Board of Directors Resignation

Imagine this scenario: your association’s entire board of directors decides they are fed up with being board members, and all resign at the same time, leaving your association with no board at all. Or, imagine that, one by one, each board member resigned over time and was never replaced, so that when the last board member resigns, the board had no members. Can members of the board simply resign, or does the law constrain their ability to do so? An association’s board of directors has many legal obligations to the association. Possibly the most important of these obligations is that the board of directors, and each of its members, has duty of care to the association. (For details about this duty of care, such as how it is different for elected or appointed board members, or for board members of COAs or HOAs, see our previous post Standard of Care for Boards.) Some courts have held that this duty of care constrains a director’s ability to resign. Particularly in the case where resignation would leave the board with no leadership at all, such as the resignation of the entire board or of its last remaining member, resignation could violate a director’s duty of care because the association would be left with no leadership, potentially to the association’s detriment. In fact, if an association is incorporated as a nonprofit corporation – like many associations in Washington - then the applicable statutes require that members of its board of directors shall hold office for their entire term, and until the director’s successor has been elected or appointed. (See RCW 24.03.100 or RCW 24.06.130.) This language, together with the board member’s duty of care, may impose constraints on the ability of board members to resign. On the other hand, one Washington case has held that despite this language, directors cannot be required to remain in office after they have resigned. In King County Dept. of Community and Human Services v. Northwest Defenders Assn., 118 Wn. App. 117 (2003), a nonprofit corporation’s entire board of directors resigned one by one until no board members were left. The court held that despite the language of the nonprofit corporation statutes, the directors could not be required to remain in office for their entire terms or until successors were chosen. This was true even though the association was left with no board members at all. Because the law surrounding issues of board member resignation is not clear, we recommend that board members, association members, managers, and others confronting issues arising out of board member resignation consult with their association’s counsel to determine what the rights and obligations of all parties are. If you have any questions we can answer, please feel free to leave a comment or contact us directly. We look forward to continuing this conversation with you in our future posts!