Term Limits for Board Members: A Breath of Fresh Air or a Lack of Oxygen?

Term Limits for Board Members:

Term limits are often a hot issue at all levels of government. Does capping the tenure of an elected official clear the way for new ideas and re-energize governance, or does it cut off expertise and knowledge that can really only be acquired over time? There are compelling cases to be made on both sides of the debate - and the issue faces condo and co-op communities too. Would term limits bring new ideas and ways of doing things to traditionally sluggish and stodgy boards, or would they usher experience right out the door?

Board Participation

Unlike elected positions at local, state, and federal levels, serving on the board of a condo, co-op or HOA is an unpaid, volunteer position. As such it is often difficult to get more than a handful of owners or shareholders to run for the board at any given time. Elections are often non-competitive and individual board members often serve for many years unchallenged. In this reporter’s own co-op, there have been two presidents in the past 20 years, each serving for a decade. Board members serve six to eight years on average, often retiring exhausted from the experience - and prospective new board members often have to be cajoled to run when a board seat becomes vacant.

Is it Legal?

“There isn’t any legal impediment to adopting term limits for directors or managers,” says Leni Morrison Cummins, an attorney with Cozen O’Connor in Manhattan.  “Such limits belong in the bylaws of the condominium or cooperative.  Therefore, in order to adopt term limits, it would require the building to follow the amendment requirements contained in the bylaws.” 

Cindy Petrenko, president of Complete Property Management in Vernon, New Jersey, says, “If a community wants to institute term limits, that provision will have to be added as an amendment to their governing documents. Their master deed would have to say so. Changes of this type must be made permanent.” 

Benefits vs. Drawbacks

“Yes, there are benefits” to implementing board term limits, says Morrison Cummins, “so long as the terms of managers or directors are staggered. Fresh blood is a good thing in any type of board – new ideas, perspectives, and trends can be introduced. However, this is only if the term limit provision doesn’t end up forcing an entirely new board, and if there is a good level of volunteerism in a building. Some consistency is important, especially for ongoing projects.” 

Morrison Cummins also observes that some co-op and condo communities simply don’t have enough residents with an interest in running for the board, so you might want to draft the term limit provision in such a way as to only apply if there is a contested election.

Petrenko adds that “New people bring out new ideas, and new blood diversifies the board and the communities. It’s hard to get people to run for the board, though; it’s a volunteer situation. You have to be available to the community if you make that commitment. Many residents are concerned about the repercussions of making decisions, and that holds them back. It might be hard to fill the board if there were term limits.”

In a more ‘macro’ view, Morrison Cummins says that “There is good and bad in not having term limits. The good is when there are full and fair elections, and the same individuals are voted in for decades because the shareholders and owners support them.  The bad is when the incumbent board uses its power to prevent other candidates from gaining office. An example of the latter is if a board only allows the board-recommended slate to be put on the ballot so that any other candidate must be nominated from the floor without a chance to speak or present his or her candidacy statement. On the other hand, there are directors and managers out there who have served their buildings well for decades, been a pillar of their communities and helped maintain property values. A term limit that would force someone like that out would not be a good thing.” 

All considered, term limits may be right for some communities and not for others. The major factor in adopting such is to determine whether it would work for your community, and implementing it in a thoughtful and legally supported way.

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