A lame duck is a political term for an elected official whose successor has already been elected or will be soon. In the context of a community association, a “lame duck” could be a director whose time on the board is coming to an end. The issue that sometimes arises is that these individuals make last-minute decisions that should probably be left for those next in line. Accordingly, the purpose of this article is to offer some best practices for outgoing directors that, for whatever the reason, will not be seeking reelection to the board.
Many community association governing documents do not draw a connection between general board action and different points in time. In other words, it is unlikely to see a declaration provision or bylaw that specifies when a board can or should exercise certain prescribed duties and powers. This implies that the board can act on behalf of the community association at any point—presuming the acting board consists of the duly elected and/or appointed directors. But should an outgoing board enter into a new service contract a week before the elections? How about terminating the association’s property manager during the same window? Although “lame duck” directors probably have the actual authority to do these things, it may not a good idea to stir things up immediately before the new board assumes control.
Regardless of whether the community’s director terms are staggered or up for reelection annually, the outgoing board should not make significant changes or decisions at the eleventh hour. One example, as mentioned above, would be switching a vendor that provides regular services for the association (e.g., a pool vendor, landscaper, property management company, etc.). It is possible that the incoming directors had different opinions or ideas regarding the old service providers, and the new vendors may have been expecting to work with the board that engaged them. Either way, this “bait and switch” could end up having a detrimental impact on the community, especially if the new directors are blindsided by the outgoing board’s actions. For this reason, the “lame duck” directors should think twice about voting on or making an important call on something that they will not be able to see through.
But obviously, not every board decision can wait or be pushed till after the elections. Issues can show up at any time—which includes shortly before the new board takes effect—and the outgoing directors may be forced to make an important decision for the community. The foregoing scenario, however, is distinguishable from the “lame duck” director that takes action for personal preference or to undermine the new board. This is why it is important for individuals that serve on a community association board to understand their statutory duty of care to the corporation.
As a reminder, the duty of care requires that each board member simply exercise ordinary and reasonable care in discharging his or her duties. Each board member must act in good faith with the diligence, care, and skill of an ordinarily prudent person in the same or similar circumstances. This requires each director to: (1) make rational and informed decisions that are in the best interest of the corporation; (2) review matters; (3) ask questions; (4) investigate in a manner appropriate to the issue at hand; and (5) be informed, attend meetings, know and understand the association’s governing documents, and to act on issues when necessary.
To continue with the example above, if an association service provider has been underperforming, it may not be necessary for the “lame duck” director to take action into his or her own hands. Instead, it may be better for the outgoing director to simply notify the new board members of the issue and provide any advice, if solicited. Presuming this type of “delay” will not result in a contract issue (e.g., missing the window for sending a notice of non-renewal), everyone will be in a better position. The “lame duck” director will not be accused of steering the association down an unwanted path, and the new directors will be able to select and oversee a new vendor going forward.
In sum, directors should always be mindful of the duty of care as they make decisions on behalf of their community associations. But this is especially true for “lame duck” directors whose decisions will inevitably get closer and closer to the upcoming elections. For those that are unsure whether to sign on the dotted line or leave it to the next board, it is probably a good idea to consult your property manager and/or association attorney.