Asked in Business Law and Real Estate Law for Indiana

Q: If HOA Board resigns en masse, effective immediately, can they rescind resignations without homeowners approving?

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1 Lawyer Answer
Matthew Morris
Matthew Morris
  • Carmel, IN
  • Licensed in Indiana

A: You probably need to look at a couple documents and a couple provisions of the law to know what legal effect the mass resignation caused.

First, find copies of your governing documents. If your HOA is a corporation (most are), you are looking for your Articles of Incorporation and your Bylaws. One of those documents might have a clause that describes director resignations. For example, I often include the following provision for nonprofit corporations when I help draft their bylaws: "No Director may resign when the Corporation would then be left without a duly elected Director or Directors in charge of its affairs." Or, it might read, "No Director may resign if the resignation would leave the Corporation without the minimum number of directors required by law." You would want to look at the Articles and Bylaws to see if there are restrictions on how or when a director can resign, or if there is a provision that says a resignation would not be permitted if it left the HOA without a functioning board. (Note, also, that there is a fair question here about whether any individual director has breached their fiduciary duty to the HOA. If a director takes action that leaves the HOA with no functioning governance body, that is arguable a breach of the duty of loyalty.)

Assuming that the resignations of any particular director was made in accordance with the bylaws, you will also want to look at the way that the resignation was communicated and when. Note that "the board" really can't resign as a whole unit. It's probably more accurate here to say that every individual member of the board has (attempted to) resign. In general, under Indiana law, a resignation of an HOA director becomes effective "when it is communicated" (if the resignation was made orally) or "when it was received" (if given in writing.)

As to any particular director, IF the resignation was permissible under the articles or bylaws, and IF the resignation was received, then that particular director probably has no authority to "rescind" the resignation. The director has given up the position and it falls either to the directors or to the members to choose a replacement.

So, that brings a final a call to get your hands on a copy of the articles and bylaws and see what rules are included for who gets to fill a vacancy on the board. Is it the members? If so, then for any director who successfully resigned, the question of whether that director can be elected to re-fill their seat lies with the members. Or does the board of directors have the authority to fill vacancies on the board?

These are a handful of general thoughts based on incomplete facts. There may be other issues involved, and you should explore those other issues with a lawyer who works on these types of questions.

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