An individual’s interest in their community association is rarely just financial; in most cases, a building or HOA is also that individual’s home—and as such they’re motivated to contribute to its quality of life, neighborhood congeniality, and aesthetics, just to name a few of the things that make a place somewhere people love to live. For that reason, most of the people who volunteer to serve on their association board are full-time residents of that association.
This is not always the case, however. Occasionally, people who don’t actually reside in an association pursue board membership—usually due to some combination of free time and personal and/or financial interests in the community. While there’s nothing inherently problematic with having non-residents on a co-op or condo board, it does present certain considerations. We reached out to some management experts to delve into what may motivate these non-resident members, whether or not their presence on the board increases the likelihood of conflict with the members who do call the community home, and how potentially differing interests can coexist harmoniously and productively.
When a person who doesn’t live in an association year-round runs for a board position, a voting resident should evaluate them with much the same criteria as they would a full-time neighbor: what is motivating this individual to seek a board position, and will they put the interests of the greater association above their own?
“Over the years, we have represented some boards with non-resident members,” says James A. Slowikowski, a partner with Dickler, Kahn, Slowikowski, & Zavell, Ltd. in Arlington Heights, Illinois. “Sometimes the member lives locally, but is not a resident in the association. In other instances, the members are snowbirds, and as such they are ‘absent’ for several months at a time, but otherwise live at the property.
“I think there is only a slight difference between those two types of non-resident board members,” he continues. “The snowbirds generally think like resident board members. The main difference I tend to see is that the snowbirds often will want to put off projects or certain business until the spring, when they will be back on-site—and that’s usually in proportion to the number of snowbirds serving on the board. When one or more are away, board business tends to be conducted only as-needed. On the other hand, some things may be addressed sooner than they normally would, such as working on the annual budget before those snowbirds depart for the winter. So the timing of when things get done is what is most affected—not the substance of the decisions so much as when those decisions are made.”
The full-time non-resident board member presents a different dynamic than his or her seasonal counterpart. “They typically reside locally, but just not on the property,” Slowikowski continues. “Strictly speaking from a legal perspective, all board members have the same duty to act in the best interests of the association, and residency should not matter. But from a practical perspective, we do see some differences in how they approach their duties. In my experience, the non-resident board members tend to approach the operation of the association as a business; they are protecting an investment.”
As long as that business is financially stable and sustaining, off-site board members may be satisfied. “This type of board member is typically not as concerned about funding reserves, paying or adopting special assessments, or borrowing funds as needed,” says Slowikowski. “They will want the parking lot re-paved, rather than simply patching potholes. While resident board members, on the other hand, may have more concern for day-to-day operations, and how the enforcement of rules and regulations affect residents’ daily lives. They tend to be more in touch with smaller maintenance projects that can have immediate effect on those at the property, and are more likely to want to keep assessments lower—even when assessments should be raised—as they may not possess that investor mentality.”
Ain’t Nothin’ Goin’ on but the Rent
Non-resident board members may see their units as assets to be monetized; as such, they’re likely to want to rent their apartments to maximize their investment.
“Many associations prefer owner-occupied units, so in instances where conflict arises, it’s typically between those who live there and those who don’t, and who want to rent,” notes Marc H. Schneider, a partner with Schneider Buchel LLP in Garden City, New York. “But there is an obvious commonality there as well, as they all presumably want to keep the property at maximum value. So it’s not an automatic conflict of interest. But disputes can arise if someone who rents their unit out doesn’t want to improve the building in a way by which they can’t immediately ascertain value, and they feel will only cost them more in common charges or maintenance. But they have to remember that when you sit on a board, you’re supposed to take your ‘I’ cap off and put your ‘We’ cap on, and make decisions in the best interests of the entire building.”
“Interestingly enough, board members are on the same page regarding the running of the association, regardless of their living status—at least most of the time,” adds Coleen Crawford, owner of Desert Community Management LLC in Las Vegas. “They aim to save money where they can, and to keep the biggest amenity—whether pool, spa, what have you—open for as long as they can during the year.”
When it comes to renters, they, too, are entirely capable of making valuable contributions to the community, says Mary Breedlove, manager of the Augusta Village Homeowners Association in Plainfield, Illinois. “We had a renter in a community who wanted to get involved, and was appointed to the board—not elected, as we did not reach quorum to run an election meeting,” she recalls. “He was a great asset because his comments and decisions were not emotionally triggered, but business-based. After a couple of meetings, thanks to his methodical approach, the rest of the board became more likely to put their emotions aside and operate the association like a fine-tuned machine.”
Occasionally, a non-resident steps up to join the board purely out of necessity.
“In today’s age and time, we often can’t get homeowners to complete their proxies to even hold an annual election meeting, much less run for the board,” laments Breedlove. And that means that some boards need to cast their nets more widely to get enough members to run the association.
And Schneider notes that, in instances where there are enough volunteers to serve on the board, non-residents are not likely to express interest. When it comes to non-resident board members, he says “The problems occur on a case-by-case basis more than they do conceptually. When there are problems, the bad actor normally just gets voted out. And the community is going to be aware that someone doesn’t reside in the building, so they take that into consideration when voting.”
Occasionally the conflict boils down to perception, says Gary M. Daddario, a partner with Marcus, Errico, Emmer & Brooks P.C., a condo law firm based in Massachusetts and New Hampshire. “Sometimes, when non-residents are elected to a board, there is real split interest,” he says. “Other times, it is something that the community perceives to be a split interest. But in general, it just seems to be human nature that people will treat a home differently than they treat an investment.”
All the pros agree that communication issues can become prevalent when a board features non-residents. “The biggest concern I have had is when too many of the board members are out of town at the same time in event of a meeting,” says Crawford. “The owners in attendance will be upset. That said, because of technology, board members can and do conference call in to address owners and conduct their board meeting. This has worked out very well. Then, when the board members are all in town, we’ll schedule a workshop or a walking inspection of the property.”
Regardless of any concerns, non-residents are certainly eligible to run for the board, unless the association documents specifically prohibit that. “Some argue that, if elected by the community, the concern ends there, because the people have spoken,” says Daddario. “But I believe that it depends on the circumstances. In any event, if a community finds [non-resident board members] to present a problem, amendment of the governing documents presents a straightforward solution. If the amendment passes by requisite vote of the owners, then residency can become a qualification for serving on the board.”
Mike Odenthal is a staff writer/reporter for The Nevada Cooperator.