect in planning and direction. When the new board members take over leadership, they will need to connect with suppliers, create rapport with homeowners and service providers. The speed of executing the plans of the association decreases before the new board members fully understand the system.
- Cost of Replacement: It's challenging to find new board members— sometimes, there may be no one willing to take over. Failure or delay to replace board members can negatively affect service delivery.
Who Sets Term Limits?
Most community associations have bylaws that stipulate the maximum period that a board member can serve. The bylaws also provide for an annual election to replace officials. Nonetheless, the annual elections do not always include the replacement of the president.
Here are a few points to consider when setting term limits:
- State Laws: The prerogative to determine the term limit does not always fall on the HOA or COA. Some states have enacted legislation to cap the number of years that a board can serve. In Florida, a board member can only serve a maximum of four consecutive 2-year terms. It's therefore essential to check any available legislation that puts a cap on term limits.
- HOA Discretion: The association should endeavor to create a flexible law that improves the welfare of homeowners. It could look into the possibility of extending term limits to 5-8 years to give board members enough time to settle and offer quality services.
The term limits of HOA/COA boards shape service delivery and harmonious living within a community— it's, therefore, crucial to get it right. However, it may be challenging to navigate this issue without expert advice. That said, RealManage is here to offer more information on board term limits, inclusive of the pros and cons. We have over 17 years of experience, which puts us in a prime position in the management of HOAs. Contact us today to speak with one of our professional representatives.