ou may have read the Article in the February ECHO Journal about removal and resignation of Board Members. This article is an expansion on the concept, and is timely since the word "recall" (in various forms) is bandied about loosely and frequently in response to dissatisfaction with Board actions. Most do not really understand the intricacies: what it means to the community, how much steam and money is required, how difficult and divisive it can be, or alternatively - how it can energize the community and counter apathy.
Beginning at square one - the most common question probably is: May the Board remove a fellow Board Member? (The word "fire" is often used because of the "heat" of the situation.) Board members cannot "fire" a fellow board member. A group of homeowners cannot kick a board member off the board by petitioning their neighbors (although many have tried). If that comes as a surprise, please read on:
There is an important distinction that should be made at the outset, because there is a way to "diffuse" a board member who abuses the process by brandishing authority as an officer. A board of directors usually (if the Bylaws permit) may "fire" an officer legally (by taking their office away by majority vote), because officers generally are chosen by and serve at the will of the board. Some Bylaws of a homeowners association may require "just cause" to "unseat" officers. Others simply allow the board complete discretion. But the "office" of an officer is different than the position of a board director because of the way they are chosen. The members choose the directors by election. The directors then choose the officers by majority vote (or simply by appointing those directors who volunteer to hold an office). Perhaps that is where some of the confusion begins. Even if an officer is unseated from his or her position of President, Vice President, etc., by other board members, he or she still remains on the board. A board director is elected by the membership, and recall (which is the same as removal) of a board member must also be by election of the members (see Corporations Code Section 7222 and others referenced therein). There is an exception; a court action could be initiated in California to unseat a board member because of fraudulent or dishonest acts, or gross abuse of authority or discretion with reference to the corporation. (See Corporations Code Section 7223 for the requirements.) It is not an easy task to unseat a board member who does not want to step down voluntarily. If you read the prior article, you saw that the formula for removing an individual director who was elected by cumulative voting is complicated and strongly favors the director.
A special meeting of the membership may be called for a recall election. In California, a special meeting to recall a board member or members may be called by the President of the Association or a majority of the board, or others if the Associations Bylaws so provide. If 5% of the owner/members sign a petition calling for a special recall election meeting to recall any or all of the board members, the board is required under the law to call one, with notice to be sent to members within 20 days of the presentation of the petition. In the February article, examples of common faulty and inadequate petitions were noted. The meeting must be set on a date within 35-90 days of presentation of the petition. If the board does not respond to the petition within 20 days by giving notice of a meeting that has been set within the 35-90 day period, the homeowners may (arguably under the reading of the law) call the meeting or may go to court and ask for an order to have the meeting called. (See Corporations Code Section 7511(c).) Some governing documents have different timelines and some specifically allow the homeowners to call their own special meeting to vote on recall if the board fails to act. You will probably need attorney assistance to help establish exactly what is required when a petition is served.
Needless to say, some boards refuse to call the meeting. Recall efforts usually are very emotional issues and usually create a political nightmare. Although the effort can be commenced by the majority of the board to remove one member, the effort perhaps more often starts with a group of homeowners who are unhappy with something the board is doing. Disputes seem to arise naturally over very expensive rehabilitation projects, roofing changes, and/or expensive special assessment issues. Sometimes the dissatisfaction arises with management and a number of homeowners who find the manager unreasonably offensive will demand removal of a board that refuses to fire the manager. Other times, the effort is to remove a board member who is obnoxious, harassing or intimidating. Sometimes a group of owners discovers that the board is guilty of poor, irresponsible or illegal exercise of fiscal responsibilities; and sometimes a board member or members are believed to have assumed too much control. The dispute usually starts with one or two dissatisfied owners but often escalates. A recall effort that is lead by only one or two people generally goes nowhere.
However, when that lone dissatisfied person (or two) starts asking questions, and they are met with great resistance by the board or manager to requests for information, fuel is added to the fire. If the problems are flagrant or extreme enough to wake up the most apathetic of owners, the one or two people soon becomes a group of concerned homeowners, who usually call themselves - you guessed it - The Concerned Homeowners!
My litmus test for a dissatisfied owner who comes to me claiming the Board must be recalled is whether they can get enough owners involved to become such a group. If the call to arms by the homeowner(s) fizzles for lack of interest, they have failed the test needed to qualify to discuss recall seriously with me. As I said, one or two owners are not enough to make a dent.
What should a board do when faced with a demand for recall? The authors of the earlier article and I agree that the board should schedule a meeting within the timelines of law, presuming things are beyond a simpler resolution, such as a meeting with the petitioners. The law has been interpreted to allow the owners to call their own meeting if the board refuses. In my opinion it is much more advantageous for the board to be the one calling the meeting because then some reasonable controls can be put in place to prevent mayhem. The board members who want to fight to keep their positions should be willing to stand up and be counted and speak up, just like the opposing faction is going to do. Fair procedures should be established for the meeting that allow equal time for comment from those subject to recall and response from those seeking the recall. Homeowners not involved in the conflict should be given some reasonable opportunity to express their views (if any have any). Resisting the statutes requiring such a meeting usually just encourages owners to distrust the board and facilitates matters for the concerned owners who are trying to gain allies.
Here's what some boards do to stymie concerned owner groups:
Refuse to give out membership lists to the instigating owners to prevent them from communicating with other owners (even when legally required to provide the list such as in Corporations Code Section 8330), or push the outside date for providing the list beyond the legal limit of 5 days to frustrate the concerned owners.
Refuse to call special meetings even when they are bound to under the law (as in Corporations Code Section 7511(c) or the governing documents).
Use association funds and resources to support their own cause or campaign.
Fail to make any provision for a followup election at the recall meeting in the event the board is recalled - either refusing to recognize that they might be recalled or using that ploy with an intention to convince the people in attendance at the meeting that without a newly elected board, the association will crumble so the old board should be kept in office.
Refuse to accept legally valid proxies when the group uses a form that did not come from the board (even if there is no specific prohibition in the law or the governing documents for using proxies other than board proxies).
Refuse to give recall proponents equal time at the recall meeting to espouse their views about the board.
Recall meetings tend to be emotional, strung out battles. They take their toll on all of the people involved and the association members and board. In one situation, an entire Board scrapped like territorial cats and dogs to keep their positions on the board, only to resign en masse the day after the recall election (after they had "won"). In another election, the recall group fizzled out the last week before the election and forgot to carefully prepare their remarks for the meeting, and lost the effort by about 5 votes out of the 235 or so of the votes needed. In yet another, the entire board was recalled and the new board was reelected with members from each of the two opposing factions - 2 vehement souls from the prior board and 2 other vehement souls from the concerned owners group. The "swing" elected candidate was a fence sitter caught in the middle of both factions. The new board was practically immobilized from deadlocked decisions involving tie votes of 2-2 and one abstention (guess who).
However, many concerned owners groups have been successful in recalling the board and turning things around for the association.
Concerned Homeowners Have Overcome Attempts By The Board To Sabotage Recall Elections By Knowing The Following:
Corporations Code Section 7613, says that any member may authorize another person or persons to act by proxy unless the right is limited or withdrawn through the Articles and Bylaws. The statute says that any proxy that is executed in accordance with the provisions of the laws related to the form of proxies shall be presumptively valid. There are limitations on time of a proxy and technical requirements as to what should appear, but a concerned homeowners group using the form of proxies sent out by the board should not be denied the right to bring the same Â·
Corporations Code 7614 provides for Inspectors of Election. That section says that in advance of any meeting of members, the board may appoint Inspectors of Election to act at the meeting. The statute says that if Inspectors of Elector are not appointed by the board ahead of time, "The Chairman of any meeting of members may, and on the request of any member or members proxy shall, appoint Inspectors of Election at the meeting. The number of Inspectors is to be 1 or 3, not 2 or 4 (even numbers)." A concerned homeowners group should request that Inspectors of Election be appointed prior to the election. These Inspectors, under the Corporations Code, have the duty to validate the proxies if they satisfy the law and any specific limitations in the Bylaws or Articles. The Inspectors of Election are to count the votes. Requesting the Inspectors of Election ahead of time is very reasonable practice, and the Board should comply. Some boards, however, attempt to get all the proxies in before the meeting, count them, and then simply announce the results at the Recall Election Meeting. Since most recall elections involve distrust to begin with, this is a very unprofessional way to handle matters, in my opinion.
Concerned homeowners groups need to know that if cumulative voting is used by the association, recall of one particular board member, or any individual board members, requires a different voting standard than if the concerned homeowners group seeks to recall the entire board. As described in the February article, and because of the complication of cumulative voting, and the difficulty in recalling an individual board member, most groups vie for removal of the entire board. The board members who are removed may submit for re-election following the recall meeting, and this is one way to assure that certain board members get back on the board, if the concerned homeowners group has sufficient support for that.
Recall issues are not pretty. Whenever any concerned group of homeowners comes to me for advice and wants to recall the board, I retrace with the proponents the steps that the concerned homeowners have made to try and get some reasonable conduct on the part of the board to meet their demands. They usually missed a few important steps and entitlements that should be exercised before getting drastic - like rights to review records, attend and speak at meetings, and address the board members directly. Sometimes they miss the importance of upcoming elections as a time to advocate change and start the movement toward more responsible or attentive candidates.
I would not advocate recall of a board for any concerned homeowners group that has not done its homework and made every reasonable attempt to get the board to comply with records, inspection requests, maintenance requests, response to questions and inquiries, and explanations of financial records that seem to be a problem. In fact, if a concerned homeowners group came to me and said they wanted to recall the board and they had a number of demands, I would first ascertain whether those demands might be met via a letter from an attorney who is able to recite California law supporting the propositions of the concerned owners. Before suggesting a petition for recall, I would also suggest that the owners try other avenues, such as a request for mediation, or a request for a special meeting of the board with the homeowners group to try and resolve issues, a call for an audit of the financial records, etc. Recall elections disrupt the community, disrupt the business of the board, and if they are lead by persons who have no clear understanding of the law or the rights of either party, they often turn into a name calling, mud-slinging fiasco where nobody comes out clean.
There is one good thing I can say about recall meetings - although they are very difficult for a number of reasons - they tend to bring association members out of the woodwork. I have yet to be present at a recall meeting where someone did not say - "This is the most people I have ever seen at an association meeting!"
By Beth A. Grimm, a community association attorney in California, East Bay Resource Panel Chairperson and author of various publications and books about condominium living and the law, and a frequent contributor to THE ECHO JOURNAL.
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