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Quandries about Process, Proxies and Potential Problems
(The 4 Ps of Elections)

What I am finding as I go along writing election rules is that different managers serving different associations (often according to size) want to focus on different processes.  Most associations have this in common: a history of annual meetings without interest on the part of the homeowners leading to difficulty in getting candidates and difficulty achieving quorum. And most want to do away with proxies. I have written rules and guidelines to help with this. However, one of my great ideas for coping came under fire recently in one election and perhaps an adjustment in thinking would keep this from coming up in your association.

One request of many managers and board members is to give a process that eliminates proxies. To do that, you would need to amend the governing documents to eliminate proxies if they now provide that owners may vote in person or by proxy. I never used to recommend doing away with proxies because it makes it even more difficult to achieve quorum. But now, I am not so sure that keeping the option of proxies is a good idea. However, if you want to consider eliminating proxies, then I think it best to consider eliminating the need for proxies at the same time you are considering posing an amendment to the governing documents to the members.

Boards have used proxies in the past to encourage owners to put some documentation on file with the association that allows the Board to count that owner as if they were present in person or by proxy at a meeting ­ that is where the help comes in establishing a quorum for the meetings (which is commonly very difficult to get because of apathy). In such a case, the owners would be advised that they can revoke their proxy and vote in person if they are able to attend the meeting. So it makes sense for owners to do this and it helps Boards get the quorum. However, under the new laws, it complicates matters. If an owner has a proxy on file, receives a ballot package, mails it in, and then comes to a meeting and wants to revoke the proxy and the ballot and change their vote, they would be sorry to find out that the ballot once returned is not revocable - especially if there was a lot of hype in the association during the 30 day process before the meeting and there was a strong likelihood that the choices would change sufficiently the night of the annual meeting that one would want to change their vote.

And minority owners (meaning those with views not in complete alignment with the Board's current thinking, for these purposes, who sometimes turns out to be a silent majority) like proxies because they can go door to door campaigning for support and collect proxies to vote at the meeting on behalf of owners who are either afraid to speak up for themselves, who do not want to get into the fray, or who cannot attend the annual meeting.

A partial solution to the Associations' common problem of achieving quorum came in the cleanup legislation. The returned ballots will count toward the quorum as if the voter was present in person or by proxy in an election.  However, there still remains the problem that when the ballots are mailed out ahead of time and owners are encouraged to mail them in, they are not always (and in fact are not usually) provided all of the choices when it comes to the annual election. Because many associations have to seek out candidates at the annual meeting, or by going door to door when it gets down to the wire, there are commonly not enough candidates to put on the mail out ballot prior to the annual meeting to make the election any kind of contest, or to even make the full board slate to fill the positions that are opening. Often, it is at the annual meeting that incumbents are cajoled into continuing service for lack of interest in the candidacy. To help with this, a solution I attempted to integrate for some associations was allowing owners to hand over their ballot packages to another person to vote, which in essence was just like giving a proxy. The owner would have to sign their name on the outer envelope of the ballot package to "validate" it, which was a process intended as an alternative to having to give a proxy. It is actually the exact same concept as the proxy because if the owner turns over the package without the ballot completed, leaving it up to the assigned ballot holder to complete, it is no different than giving the other person a proxy and the unsealed ballot package and having them turn in the proxy with the ballot at the meeting, or than taking the proxy to the meeting and exchanging it for a ballot package so that the proxy holder can vote for the owner who assigned them as proxy.

However, innovative as I thought this process was, it raised some concerns that I did not anticipate. The public elections law would not allow it. And even though the Elections Code does not apply to HOAs, the legislator writing the new laws for HOAs suggested it should be used as a model. So some commentators condemned the practice of handing over a ballot to another to vote.  And so that may not be the best way to do away with proxies. Anyway, the criticism raised indicated to me that more thought was needed as to what to do about proxies.

The new law does not eliminate proxies from HOA elections. It refers back to governing documents on the subject and tells HOAs that their rules must provide how proxies will be used and authenticated if the governing documents provide for proxy voting. So associations are stuck in the muck. If the documents allow for proxies, then an association that turns them away at meetings or in an election could find itself subject to a challenge and a $500 fine, and could be ordered to do the election over again. It cannot accept proxies as it used to and use them as ballots either. It has to give the proxy holder a ballot to be voted, hopefully that will be a full package so it goes to the Inspector as a secret ballot, along with the proxy. To be clear, the new law says that Associations are not required to distribute proxies, but they do have to allow them if the documents so provide. (Your attorney may disagree, and in that case, listen to him or her because I am not trying to confuse you or criticize your attorney. Legal practitioners do not agree on many things about this new law other than it is confusing as all get out!

People are definitely more familiar with the proxy than my suggested "ballot handing over" process and it is something that is recognized as a legal practice. So what do you do now?

You do not have to send proxies out when you distribute ballot packages. However, you may be asked for a proxy form by an owner who wants to collect proxies. You could say no; however, you can avoid various proxy forms from being introduced by owners by having a form proxy available for use to hand out to owners who want to vote by proxy. If you do not have a form proxy available, owners may bring in anything and the inspectors will have to determine if it is legally valid as a proxy. I know this is a U-turn from the simpler process of forgetting about proxies altogether, but you do not want legal noncompliance to be a factor in your election to the extent you can help it! (No easy task with the complications of the new law, to be sure.) To assist, I posted a form proxy on the Elections page of the website.

And given that my mind never stops working in its quest to try to make things easier for managers and association boards, rather than harder, I am working on an article for the Elections Page of my website suggesting a change in timing for sending out the ballots for the annual elections. I am pondering the idea of whether it actually would be better for HOAs to move toward a process more like the public processes, where all of the action occurs BEFORE the ballots are sent out and all of the choices that are available are figured out BEFORE the ballots are sent out. This would mean that no owner would have reason to change their mind the night of the annual meeting and ask for their ballot back. It would mean that proxies would not even be necessary because the ballots would be counted at a meeting where no other action would take place.  

What a concept. Like it? Feel free to send me your thoughts on this. Understanding your concerns or needs will help me consider it from all perspectives.

Watch the link for the article "Breaking Tradition ­ A New Way of Thinking for HOA Elections."

© 2006, Beth Grimm, all rights reserved

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