In a recent case from Colorado, the Colorado Court of Appeals held that an HOA could prevent a homeowner whose voting rights had been suspended from running for election to his board of directors.
To read the entire Colorado case, here is a link: Majersky v. LCM Property Management, Inc., No. 24CA0046 (Colo. App. Oct. 10, 2024).
NOTE: Although this case is not binding in North Carolina or South Carolina, it may still be helpful to take a look at the reasoning used by the Colorado court.
Gregory Majersky was a homeowner in the Summerfield Villas Homeowners Association. The professional community management company used by the Association was LCM Property Management, Inc.
In early 2023, Majersky expressed an interest in running for a seat on the board. However, he was informed he could neither vote nor run for a board seat because he was delinquent in paying his assessments. Shortly thereafter, he filed suit against LCM. The trial court refused to award relief to Mr. Majersky and noted that the Association’s bylaws authorized the board to suspend a homeowner’s voting rights if they were delinquent in paying assessments and could be reasonably applied to prevent him from running for the board as well. The trial court dismissed Majersky’s claims, and Majersky appealed.
The Colorado Court of Appeals affirmed the trial court’s ruling (in other words, it ruled in favor of LCM and against Majersky). Despite there being no language in the bylaws about suspending the right to run for the board, the Court reasoned that it was appropriate to suspend both the voting rights and the ability to run for the board when a person is delinquent in paying assessments, primarily because of the inherent conflict of interest that results when a member of the board is delinquent.
It also pointed out that a delinquent director would not be able to appropriately pursue the association’s best interest, as he/she had a duty to collect assessments from other homeowners.
The issue of a director with possible conflicts of interest serving on a board is not unique to Colorado. Often a homeowner has an axe to grind or some ulterior motive for serving on the board. While either of those are not necessarily reasons to prevent a person from running, being in active violation of the restrictions or delinquent in paying assessments may be a basis for preventing such a person from serving on the board of their homeowners association.
Although this case is not binding in North or South Carolina, if your association has questions about qualifications to serve on the board or other related items, reach out to one of our experienced community association attorneys.