As many board members and property managers know, we are currently in a season where many condominium associations hold annual meetings. With each of those annual meetings generally comes an election for members of the condominium board. When a board is approaching an election, management and board members must be clear as to who is eligible to serve as a board member. The question seems simple, but there are many variables that control eligibility. Any election or appointment preparation should begin with reviewing the condominium association’s governing documents – in particular, its declaration of trust and/or by-laws, which will describe the process for election and appointment of board members and any restrictions on who is eligible to serve on the board.
All board members and property managers should have familiarity with these issues of board member eligibility for election, appointment, and continued service.
Administration of the condominium association is the responsibility of the board pursuant to the Massachusetts Condominium Statute and confirming that board candidates and existing board members comply with any board member eligibility requirements falls under that responsibility. This administrative responsibility also means that existing board members must interpret these requirements, which can be a difficult task. Disqualification of a candidate and/or existing board member(s) can be a sensitive issue, so any question as to interpretation of eligibility restrictions should be discussed with the board’s managing agent and association counsel.
The good news is that most eligibility restrictions are simple in nature. The bad news is that even those restrictions that are simple in nature can be complicated to interpret in practice. Some governing documents will state that only a “person” or a “natural person” may serve as a board member. Others will restrict board eligibility to a “unit owner” or “owner.” Some governing documents will require a board member to be both a person and a unit owner. A smaller number of associations have more extensive and specialized requirements. The most typical verbiage that we see in condominium documents relative to eligibility requirements is discussed, in turn, below.
Person or Natural Person
For those governing documents that provide that only a person or a natural person can serve as a board member, eligibility may seem very simple. However, who qualifies as a person? Who qualifies as a natural person? Merriam-Webster defines person with the synonyms “human,” and “individual.” “Natural” in this context is defined as “having a physical or real existence as contrasted with one that is spiritual, intellectual, or fictitious.” If only an individual or an individual with physical existence can serve on the board, this restriction would prevent corporations and trusts from serving on a condominium board. While a corporation itself would not be qualified to serve pursuant to this language, one of its officers, managers, or directors could serve so long as the officer, manager, or director is an individual and not some other entity. The same would be true for a trust. A trust would not be permitted to serve as a member of the board, but the trustee of a trust may serve. In associations where this is the only restriction, a resident tenant could serve as a board member, or any individual could serve, whether they are a unit owner, resident, or neither.
Unit Owner or Owner
Many governing documents state that only a “unit owner” or “owner” can serve as a board member. This restriction requires an evaluation as to who constitutes a unit owner in the condominium. The concept of ownership is straightforward, and any individual owner of a unit qualifies. However, corporate or trust ownership constitutes ownership as well, and this type of restriction would allow a corporate unit owner, or a trust unit owner itself, to serve. Generally, these entities will designate a specific individual to serve on their behalf for administrative purposes and that should be discussed with any entity requesting to run or serve as a member of the board.
In our experience, what is more common in associations where ownership is required for eligibility is for an individual who is affiliated with a corporate or trust unit owner who seeks to run individually for a seat on the board. This requires an evaluation of the individual’s affiliation with the corporation, trust, or other legal entity owner and whether their affiliation with the entity constitutes ownership and control of the unit. The evaluation may require association managers and association counsel to review corporate or trust documents, and the prospective board member candidate may need to provide information about the trust or corporate structure that is above and beyond what is typically of public record. By way of example, a corporation’s officer may qualify, but an individual shareholder may not. For a trust example, the trustee of a trust who has the explicit power to deal with trust property would likely qualify as a unit owner. However, a trustee of a nominee trust who lacks the authority to deal with trust property unless directed to do so by the beneficiaries of the trust may not qualify as a unit owner. Each fact pattern will be unique and require an evaluation of the level of control of the individual candidate.
Joint Unit Ownership
Joint unit ownership can create another scenario requiring evaluation, particularly in the rare scenario where joint owners of a single unit each wish to run for the board. Some governing documents address this scenario and state that joint unit owners must together agree upon just one owner who represents the unit in all association matters. In that case, only the representative unit owner would be able to serve on the board. However, if the documents are silent, multiple joint owners may qualify as an owner and be eligible to serve on the board.
Both Person or a Natural Person and Unit Owner
In associations where a board member must be both a person or a natural person and a unit owner, there is no question that a corporate entity and trust unit owners cannot serve on the board. In these situations, generally an individual affiliated with the corporation or trust will run for the board and the eligibility analysis should be conducted to determine that individual’s level of control of the entity and whether it rises to the level of ownership of the unit.
Additional Specialized Restrictions
For associations that have additional specialized restrictions in their governing documents for board eligibility, those are generally easier to interpret. For example, if no member of the board may be delinquent in the payment of common charges, that is an objective standard. The same would be true for a restriction requiring all board members to reside in the unit which they own. For any other, more specialized restriction that requires a particular evaluation, the board should discuss with management and association counsel.
Board member eligibility is a timely and important topic at all times of the year, but especially during annual meeting season. All board members and property managers should have familiarity with these issues of board member eligibility for election, appointment, and continued service.