Request for Consultation
March 16, 2007

What Ifs - The New Election Laws in California

Tany managers have asked me if I would do an article on the "What Ifs" ...  meaning what if this happens or what if that happens in an HOA election. Some of the following "what ifs" have already happened and others have been anticipated based on past experience of the managers. Maybe some guidance on these will help you avoid some problems with your next election.

Here goes:

What if the owners go ballistic when they receive the rules, and immediately start challenging the board on authority?

Boards have to circulate election rules before approval (unless they basically just send out the statute and call it "rules, not my recommendation).  Sometimes owners do go nuts when they receive a list of "new rules" adopted by or offered by the board for comment. Sometimes there is a prevailing feeling of distrust. Usually, though, if this happens, there is some kind of "history" or secrecy issues and offering up what looks like a bunch of onerous procedures can appear to be just another ploy. If the members become unglued, it is best to institute some kind of "damage control" efforts. Why?  Because if the feelings are left to "fester", the first election under the new rules will surely suffer. Perhaps another letter pointing owners to the law itself would help; perhaps a town hall meeting or notice that the rules will be discussed at an upcoming board meeting will help. If it is a contingent of owners complaining, maybe a meeting with the group would help. This is true for any material "sore spot" - failure to give it the right kind of attention almost assures that it will get infected and get worse.

What if a member asks to have their name on the ballot after the board's published cut off date?

This would be up to the board. In some associations, there would be reasons not to put the name on the ballot (timing issues given that the package might already be on its way to production, not wanting to open the door to complaints of inconsistent treatment, etc.). Other associations may take a different approach, or different circumstances may dictate another approach, i.e., there might be a reason to accept (shortage of candidates, etc.). In any case, be sure to pay attention to the distinction between whether the cutoff date stated is for nominations or just for getting the owner's name on the ballot. Make it clear to the owners when sending out the solicitation materials.

What if the name does not get on the ballot; can an owner mount a "write-in" campaign and get nominated from the floor at the annual meeting?

Waiting to do this would put a candidate at a distinct disadvantage. However , if the association is accepting nominations from the floor of the annual meeting, conceivably an owner could mount a write in campaign. Of course, the other decision to make is whether a write in blank or blanks should be put on the ballot. Failure to inform owners that nominations may come from the floor may result in an owner demanding their ballot package back from the inspectors, if they come to the meeting and want to change their vote. It is up to the board to explain how this all will work. Common sense is an important element. Common sense tells you that if the bylaws call for nominations from the floor at the annual meeting, then the board needs to inform owners and include write in blanks on the ballots so that the folks who come to the meeting to see who is nominated have a way to vote for nominees from the floor.

What if a nominee does not qualify to serve?

First of all, it is important to determine what the bylaws say about qualifications because the rules need to be consistent with the governing documents on this point. Qualifications cannot be added that do not appear in the association bylaws or other governing documents. Second, do the documents require a hearing before a board member can be "disqualified"? If so, it is hard to "pre-disqualify" a nominee.  Third, is the candidate attempting to cure any defects in qualifications to be clear in the running? Fourth, do the bylaws set qualifications for board members, or for candidates for the board, or both?  These are pertinent questions. It may be appropriate to deny owners the right to run for the board if they are clearly disqualified to serve; however, then the question becomes whether they are disqualified from having their name on the ballot, or disqualified from having any ballots counted for them, or if the disqualification would have to wait until the person is elected. This is a question that needs to be answered by your own legal advisor, because literature and rules being circulated on this point are widely diverse.

What if a nominee withdraws their name ... before or after the ballots go out?

There is little the board can do to rectify the problem other than following through with the nominations period and sending out ballots with the names of qualified candidates that are in at that time. If some owners have already voted for the candidate who withdraws, there is little the board can do. Obviously, the votes for this candidate will not count for anything. The question is: do you reopen nominations? If you need to in order to find sufficient candidates to serve, then it is an option. If you don't need to it is probably not advisable to create a new issue that may have ramifications. Of utmost importance, consult with your legal professional if you are wondering what you should do.

What if there are not enough candidates to warrant sending out a ballot? Do we need to?

I believe this depends at what point you are in the process and what the documents say. For example, if you declare the nominations closed prior to the annual meeting and do not have more candidates than positions open, some practitioners suggest declaring the election by acclamation at that point and do not send out the ballot. If the governing documents do not call for nominations at the meeting, this may be acceptable; however, if the bylaws do call for nominations from the floor of the annual meeting, deciding against sending out a ballot and declaring the election by acclamation before the annual meeting may be premature. If, on the other hand, you wait until the annual meeting and there are no nominees from the floor and still there are not more candidates than positions, then it seems like a decision to forego sending out the ballot would more likely be accepted if the process is challenged. This is because the Board will have honored the bylaws by reasonably attempting to find candidates including allowing owners to be nominated or nominate themselves at the annual meeting.

What if the Board does/does not want to put write in spaces on the ballot?

The new law does not require write in spaces on the ballot but it does allow for it. Give it some thought because it may make a difference if the election is challenged and a question arises as to whether nomination solicitations were cut off early or owners did not receive a fair opportunity to get their name in the running.

What if owners do not sign the outer envelopes of their ballot packages? Can they be counted? Is there anything the Board/inspectors can do to get the envelopes signed?

If you take the approach that each owner deserves to have their vote counted, you may want to try and address this problem before the ballot packages are counted. If you take the approach that it's the owner's problem if they do not follow instructions, you may think this is only the owner's problem. But it can be a problem for the association. Every ballot that is not verified cannot be counted toward the quorum, or can it? The law is not exactly clear on this. It says:  
"If a quorum is required by the governing documents, each ballot received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum. An association shall allow for cumulative voting using the secret ballot procedures provided in this section, if cumulative voting is provided for in the governing documents."

Even if a ballot package cannot be validated, it is not clear whether the ballot in it may or may not be counted toward the quorum. Attorneys and inspectors may differ on the way they interpret the law. If we were dealing with proxies, invalidated proxies would not count toward the quorum, but we are not dealing with proxies. We are dealing with a law with gaping holes in it.  In any event, it makes sense to me that if it is practical for your association, and if the inspector(s) determine that ballot packages are coming in without signatures, the Association could take measures to allow owners who did not sign the opportunity to come to some kind of arranged meeting place where the unsigned, unopened ballot packages can be brought by the inspector(s) and with their oversight, be signed by the owner of the property.

What if the inspectors do not agree on whether to validate a ballot package or not? 

This is the reason the law calls for 1 or 3 inspectors, and not 2.

What if the attorney for the association and any other attorney present do not agree on whether to validate a ballot package or not (when asked by the inspector(s) to weigh in)? 

The Association will most likely rely on its own attorney's opinion. The other attorney(s) will probably reserve the right to object at some point to the election. If the decision on the ballot would not affect the outcome of the election, than it would probably be futile to use such a decision to try and unravel the election.

What if the inspectors set aside questionable ballot packages until all unquestionable packages and ballots are tabulated?

This will probably be all right. However, if the packages remain unopened, something important may be missed. For example, say that one owner ones 5 units in the development and stuck all ballots inside one ballot envelope, and one outer envelope. There would be no way for the inspectors to know there are 5 votes at stake.

What if there is not a quorum of ballot packages received? What should the inspectors do?

Again, there may be some ballots unaccounted if the envelopes are not opened. On the other hand, if the envelopes are opened, any attempt to extend the voting period will probably be negated. So, this is a factor. Some associations may want to take advantage of "adjourned" meetings that have lowered quorums for the election of board members, or extending the voting period in an important election. The inspectors should notify the board if there is not a quorum and receive guidance from the board as to whether the ballots should be opened or not. It certainly will help matters if the inspectors are advised ahead of time to pay attention to quorum. Otherwise, envelopes may be opened inadvertently - before the Board can offer up a plan to extend the election period or use the adjourned meeting right to get the quorum lowered.

What if there is not a quorum of ballots? What should the board do?

The association governing documents may offer the option of an adjourned meeting or the ballot measure may have been set up to allow for extension of the voting period. The Board may want to consider at that time whether to try again, or take action by appointing successors to the Board, giving up on the idea of expending more money or energy trying another election. For elections that require a quorum for approval, the Board's choices are more limited - try again, extend the voting period, or consider the proposal has failed. Since the Association needs directors, a decision has to be made to go forward with some acceptable plan, or "folding" and appointing. Whether appointment in this manner of successors will be upheld if challenged depends on the circumstances, but you can be sure if there is a challenge, there will be differing opinions as to whether enough effort was made to achieve quorum.

What if the association did not distribute proxies but an owner sends a person with a valid proxy to the meeting to vote?

The new law does not require a Board to distribute proxies. But likewise, it does not do away with proxies. If the association governing documents allow owners to vote in person or by proxy, then there is no basis to deny a legally valid proxy (unless of course it is presented after the "polls" close).

To the extent the association is allowed to conduct an election wholly by mail, there should be no need for proxies, unless an owner is leaving the country, serving in the military, or is sick and wants another person to exercise their voting rights. In that case, they might want to place a proxy on file with the Association. Should they be denied that right? Not if the documents allow for proxies. (Note: The same does not necessarily apply in recall processes because typically, in recalls, owners may decide to go out and collect proxies to help a candidate or candidates get elected at the meeting.)  The important thing to note is that proxies cannot be counted as a ballot - the Board may want to or have to let the owners know this and make arrangements for proxies to be exchanged for or turned in with ballots that can be counted in instances where the "polls" do not close until the membership meeting at which ballots may be counted.

There is always a chance that an owner may send someone to the meeting with a proxy. If you close the "polls" (require that the ballots be mailed back) before the meeting then of course there is no ballot to be given in exchange because voting has closed. However, if ballot packages are being accepted at the meeting, you will need to provide the proxy holder with a ballot package for the owner who gave the proxy - unless that owner previously mailed in a ballot. Check in procedures need to allow for this. I suggest that any ballots distributed at a meeting be in the same exact form as those sent by mail. If a package is given to a proxy holder, either require that they return it with the proxy, or take the proxy and write the word "proxy" where the signature would go so the inspectors will not be looking for it. That way, before counting any ballots, the outer envelope can be used for check in by the inspectors and it can be determined if the owner has had two or more ballot packages turned in. If that is the case, the inspectors can determine what to do about it. Generally, it seems the first ballot turned into the inspectors should be the one that is counted because it is not revocable. However, some inspectors/attorneys might suggest none should be counted. Others might suggest opening the ballots and if they do not cancel each other out (if they are the same) one of the ballots can be counted.

One more thing about proxies. A board cannot ban proxies when the bylaws provide that owners may vote in person or by proxy. However, a board can arrange an election so that proxies are not necessary. In many cases, I have recommended to boards that they use a different approach, and that is to give notice of the annual meeting and solicit nominees right up to the night of the annual meeting, and then send the ballot for the election out after that and have the ballots counted at the next board meeting (of course it must be 30 days after the ballots are sent out). Since there would be no voting at a board meeting, there would be no need for proxies. In fact, if arranged properly, the board may be able to schedule a second "adjourned" annual meeting for the counting, taking advantage of a lowered quorum (when such a lowered quorum is offered as an option in the bylaws).

What if the Ballot package return address is not listed on the owner list and the signature is not legible?

This is a risk if the Board does not use envelopes with return labels on them. The ballot package cannot be checked in if the address that is printed does not correspond to the list. However, from the inspector's' perspective, they can ask the board for a cross reference list as between property addresses and mailing addresses. If the address still does not match up, it may be a ballot package that has to remain in the unopened or at least invalidated ballots pile.

I hope this information helps. There are another 50 what ifs waiting to happen. I will try to keep up as they come in. It is conceivable that an association may adopt procedures in your association that helps, during the counting of ballots, identify unidentified packages. There are ways to be prepared to deal with the issues that apathy raises, and to avoid inadvertently disenfranchising owners. Planning ahead is important. Learning from your first experience and each one following is important.

Beth A. Grimm is frequent contributor to the ECHO Journal. She is a Bay Area attorney that authors books, writes articles and newsletters, is active in ECHO and other groups that serve the public who live in CIDS via educational materials and otherwise, and who stays active in current legislation.

By Beth A. Grimm, Attorney. A "service oriented" attorney and member of ECHO and CAI and various other industry organizations in California and nationally, host of the website www.californiacondoguru.com; two Blogs: California Condominium & HOA Law Blog, and Condolawguru.com Blog, and author of many helpful community association publications which can be found in the webstore on her site.