No Board Members? What Happens To Your Association Next?

It happens to all board members: you volunteer to be on your association’s board, and after a few years of devoting your time and energy to the association, you decide that it is someone else’s turn to contribute by serving as a board member. But what happens when no one is willing to be a board member?

Unfortunately, the association cannot function without a board. There would be no one to transact business, make or sign contracts, or to make general decisions about the function of the association. No one would have authority to collect dues or pay contractors.

If the board positions cannot be filled, any member or creditor can commence a lawsuit. The court, after determining that no members of the association were willing to serve on the board, will appoint a receiver to facilitate general business on behalf of the association. Unfortunately, receivers are usually expensive, and may charge $150- $250 per hour for the work that the board would have done for free. The costs of appointing a receiver would then be passed on to the owners and

result in increased maintenance fees and/or special assessments. The receivership would continue until a suitable board could be put into place.

In some cases, a receiver is appointed to run the association even if there are members willing to be board members. In cases where the developer turns over control to a bank (usually through deed-in-lieu of foreclosure), the association is insolvent (or facing bankruptcy), and/or involved in other litigation, a receiver may be appointed.

If your association is in a receivership, keep in mind that this will look unfavorable to potential homebuyers and lenders, which may adversely affect your property values in addition to increasing maintenance fees and/or assessments. Special assessments may not be paid right away depending on the amount, and may increase your delinquency rates. For a conventional loan, no more than 15% of owners can be delinquent on maintenance fees. What may be as simple as members not wanting to volunteer may turn your community into a “cash buyer only” situation, causing values to plummet.

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