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Subject: HOA General Meeting and Proxy Rigging??

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KevinK7
(Florida)

Posts:59

08/19/2008 8:47 PM
Hello everyone, I had made a few posts in the past regarding a lengthy and messy legal battle involving my HOA regarding the change from Voluntary to Mandatory. A short while ago, numerous homeowners were presented with court documents labeling them defendants in a possible class action lawsuit against the HOA. Most recently several of these homeowners petitioned the courts to have their signed joinders amending the CC&Rs dismissed on the basis that they did not fully comprehend the ramifications of their actions and that they were not aware these documents would be filed with the county. Unfortunately our HOA only holds quarterly meetings so there has been a void of information regarding this lawsuit (it was filed shortly after the last meeting). The lawsuit was actually featured on our local news program, as well as a full page ad in a local newspaper, as well as numerous yellow signs in supporter's lawns. The BOD had not made any mention in the newsletter or website about this lawsuit and now they are limiting the HOA meeting to members in good standing. We are not members in the HOA but they have claimed that our section has become mandatory and have assessed fees on our property. Under advisement, we paid the fees (with notice stating payment under protest) to avoid any penalty until any legal questions can be sorted out in court but we refused to pay the fee to join the HOA. Under this change, I will not be allowed in the meeting. I assume they are enacting this because the people who are party to the lawsuit are not members as well. Another issue is that the BOD is collecting proxy votes through their website with only one option ("Yes" to establish a quorum and grant members of the BOD full power of substitution). The only problem I have with this is that it specifies in the proxy application that if no direction is indicated, the proxy vote will be at the recommendations of the BOD. There is no other form to make another selection. Just a check box for "Yes". So I guess my two questions are: 1. Can a partially-voluntary homeowners association limit attendance to homeowners who are members even though the HOA assessed fees on all homeowners within certain sections?, (I list partially-voluntary because membership is voluntary UNLESS you join or purchase a home, then you become mandatory) and 2. Can a proxy vote only allow one option with no specification for use and no other option other then selecting the BOD to act as a substitute?

GlenL
(Ohio)

Posts:1362

08/19/2008 11:15 PM
#1 IMO yes they can limit attendance to members in good standing. You said you paid dues under protest but didn't pay the initiation fee which would make you not in good standing. #2 IMO fair no but probably legal. This however does not stop you and the others from printing your own proxies and soliciting them. Even with one proxy from a member in good standing you could then attend the meeting and vote in their place. You should have a line stating for what meeting the proxy is for and that any prior proxies are void. This way if H/O a member IGS sent in his proxy dated August 20, 2008 and you get him the next day to give you his proxy the previous one would be invalid.

KevinK7
(Florida)

Posts:59

08/20/2008 4:39 AM
What I don't understand is that if the HOA is assessing fees on every property owner and using their money to conduct HOA business, then regardless of membership status, every homeowner should be allowed to attend. In the previous meeting that I was allowed to attend, another homeowner asked a question regarding the assessments and the president would not allow them to talk. As for the proxy vote, I plan on seeing if one of our member neighbors would sign over a proxy vote to us. The only thing I am concerned about is the HOA stated they sent a mailing to everyone and this mailing will be used to check-in. I do not know what the mailing looks like but I will be sure to find out. I don't know if the HOA really understands the legal issues of what they are trying to accomplish. From what I understand, the HOA's lawyer is a collections attorney. A neighborhood nearby to ours was considering transitioning to a mandatory subdivision and contacted our HOA's lawyer. When they asked about the process, the lawyer told them that it is a legal gray area and that the HOA should have no problem making the change as long as no one bucks the system. Hearing about this, and from personal experience with the HOA and their lawyer, I don't have much confidence in finding out much or being allowed to even attend as a proxy. Another question would be that if the meeting is open to all "Members in Good Standing", there are some problems in that the President of the HOA does not own a home. He lives with another board member whose name is on the deed. And I was told that another board member lives in another section of the neighborhood that separated and became its own subdivision. We have already had two board members resign in the past couple of months.

SusanW1
(Michigan)

Posts:2121

08/20/2008 4:55 AM
You said: "and now they are limiting the HOA meeting to members in good standing" If that ain't in the documents, it does not exist. They can't just "decide" this on a whim. What do your documents say about "voting rights"? Limiting the attendance to only members is good standing is even different than limiting the voting to members in good standing. IMHO, ANYONE who could be impacted by the actions of this HOA should be able to attend the meeting and hear all the details.

KevinK7
(Florida)

Posts:59

08/20/2008 9:58 AM
According to the bylaws: Membership is defined as any owner of property who pays their membership dues. A member in good standing is one who pays their dues within 60 days of the due date. A Board Member must be a member in good standing. The bylaws state that general meetings are to be held at least semi-annually, or more often as decided by the board of directors. They do not specify who is allowed to attend. I can not find any information pertaining to the changing of by-laws. I attended the last general meeting and no mention was made of any changes to the general meeting. The board has also ceased announcing when board meetings are to be held. It is possible that they voted on this in private to not allow open meetings. (If a board member must be a "Member in Good Standing" and in order to be a member, one must own property, how can the president retain his position when he owns no home? Does this make all business conducted by the BOD and HOA invalid since he has been in charge?) The bylaws do state that members in good standing are allowed one vote per property and a proxy may only designate a Board member. The proxy vote supplied by the HOA does not allow the choice of who. It designates the Secretary, who is the homeowner where the President lives. It does state that lessees are not allowed to vote.

MaryA1
(Arizona)

Posts:2161

08/20/2008 12:10 PM
Kevin, There should be an article in the bylaws titled "Amendments, Termination", or something to that effect. If there is none the IMO the bylaws should be amended to include one. The board may have the authority to do this. I believe it would require an attorney's opinion. As for "members in good standing"; this is a member who is current on his assessments and has no outstanding fines for CCR violations. A member NOT in good standing usually does not have the right to vote. Some assn docs go further in stating they cannot run for office. I've never heard of a member not in good standing being denied the right to attend a meeting. A board assigning proxy votes only to the board sec is not uncommon; however, I'm not sure this is legal. You state the Pres is not a property owner. Have you checked your docs to determine whether or not board members must be property owners? Some assn's docs allow this mainly because the developer traditionally appoints non-members to the board. Some docs only allow this while under declarant control; others make no distinction. You also stated the bylaws say general meetings must be held twice a year. Are you talking about member meetings or board meetings? All members of the assn have the right to attend member meetings.

KevinK7
(Florida)

Posts:59

08/20/2008 3:03 PM
Here are excerpts copied and pasted from the bylaws: ARTICLE I. ORGANIZATION AND MEMBERSHIP A. Purpose of the Sand Lake Hills Homeowners Association, hereinafter referred to as the “Association”. In order to maintain the high standards of the Subdivision and in order to supplement the enforcement provisions as set forth herein in regard to any violations of these Covenants and Restrictions as recorded in the Public Records of Orange County, Florida, and in order to effect the maintenance of all common use areas, the owners of the Lots in the Subdivision have formed a Homeowners Association in the form of a corporation, not for profit, organized and existing under the laws of the State of Florida. B. Organization – The official functions of the Association will be performed by a Board of Directors composed of 9 members: Four (4) officers of the Association: President, Vice-President, Secretary, and Treasurer; and five (5) members-atlarge, as specified in the Articles of Incorporation. A minimum of seven (7) members of the Board must be members of the Association in goods standing (as defined below). The members of the Board of Directors will perform their responsibilities without remuneration in any form, i.e. gifts, salary, or wages. C. Membership – Any owner of property in Sand Lake Hills, as defined in the Articles of Incorporation and amendments thereto, may become a member of the Association by paying the annual dues set by the Association. To maintain in good standing as a member, the member must pay the annual dues to the Association within a period of sixty (60) days of the due date. ARTICLE IV VOTING RIGHTS Voting privileges of members in good standing shall be limited to one vote per lot. A vote may be cast in person or by proxy. Only members of the Board of Directors can be designated to act as proxies. Lessees may not vote. ARTICLE V GENERAL MEMBERSHIP MEETINGS Meetings shall be held at least semi-annually, but may be held more often as decided by the Board of Directors. ARTICLE VI BOARD OF DIRECTORS MEETINGS The Board of Directors shall meet in advance of the General Membership meeting. Special meetings may be called by the President as reasonably necessary to complete unfinished business, or to attend to new matters of the Association that require immediate attention. At least 48 hours advance notice should be given to all Board members for a special meeting. For matters requiring a vote of the Board, a minimum of five (5) Board members must be present to conduct business. Other meetings of the Board may be held with less than five members present to discuss or prepare for the Board meetings. These meetings shall have no effect in any of the Association business and no action pertaining to the Association can be taken by any Board member as a result of such meetings. All meetings should be limited to the subject for which the meeting was called, unless a motion to suspend the rules to consider another specific subject is carried by a two-thirds affirmative vote of members present and voting. Rules governing the conducting of all meetings shall be courteous, apply common sense, and comply with Roberts Rules of Order. ARTICLE IX AMENDMENTS Any amendments to the Articles of Incorporation or By-Laws will take a simple majority (50% + 1) of the voting Association members present physically or by proxy. A quorum is considered fifteen percent (15%) of the membership. I'm sure the way the proxy vote is set up is legal, but it does not sound very ethical to me. As for the meetings, I understand that non-members are not allowed to vote, but I do not understand how they can restrict access to the meetings when they still collect money from non-members. Especially since Florida Statutes 720.306 states "Members and parcel owners have the right to attend all membership meetings and to speak at any meeting with reference to all items opened for discussion or included on the agenda." According to or county property appraiser, the president currently owns no property in the neighborhood. From my understanding, membership requires ownership. The president has been in charge I believe since 2001. I am curious if that would have any retroactive effects.

MaryA1
(Arizona)

Posts:2161

08/20/2008 4:54 PM
Kevin, Well, it looks like some of the issues you were questioning are answered in the articles of the bylaws that you've posted. I really surprised there is no article addressing amendments -- what about termination? 1) The board pres can be a non-member: "A minimum of seven (7) members of the Board must be members of the Association in goods standing (as defined below)." The bylaws call for a 9 member board, meaning 2 board members may be non-members. While it's true that membership requires property ownership; the bylaws specifically allow 2 board member to be non-members. Why do the members continue to elect this non-member Pres? In fact, I wonder why he wants to continue to serve on the board. Was he appointed by the declarant while the assn was under declarant control? One way to get him off the board is to reduce the board to 7 members. 2) The bylaws specifically state "Only members of the Board of Directors can be designated to act as proxies." As I said, I'm not sure this is legal; however it is stated in your bylaws! 3) The bylaws must be amended by the members: "Any amendments to the Articles of Incorporation or By-Laws will take a simple majority (50% + 1) of the voting Association members present physically or by proxy." Note that it says a simple majority OF THE VOTING ASSN MEMBERS PRESENT PHYSICALY OR BY PROXY; this is much different that a simple majority of the members of the assn. With only a 15% quorum required, you may not need many members to adopt an amendment. Since it is not specifically stated that all members are entitled to attend the member meetings, I would use the state statute as law. Actually state law is above your gov. docs anyhow.

MicheleD
(Kentucky)

Posts:1676

08/20/2008 5:59 PM
Posted By GlenL on 08/19/2008 11:15 PM #1 IMO yes they can limit attendance to members in good standing. You said you paid dues under protest but didn't pay the initiation fee which would make you not in good standing. #2 IMO fair no but probably legal. This however does not stop you and the others from printing your own proxies and soliciting them. Even with one proxy from a member in good standing you could then attend the meeting and vote in their place. You should have a line stating for what meeting the proxy is for and that any prior proxies are void. This way if H/O a member IGS sent in his proxy dated August 20, 2008 and you get him the next day to give you his proxy the previous one would be invalid. I pretty much agree with Glen's assessment. I don't think it's proxy "rigging," unless they end up not accepting ANY OTHER proxy besides the ones they produced. I think what they're counting on is that most people don't know that they can execute their own proxy and designate their own vote. So, in that case, since it appears they are hoping that no one figures that out, it might not be illegal, as Glen said, but I find it very close to the "unethical" column.

KevinK7
(Florida)

Posts:59

08/20/2008 6:11 PM
Regarding the president, I guess there is a loophole that allows him to serve. I still see a conflict in that he is not a member and he is not allowing other non-members to attend. I do plan on using the Florida statute when I attend, and I assume I will be faced with some opposition but the law is the law. Basically, our HOA is approaching 30 years. Around 2000, some of the homeowners in a section of the neighborhood wanted to amend the covenants to be more restrictive. They held elections and were elected. They changed the name of their section and planned on uniting every section under their more strict covenants. Technically there can be several HOAs in my neighborhood. Two elected their own boards and broke away to become separate HOAs much to our HOAs disliking. I know the board has a habit of having a set amount of proxies on hand and they are not specified for a particular item. They are "authorized to vote upon such other business as may properly come before the meeting and any adjournments or postponements thereof" and unfortunately most homeowners are so apathetic that they unknowingly signed away their rights! The last general meeting had about 25 people and when someone spoke up, they were not allowed to speak. Unfortunately while the lawyers are at work (A Motion to Certify a Class AND A Motion For Temporary Injunction was filed in the Circuit Court of the Ninth Judicial Circuit) all I can do is wait, reading any material relevant to what is going on and try to get a full grasp of the situation.

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