Board of Directors is Required

Corporations including all incorporated homeowner associations are required to have a board of directors per the California Corporations Code:

Each corporation shall have a board of directors ........ the activities and affairs of a corporation shall be conducted, and all corporate powers shall be exercised by or under the direction of the board ....... the activities and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the board.

Without a board of directors, a corporation cannot conduct business. This means its insurance coverage will lapse, all maintenance. will end, rules enforcement ends, the association's corporate status lapses and lawsuits cannot be answered. This exposes every homeowner to great liability. Resignations by all directors without appointing replacements may also be a breach of the resigning directors' fiduciary duties.

Management companies are agents of an HOA and have no independent authority to oversee an association's business. Managers have no authority to appoint directors. Without a board, the management company should immediately resign.

If necessary, a court will appoint a receiver to oversee an association. The cost is always high and the service is, usually substandard.

Creating incentives, positive or negative, for owners to serve on a board is highly problematic. Associations cannot penalize owners for refusing to serve on board. Nor can they reward owners for serving, such as waiving their homeowner dues, since this makes the directors paid professional directors and removes the protections provided to volunteer directors under California law.


Candidate Qualifications for Board Members


Coast Management of California