All North Carolina property owner associations are required by law to have regular meetings of the Board of Directors ("Board") and at least one annual membership meeting to discuss and transact certain association business. But what about those items that arise months before or after the annual membership meeting? Or the rare emergency situation? Luckily, the law allows "special meetings" of both a Board and the membership to be called in certain circumstances.
As mentioned above, special meetings exist as a useful way of gathering the voting body, either the directors or the membership, to make decisions at a time the body otherwise would not meet. This option affords the association significant flexibility to address issues that come up unexpectedly or deserve undivided attention, such as dealing with a special assessment or removing a member of the Board. In some circumstances, such as when an association inadvertently omitted an important item of business from a regular meeting agenda, a separate special meeting may be the only means to provide proper notice and deal with the issue.
Basic Procedure for Special Meetings of the Board
The procedure for calling and providing notice of a special meeting of the Board is relatively simple and typically is addressed in the association's Articles of Incorporation or Bylaws. If it is not, the North Carolina Nonprofit Corporation Act provides the default method and requires that notice be sent by any usual means of communication at least five days before the meeting. It is typical for the Board president or a majority of the Board to have the authority to call a special meeting of the Board. The notice of the meeting is most often sent by the Board secretary.
Basic Procedure for Special Meetings of the Membership
The procedure for calling special meetings of an association's entire membership is a bit more complicated and is governed by both applicable law and the association's governing documents. Both the North Carolina Planned Community Act and the North Carolina Condominium Act provide that a special meeting of the membership may be called by the Board president, a majority of the Board, or at the demand of more than a certain percentage of the votes of the association. Under these statutes, notice must be sent to the members no less than ten nor more than sixty days in advance of any meeting, and such notice must state the time and place of the meeting and the items on the agenda, including the general nature of any proposed amendment to the association's Declaration or Bylaws, any budget changes, any proposal to remove a director or officer, or any sale of association property. For property owner associations that were formed prior to the effective date of these statutes, the association's Declaration of covenants may have more specific requirements than, or contrary procedures to, those contained in the statutes. In such a case, the non-statutory procedures must be carefully analyzed, and the association should consult with an experienced community association attorney to ensure it is proceeding correctly.
It is critical that associations and their memberships observe the rules pertaining to special meetings. Failure to do so may make the action taken at the special meeting, if any, subject to a legal challenge from the membership.
Familiarity with the procedures for special meetings, and for all of the other ways in which a property owner association may address action items, will equip the association, its leaders, and its members to better conduct its business, which undoubtedly will have a positive impact on the community as a whole.
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This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.