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Subject: Non-Response to Ballot Considered a "Yes" Vote...
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DougL2
(Washington)

Posts:2


05/21/2008 9:56 PM  
I am on the Board of our local HOA and we are having a bit of a disagreement over the legality and ethics of this scenario:

A local developer is attempting to buy a golf course adjacent to our HOA to build massive quantities of high-density, lower entry level housing. I won't bore you all the details of that issue but since if the development does happen, it will likely negatively affect our HOA property values. Our board has already donated a large sum of money ($10K) from our reserve to a legal fund fighting the developer and at our annual meeting, decided to levee a Special Assessment to have a legal reserve to fight this matter further. There are a few questions that I have:

1) Given that it is nearly impossible to get the 2/3 Super Majority of all members to our Annual Meeting, the special assessment vate was put to a mail ballot. Our past experience shows that we don't get a huge response but none-the-less, it was decided to state that if a member did not return the ballot, it would be considered a vote of YES in favor of the special assessment... Im not sure I agree with this premise.... What say you?

2) One home-owner has spooked some members of the BOD because he has threatened legal action against the board if we don't fight the developer and "protect the value of his home". I said "Bring it on!" but the other members of the board are worried.... Whaddya think?

3) Our CC&Rs are pretty specific about what you can have a Special Assessment for and legal defense is not one of them. The BOD believes it has the authority to levee just about any Special Assessment they want to as long as they can get Super Majority approval. Any input??

Thanks a ton in advance for your insight!

Doug
GlenL
(Ohio)

Posts:5491


05/22/2008 5:46 AM  
That's as absurd as considering a non-returned ballot as a no. How do you prove that everyone actually got a ballot? Do you send them out certified return receipt? In these economic times I don't see H/O's willingly voting to assess themselves more so if you get the word out you will likely get an avalanche of ballots being returned with a resounding NO!

I do not believe taking money from reserves to pay the attorney for this is proper, the money can be loaned from the reserves but should be repaid with interest. As far as doing a SA with a super majority, it depends on exactly how your documents are written and any applicable state law on the matter.

Studies show that 5 out of 4 people have problems with fractions
BruceF1
(Connecticut)

Posts:2535


05/22/2008 6:45 AM  
Doug,

I would like to ask, in the first place, is a donation from your reserves to put into a legal fund even legal? Many states have strict rules on what reserve funds can be used for, and many mortgage companies may take a dim view of such action which could have a negative effect on the ability of a buyer to obtain a mortgage should one of your homeowners be trying to sell. Reserve funds are supposed to be for long-term maintenance or repair of common elements, like replacing roofs, repaving roads and parking lots, etc.
You might be able to borrow from your reserve account, but you'd have to replace it.

As to your other questions, here’s my opinion:

1.) Absence of a vote is not a "yes" vote, nor is it a "no" vote. If your municipality has a budget referendum and you don't go and vote, is your lack of a vote counted as a yes vote? If that were true, just about every municipal budget in the country would pass on the first attempt, because historically, fewer than half of the registered voters in any town or city ever go out to vote on such issues. According to accepted parliamentary practice, an abstention (lack of a vote) is not counted as either a yes or a no vote.

Now, what is the EFFECT of an abstention (lack of a vote)? That's another matter. It depends on how your governing documents are worded as to what is required, and it depends on how the vote is put to the members. In any event, though, you must meet the quorum requirements. Also, whether voting by mail (absentee ballot) is even allowed depends on your governing documents and state law. If absentee ballots are not specifically authorized, then you can't do it that way; you would have to call a special meeting. Then, you need to have a quorum. If you don't meet the quorum, then you can't have a vote on the issue. Keep in mind, that whatever your board decides to do, it had better be in strict compliance with your state laws, your CCRs, and other governing documents, or it will likely be overturned by a court. And, when it comes down to a special assessment, there are going to be homeowners who are going to be unhappy and may well decide to take the association to court. The board will then find itself fighting more than one legal battle.

2.) I never think it’s wise to issue a dare. That tends to anger some people even more and only adds fuel to the fire, and they may just take you up on it. You may not always be happy with the results. You then have only yourself to blame. I think it’s best just to remind the homeowner that the choice of what to do depends not on a single person, but on what the majority of homeowners feel should be done.

3.) If your CCRs limit what special assessments can be for, then you have to abide by them. As I said in #1, if your board doesn’t “go by the book” in whatever it does, it runs the risk of having the decision overturned by a court. That would be a waste of your time and money. Our CCRs permit our board to levy a special assessment for any reason whatsoever, and as long as it does not exceed 15% of the annual budget, no homeowner vote is required. However, if it is over 15%, a homeowner vote is required. I can tell you this, though; if we levied a special assessment that the majority of homeowners didn’t agree with, you’d see 5 new faces at the board table in very short order.
SusanW1
(Michigan)

Posts:5202


05/22/2008 6:54 AM  
Tell that fellow who is threatening the Board if they won't "protect" his investment to go jump in the lake.

Your Board has NO power to prevent a landowner from developing his/her land. This battle is going to be fought at the local municipal (building and land permit useage) commission meetings. There you can state your "case" The issue will be the zoning.

I am concerned that your Board has an unreasonable sense of "power" if it thinks it can stop a developer from doing his thing. In the meantime, the lawyer is the only one who will benefit.

DougL2
(Washington)

Posts:2


05/22/2008 7:27 AM  
Hello all,

Thanks so far to those that have replied. Excellent insight and advice. It may be time to pay for a legal opinion - this was suggested by an HOA member and the BOD deflected the suggestion.

To clarify, I didn't tell the homeowner in Question 2 to "Bring in on" (I'm way too introverted to do that in public and wouldn't show him that disrespect) I told the other BOD members to let the member "Bring it on". This was to support my absolute belief that we as a BOD cannot be found legally liable for property value retention in the face of this fight with a developer.

In your NOA, if you require a Super Majority participation or approval for any decisions, how do you get your members out to vote??????

I look forward to input from more readers.

Thanks again!

Doug
DwightT
(Idaho)

Posts:664


05/22/2008 7:41 AM  
To expand on Bruce's comments a little, typically the effect of a non-vote is a NO vote. An initiative should be worded as a yes/no question: "Shall the HOA pass a special assessment for a legal fund..." In Doug's case, 2/3 of the homeowners must vote in the affirmative in order for the initiative to pass. Until that 2/3 super-majority has been reached, the initiative does not pass. If a homeowner does not send in a vote, it is not an affirmative vote. Thus it has the effect of a no vote.

However, as long as 100% of those eligible have not voted (and any specified voting period is still open), those who want to get the measure to pass can go talk to the people who have not voted yet and try to get them to vote in favor of the measure.

Those opposed to the measure can also try to convince the non-voters to vote against the measure. If enough "No" votes are cast to prevent the 2/3 "Yes" requirement from being met, then the measure fails. IE: in Doug's case, if 1/3 + 1 homeowners have voted "No", then the 2/3 super-majority cannot be achieved.
BruceF1
(Connecticut)

Posts:2535


05/22/2008 8:07 AM  
Dwight's comment is correct in this case becase vor the measure to pass requires a 2/3 super majority of ALL members.

However, Dwight, I think the use of the word "typically" is too strong. The effect of an abstention (not voting) can be either no effect at all (not counted) or a no vote. It depends on the wording of the voting requirements; that is, whether the required super majority is among ALL members (as in this case), or if is only among the number of votes that are actually cast (which is the parlimentary default rule).
DwightT
(Idaho)

Posts:664


05/22/2008 8:28 AM  
Posted By BruceF1 on 05/22/2008 8:07 AM
However, Dwight, I think the use of the word "typically" is too strong.



Sheesh. I threw in the "typically" to soften my statement . Without it I would have been saying that the effect of a non-vote is always a No vote, and I know that isn't correct.
BrianB
(California)

Posts:2820


05/22/2008 11:52 AM  
congratulations! by utilizing negative response mailings (and voting) you have entered into the same field of play as telemarketers, columbia house/bmc, and cell phone marketers. You are in proud company!

only a few more suspect tactics, and your HOA could enter the halls of our politicians!

(I agree with you, it's slimy and unethical to do "voting" this way.)
RogerB
(Colorado)

Posts:5047


05/22/2008 12:31 PM  
We recommend you be able to provide hard copy proof of the homeowners approval whenever there is a challenge to an amendment to the Declaration. This means being able to provide homeowner's signatures approving. It does not mean a voice vote nor absence of disapproval.
DonnaS
(Tennessee)

Posts:5671


05/22/2008 6:35 PM  


Doug,
I wonder about your Reserve fund. Is it a general fund that you can dip into it and pay legal bills from it? Our Reserve Statutes do not allow Reserves to be used except for their intended purposes and they are specifically used for capital repair and replacement, not to pay for a lawyer. If I was a member of your association, I would have fought that to my death.

Now the member who has spooked other members with his worry over his property values, he is way too paranoid and his solution to pour more money into fighting the Developer is never going to work. Has he found out how much money the Developer has already sunk into this proposed project? I would bet that it is more than your association is willing to "special assess" your members to try and scare him away. Trust me on this one--IT WON'T HAPPEN!!

The special assessment needing a 2/3rds vote would suprise me greatly if it passed for a legal fund. Spend the money more wisely and build a tall concrete or stucco fence around the property involved.

Any non returned vote would be considered a "YES" vote? Who came up with that brainstorm? If the vote letter has that written on it, I would follow up on that and get the Board removed. That , I have never heard of it being done that way.
GlenL
(Ohio)

Posts:5491


05/23/2008 2:51 AM  
Posted By DonnaS on 05/22/2008 6:35 PM

Any non returned vote would be considered a "YES" vote? Who came up with that brainstorm? If the vote letter has that written on it, I would follow up on that and get the Board removed. That , I have never heard of it being done that way.



Donna we had a BOD that tried something similar before I moved in here. They wanted to let a neighboring Association to use our amenities for a nominal fee. So they sent a ballot to everyone with the notation that all ballots unreturned by x date would be considered that the H/O was giving the BOD their proxy to vote as they saw fit. Using this method they passed the agreement, got it signed and sealed and in place. Thankfully it only lasted six months or so before the original developer of the other Association declared bankruptcy and stopped paying which voided the agreement before we had to take our BOD to court over it.

Studies show that 5 out of 4 people have problems with fractions
StacyC1


Posts:0


06/12/2008 6:22 AM  
Just to clarify ~ a non-response to ballot can never be considered a Yes vote.
The Board I am on is getting prepared to hold a special meeting to amend the CRR. They are under the impression that the no response can be a vote "for the board". This didn't sound right to me.

Last time we had a proxy vote we took them door to door and told them that by signing they are basically turning their vote over to the Board. I couldn't find "where" on the form it actually said this, but that is what the people were told. Was that legal?

It is just so hard to get a quarum and to get anything done without waisting the time of those that are involved. Is there a better way?
BrianB
(California)

Posts:2820


06/12/2008 7:25 AM  
Stacy, when you sign a proxy, you are giving your RIGHT to vote to another person. the proxy should clearly state who that person is, either by name (Stacy Jones) or singular title (current chairman of the board). It should not be blank, or generic (board member), it must be specific.

It could be your board is passing out proxies with the authority going to them (president) already noted on the form. the owner signs, returns, and the president gets another vote to cast.
However, the owner can make their own proxies, and designate whomever they desire, it just needs to be similar in format, contain their name clearly, and who they give authority to clearly, their signature, etc..
RogerB
(Colorado)

Posts:5047


06/12/2008 8:13 AM  
Stacy,
If the amendment to the CC&Rs is challenged the HOA will need to provide proof of the required number of homeowners approvals. I would not count 'no response' and proxies unless they provided a notorized copy of the homeowner giving them power of attorney. I believe proxies are a valuable means of achieving a quorum at a members meeting and can be used for MEMBERS voting. Meanwhile, a percentage of ALL HOMEOWNERS is required to approve an amendment to the CC&Rs.
KirkW1
(Texas)

Posts:1665


06/12/2008 1:09 PM  
Doug,

The way you get the super majority to vote is to get people knocking on doors. And the leader should be the one demanding the HOA take action.

But before you put huge sums of money into legal, there are better and cheaper ways to go about it. You start with the Zoning Commission. Get out and collect signatures on a petition. And then follow it up with as many people in the room as you can muster. If the place can't hold all the angry people, then the message will be heard. You want to double your efforts going into City Council.

Now understand that if this proposed development fits current zoning requirements, spending money to fight a legal battle is likely to end up just spending huge sums of money. In fact, the developer may well look to force your side to fork up for his legal fees. And if you are in Texas, he will likely win them as well. And if your HOA supported some fund, then your HOA can end up on the hook. (Monies can and will be tracked.)

Hopefully the good news is that you carry insurance should someone sue the board for lack of action. But be sure your insurance will cover you should the developer win the battle to develop and then turn to recover his costs.
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