Election Apathy & Quorum Requirements

Source: Adrian J. Adams Esq.

QUESTION:

We have spent a countless amount of money in the election process trying to meet quorum. How many attempts does the HOA need to make before the current board just continues/rolls over as the board?

ANSWER: There is no required number of attempts to meet quorum. If it is clear the membership is not interested in participating, the board can stop. For example, if you have 100 units and only 9 send in their ballots, it’s pretty clear no one is interested, which means reaching a 50% or even 30% quorum may not be achievable.

I had a large association with a 15% quorum requirement that could not get more that 12% participation no matter how hard they tried. We sought and received court approval of the 12% so they could open and count ballots.

If quorum is within striking distance, directors should put in the effort to round up more votes. If not, the board does not need to waste time, money, and energy trying to get members to participate. The existing board can continue in office and appoint replacements if they are anxious to step down.

RECOMMENDATION: Associations should amend their bylaws to eliminate cumulative voting and quorum requirements for the election of directors. Apathy will make it difficult to get the amendment passed but it’s worth the effort. 

Illegal & Unethical

Source: Adrian J. Adams Esq.

QUESTION:

Our association recently recovered funds from a lawsuit which the homeowners were charged a special assessment. The board opted to place the funds in the reserve account rather than reimburse the homeowners for their payments. Is this ethical or legal?

ANSWER: Unless the board promised to reimburse owners or somehow made it a condition of the special assessment, it is neither illegal nor unethical to put the money in the reserve account.

Reserve Funding. In fact, not doing so may be imprudent if your reserves are badly underfunded. Failing to fund the reserve account now could result in special assessments later when large repairs are needed and reserves are insufficient. Then everyone would rail against the board for not funding the reserves.

Who Gets the Money? Also, for those units sold after the special assessment but before the recovery, who gets the money? Does it go to the ones who paid it but no longer have a legal interest in the association or the ones who bought units and lay claim to the reimbursement? That could get messy.

RECOMMENDATION: Prudent fiscal management is one of the duties of the board. If you disagree with how they are handling the association’s money, you should consider running for the board.

Seating Arrangement

Source: Adrian J. Adams Esq.

QUESTION: Is there a seating protocol for board members on the dais? Is it appropriate for the manager and attorney to be seated on the dais? What is common practice?

ANSWER: There is no seating protocol that I’m aware of. I checked Robert’s Rules of Order and found nothing on the subject.

Seating Arrangements. I’ve been in meetings where the board, manager and attorney were (i) on an elevated dais with everyone facing the audience, (ii) seated at tables in a “u” shape (common with larger boards), (iii) seated at a round table with the backs of some directors to the audience, (iv)  seated randomly in comfy chairs in someone’s living room, and (v) seated in folding chairs on one side of a pool and the audience on the other side (a quasi separation of church and state–if you could walk on water, you could join the board). My favorite is where the board met in the alley next to a dumpster and everyone stood (it made for very short meetings).

On A Dais. When the board meets on a dais facing the audience, the most common position for the manager and attorney is at the end of the table. The second most common is for the attorney to be seated next to the president so he/she can consult with the attorney as-needed during the course of the meeting.

RECOMMENDATION: Generally, the larger the association, the more formal the seating arrangements. Boards should pick one that is comfortable for them.

Election Confidential

Source: Adrian J. Adams Esq.

QUESTION:For Christmas, I gave out gag gifts to my fellow board members–a condom for the men and an early pregnancy test kit for the ladies. The recipients are all over 65; most are in their 70s. A week later I received a letter from our HOA attorney accusing me of sexual harassment. At a meet the candidates forum, a shareholder asked a question that referenced the content of the letter. Do I have any protection from this confidential letter being shared?

ANSWER: If there is one thing I’ve learned, it’s that people like to talk–especially when directors behave badly. Your options are quite limited. No court is going to order people to stop talking about you. Can you sue for defamation? If members truthfully describe what you did, you would spend a lot of money and lose. Moreover, your litigation would alienate everyone and they would talk about you, your prank, and your lawsuit endlessly.

RECOMMENDATION: If you want to run for the board and win, you should own-up to your gag and apologize for it. If members believe your apology is sincere, you have a better chance of winning their votes.