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 aren’t any legal impediments to term limits for condo or co-op boards,” says Sima Kirsch, a Chicago attorney specializing in community law. “The only possible impediment is if the condo documents say it’s an absolute no, or if the term limits somehow conflict with the condo’s governing document.  As long as you have the requisite vote of the members, you can adopt term limits, but there must be an amendment to the operating documents.”

Kristofer Kasten, a attorney with Altus Legal, in Chicago, “The Illinois Condominium Property Act and the Illinois Common Interest Community Association Act are silent with respect to eligibility term limits,” says. “Therefore, community associations can impose eligibility term limits. However, to do so requires amending the association’s bylaws, which generally requires the approval of a super majority of owner/members. The possible impediment to adopting eligibility term limits is insufficient owner/member approval to validly amend the association’s bylaws.”  

“With respect to co-ops, the situation is similar,” continues Kasten.  “Neither the Illinois Business Corporation Act of 1983 nor the General Not For Profit Corporation Act of 1986 impose any eligibility term limit.  Therefore, a co-op can impose eligibility term limits by amending their bylaws (or trust agreement if established as a trust) in accordance with the amendment provisions set forth in their bylaws (or trust agreement).” 

Benefits vs. Drawbacks

“There are realistic benefits for implementing eligibility term limits,” says Kasten.  “They can prevent a single owner/member or small group from maintaining long-term control over a community association. There are plenty of horror stories out there about board presidents or boards who have essentially ‘ruled’ over the association like autocrats instead of operating more like a democratic republic and administering the association on behalf of all owners/members. That type of autocratic rule can lead to a variety of problems - including but not limited to targeted or arbitrary enforcement of rules and covenants and general discontent and low morale within the community.” 

That said, “The idea of term limits is a double-edged sword,” says Kirsch.  “At times, in some buildings, it’s difficult to get members to serve on the board.  Term limits could exacerbate that problem.  On the other hand, there are also boards where the directors run roughshod over the owners and have self-serving interests.  They don’t pass necessary assessment increases and reserve reports, don’t keep reserves at required levels, or take proper minutes.  This damages the association.  You have a situation where everyone is mad at everyone.  For those associations, term limits may be good.” 

“A lack of board turnover can become problematic, depending on the community association,” notes Kasten. “When board members do everything in their power to stay on the board and maintain control over the community association, it may be an indication that they may not be acting in the best interest of the entire community association.”  

So 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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