Resignation May Not Prevent the Cessation of a Board Member’s Right to Designation of Your Representation…

…and this may lead to frustration and vexation!

Florida law and most association bylaws allow for board members of non-profit entities (such as condominium and homeowners associations) to tender their resignation at any time during their tenure.  The resignation is effective at the time it is tendered unless a later effective date is specified.   If the resignation is made effective as of a later date the board of directors may fill the pending vacancy before the effective date provided that the successor does not take office until the effective date.  Florida law and many bylaws further provides that the vacancy is to be filled by a majority vote of the “remaining” directors.  See Florida Statutes 617.0807, 617.0809 and your association’s bylaws.  Note: This procedure may be different for vacancies created by a recall.

The potential problem with this scenario is as follows.  Say a board member develops a conflict of interest, such as the filing of a lawsuit against the association, and that board member decides that he or she must resign from the board due to this circumstance.  That board member would be well within his or her rights to tender their resignation with a future effective date and the board could then decide to vote on a successor prior to the departure of the resigning member.  The question then arises as to whether the departing board member is afforded the right to participate in the vote for his or her successor.  Since the individual is still technically a board member at the time of the vote, he or she may be deemed a “remaining” director and therefore, may actually have the right to cast a vote despite the fact that such a literal interpretation of the word “remaining” may seem to confer an unintended right on the departing board member.

The Florida Department of Business and Professional Regulation has dealt with this circumstance and has issued an opinion supporting this literal interpretation of the term “remaining” director.  In the matter of Rhoda Blau v. Martinique 2 Owners Association, Inc., Case No. 99-1880, the arbitrator in that entered an order stating that “it is apparent from the statutory sections set forth above (617.0807 and 617.0809) that a director who resigns with a delayed effective date may generally continue to exercise the authority conferred on board members, absent countervailing circumstances.”  The opinion does go on to clarify that these particular statutory provisions and the resulting literal interpretation of the term “remaining” directors would not apply if the vacancy at issue was the result of recall efforts.

In light of this information, associations should be wary of resignations with delayed effective dates and should ideally wait until the resigning board member vacates his or her position before a vote is held to select a successor.

Daniel Wasserstein