By Greg Ellison

(March 10, 2022) Final refinements of proposed governance rules tied to Ocean Pines Board candidate qualifications were drafted by the Bylaws and Resolutions Committee last week ahead of a related town hall this Saturday.

Committee Chair Jim Trummel said the group began crafting bylaw changes last April, with a laundry list of revisions reviewed and voted on during the board meeting on Feb. 7.

During the group’s meeting on March 4, Trummel said clarification for changes to bylaws section 1.11 defining owner of record were proposed.

Director Frank Daly proposed that section 1.11 define owner of record as “person(s) listed on the deed … in Land Records of Worcester County.”

Daly’s motion for section 1.11 further outlines that in instances of property listed under a trust, the owner of record is a trustee(s) or co-trustees.

Lastly, the proposed section 1.11 language states if a corporation, LLC or partnership is listed as owner on a property deed, owner of record would be, “an officer of the corporation, a living person who is a member of the … [LLC] … or a living person who is a partner in the partnership…”

“The definition recommended in the motion refers to a person on the deed,” he said.

Trummel said committee members made a motion during its Feb. 25 meeting to eliminate the last section for corporate or partnership interests.

“In the definition, all those entities are included but it goes on further to identify who as owner of record is eligible,” he said.

During subsequent discussions last Friday committee members concluded the corporate ownership aspect should be a disqualifier under bylaws section 5.02A relating to board candidate qualifications.

Committee member Keith Kaiser said a major problem is that land records for property owned under corporate-type structures would not specify individual(s) on deeds.

Based on recent board meeting discussion on the matter, Kaiser said a clear delineation between company-owned property and family-based trusts has been lacking.

“I don’t recall there being a discussion … that these are two entirely different things when it comes to the potential motivations of the people involved,” he said. “One board meeting I saw it seemed people were lumping them together.”

Board liaison Colette Horn said despite raising the matter of fiduciary duties for corporate interests owning property in early February, the concern failed to gain traction.

“In the summary I gave to the board, I stated the concern that you had about the conflict in fiduciary between an owner of a corporation and a director,” she said. “Serving two masters, so to speak.”

Kaiser, who has experience performing property inspections for homeowners’ insurance companies, said the percentage of corporate owned homes is significant.

“I can tell you that in Ocean Pines and in Ocean City there are many many of these single-family-detached homes that are owned by companies,” he said.

At the same time, Kaiser said there are few precedents of corporate interests holding property deeds seeking to run board candidates.

“Maybe it hasn’t happened in the past,” he said.

Still, Kaiser said the matter was under discussion if future instances arise, with the intent to block business entities but not individual homeowners from qualifying for board membership.

“Some of the LLCs are family-based groups but how do you distinguish from company-owned property?” he asked.

Committee member Stephen Jacobs said earlier recommendations for section 1.11 language revisions forwarded to the board in January included subsections for 5.02A prohibiting board candidates from being corporate entities.

“Without addressing the corporate entity in 5.02A, you’re setting everything up for the conflict of interest, which drove us to this point in the first place,” he said.

Committee member Lora Pangratz said it was crucial for association members to recognize the clear distinction between corporate and privately held properties.

“Homes owned by corporations are very different for family trusts,” she said. “There needs to be a way for us to better define what we’re talking about.”

Jacobs made a motion, which was unanimously approved, to recommend the board consider revising section 5.02A to prohibit corporate entities (including but not limited to corporations, LLCs, partnerships or agencies) listed as owner of record from running candidates.

Committee members also recommended including a caveat that the “subsection does not apply to a trustee or co-trustee.”

Horn said the changes would provide new information for the membership to consider and could be raised with the board during the public hearing on March 12.

“I can’t say they won’t entertain this change,” she said.

Trummel said although it was too late to update details on specific bylaw proposals already distributed to members for the March 12 meeting, further revisions are possible.

“We’re providing committee comments to the board for the pubic hearing,” he said.

Trummel said per bylaws section 4.08A board members have the option to either modify or withdraw proposals after the upcoming public hearing.

“It could be added to referendum materials still,” he said.

The OPA is scheduled to mail homeowners referendum ballots including 30-plus bylaw changes by March 25 with a voting deadline of April 29.

Prior to printing and mailing ballots the association is holding a mandated hybrid public hearing on Saturday at 9 a.m. in the Golf Clubhouse banquet room.