Volunteering to serve on the Board of a Community Association can, unfortunately, often feel like a thankless job. In many cases, conflict among the Directors, or between owners and the Board, can make service to the community an extremely stressful experience. Several of our clients have reported that they are finding it difficult to recruit new volunteers willing to serve, and they wonder what will happen to their Association if no members are willing to volunteer. Typically, the only alternative to a volunteer Board of Directors is a court-appointed receiver.

Of course, if there are no members willing to serve on the Board, the Association must nonetheless continue to exist. If there is common property, that property requires maintenance. Covenants must, or at least should, continue to be enforced. Dues must be assessed and collected, vendors must be paid, etc. However, if there are no Directors to manage the affairs of the Association, it is very likely that any managing agent would terminate their contract. Managing agents do not make decisions on behalf of the Association, and most managers would be unwilling to take on the role of managing the Association without guidance from a duly authorized Board of Directors.

In the event that no members are willing to serve on the Board, the only other option would be to ask that a court appoint a receiver to manage the affairs of the Association. This does not happen automatically. At least one owner must petition the court to make the appointment. In Washington, under RCW 7.60.025, the court must be persuaded that a receiver is necessary. In Oregon, under ORS 100.418 for condominiums or ORS 94.642 for planned communities, if there are not enough volunteers to fill a quorum of Directorships, an owner may petition for a receivership.

Court-appointed receivers are generally very undesirable for many reasons. First, in order to request that a court appoint a receiver, a legal action must be filed, which costs money. Second, once a receiver is appointed, the Association will have to pay reasonable administrative expenses. That is, the salary of the receiver, court costs, attorney fees, and all other expenses of the receivership are added to the common expenses . Therefore, all owners’ assessments for common expenses will increase. The cost for a receiver is substantial. Although a receiver does not have to be a lawyer, typically courts appoint lawyers to receiverships. A receiver will bill the Association hourly for his or her time spent administering the affairs of the Association, and this time will undoubtedly amount to thousands of dollars monthly.

The additional costs are not the only negative aspect of receiverships. Being managed by a receiver means that a non-resident, non-member will be making decisions. These decisions include enforcement for rules violations, adoption of additional rules, regulation of the common areas, and all other matters that the Board of Directors is generally responsible for. Receiverships are an extremely undemocratic remedy, and invariably receiverships are less desirable than governance by an elected board of volunteers.

Lastly, in Washington, receivers are indefinite. Once appointed, a receivership will continue until the court terminates the appointment. This means that if owners wish to have the receiver removed and a democratically elected Board reinstated, those owners will have to bring a second lawsuit, and cover those expenses themselves. In Oregon, a receiver serves until a sufficient number of vacancies on the Board are filled to constitute a quorum. But, if the receiver refuses to relinquish control, a lawsuit may be required.

Receiverships should be considered a last resort. Owners should be willing to serve on the Board for some period of time simply to avoid receivership. If Directors are feeling that the burden of serving on the Board is too much, then there are many ways that the workload can be reduced without having to resort to receivership. Harker Lepore consults with Boards to find effective ways to lighten the burden on the volunteers who are willing to serve.