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Transition To Owners

Started by JohnC46 • 29 replies • 1945 views

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JohnC46 (South Carolina)
Posts: 14,265
Posted:
We have begun disussing transitioning our standalone homes HOA control from the Declarant to the Homeowners. We are fortunate that we have a good relationship with our declarant and we (the Appointed BOD) have been reviewing our CC&R's and Bylaws so he can make changes (without homeowner approval) prior to the transition.

One area we are discussing is making the use of Proxies clear and easy to follow.

Are there any particular areas some feel are holding back their association from being upfront and above board. Please no rants or gory details. Please make the suggestions more a general overview like make it easy, simple, and clear for all to understand and use Proxies. Not that we will adopt all suggestions but........LOL

Thanks.

TimB4 (Tennessee)
Posts: 21,059
Posted:
That's simple.

..... by members present, in person or by proxy, .......

However, I'm not sure that this is what you were looking for.
Typically laws concerning proxies are within corporate laws. You may want to check there.

VA has a whole section on proxies: VA 13.1-847. Proxies

Hope this helps,

Tim
CarolR11 (Colorado)
Posts: 2,563
Posted:
I assume that members are not counted as present in SC if they vote by absentee ballot. Is that correct John?

So, if they may only vote in person or by proxy, Tim's wording makes sense. The specifics of exactly how to vote by proxy would be in instructions that are mailed to the Members with their ballots, wouldn't they? That's how we do it here. I don't think that Member are likely to refer to the bylaws when they want to know how to vote by proxy.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Tim and Carol

Thanks. I think we can easily cover the proxy issue if we are wanting to be open and candid.

I am looking for other tips like if you or anyone could quickly and easily change your docs to make things easy and more open, what would you like to have?

Thanks.
LarryB13 (Arizona)
Posts: 4,099
Posted:
John,

From all the posts on this forum, the subject of proxies seems to be one of the bigger problems.

In AZ, the legislature solved the problem by prohibiting proxies entirely for HOA's and condos. Associations are required by law to accept mail-in ballots and in-person ballots in any vote or election.

Make life easy on yourselves and future members. Ditch the proxies entirely and accept mail-in ballots at any election where a member may vote in person.
LarryB13 (Arizona)
Posts: 4,099
Posted:
John,

The biggest problem with CC&R's is that the amendment process is usually so difficult as to make amendment impossible. (That's why you are doing it now, isn't it?) No one but owners should have a say in whether to amend. Lenders and the declarant's first cousin should have no say. Even the BOD should not be able to veto an amendment. Set the percentage of approvals to a reasonable level. At least 50% but no more than 75%.

You might want to consider limiting the voting rights of non-resident owners to prevent investors from ruining your community. Consider association approval for rentals and collecting assessments from tenants.

Clarify any ambiguous language in the existing CC&R's. For example, "no two-story houses" should be changed to "no home where any part of the structure is more than 30 feet higher than the lowest point on the street immediately in front of said home" or something like that.

Good luck. You are fortunate to have a good relationship with your declarant.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Larry

Good points on mail-in ballots and non-resident owner voting. I think the non-resident not voting could hurt some accociations and we have few rentals, but again thatbnk. Good suggestions.
CarolR11 (Colorado)
Posts: 2,563
Posted:
Yes, accept mail-in ballots as counted towards quorum, which also is how CA solved the proxy problem a few years ago. Proxy voting is still permitted, but no one votes that way anymore. And we're deleting proxy voting form our bylaws.

Yes, do specify a lower threshold for changing your CC&Rs. Make it lower yet for your bylaws. Our restated bylaws call for a majority vote of a quorum of H/O's, which in our HOA is 25%, to amend the bylaws.

John, do you have a separate governing document for rules & regulations? or are they all in your CC&Rs? Or? Do you have a fine schedule?

It's important, IMO, to protect H/O's as much as possible. Your current board may be worthy folks, but Boards down the line may not be. Make sure the Board doesn't have too much power.

To make sure that your new Bylaws & CC&Rs comply with state statutes you probably need an HOA attorney to assist you. It may not be legal in SC, for example, to limit the voting power of landlords.

Our current CC&Rs don't permit us to have in-house management, i.e., we must hire a MC. We'll change that so that we can hire in house mgmt. if we wish.

More later . . .
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Carol

Thanks.

Personally I do not believe in less then 50% being able to change CC$R's and Bylaws. I know less makes it easier but I am concerned it open up the door for the minority to control the majority. That said, the transition BOD will be discussing it.

I agree a set fining schedule and amount but would that not fall/be better under Rules and Regulations

Thanks.
CarolR11 (Colorado)
Posts: 2,563
Posted:
Yes, John, our fine schedule and procedures are in our Rules & Regulations, which is one of our gov. docs. In Calif, they can be changed by the board voting on proposed changes and then sending the proposed change(s) to Owners for a 30-day comment period. After that, and taking into account Owners' comments (if any!), the Board meets to approve the changes, or not. So they're much easier to change than our CC&Rs and Bylaws though, as you know, the R&R must not conflict with the CC&Rs & bylaws.

I've thought of other things that I think should be in the bylaws, but you may already have so many of them that I'm not going to spend the time. Your board, for example, may want to consider whether you want a board vacancy to be filled until the next annual election or until the term expires. We opted for the former.

We also gave ourselves (current board) & future boards the option to reduce the board to 5 from its current 7 directors. Etc., ect.

Mainly it seems to me that your board should try to clean up all ambiguities and also build in lots of flexibility. An ambiguity in our CC&Rs, for instance, is that it's not crystal clear where Owner responsibility for maintenance stops, and HOA responsibility begins. But this is probably easier to handle in your detached homes than in our high rise condo towers.

If you have time, your board might want to consider getting H/O feedback about their opinions--sort of seek their advice.

I see your point about wanting at least 50% to approve CC&R and bylaw amendments in the future, but I don't agree that less gives "the minority" too much control. If Members refuse to vote, their voices won't be heard and its their loss. In addition, their silence could be interpreted as as agreement with whatever the topic is.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Carol

Thanks for your replies. I am making a list, checking it twice, trying to find out who has been naughty or nice.....wait....I digress........LOL

Again, thanks. I am saving all the posts and making a list for discussion.

Thankfully we do not have to deal with parking spaces.....

JohnC46 (South Carolina)
Posts: 14,265
Posted:
All

I realize I might be sounding like how can we work with the declarant to force feed changes/modifications before turnover (which I am) but the real confusions I see are when things are not simple nor real life understood. Now is the easiest time to change but I mean to make them open and easy for all to participate.

As an example:

Proxies, mail in ballots, etc. concerning BOD Elections.

1. Mailed in ballots were cast before they knew of whom was nominated from the floor so mailed in votes cannot go to anyone nominated from the floor.

2. Proxies dictating one is to vote for me as dictated (Directed Proxy????) says they cannot vote for those nominated from the floor.

3. Proxies dictating one can vote for me for anyone they so desire (Undirected Proxy????) to vote for could allow them to vote for those nominated from the floor.

I see some saying each of the above is the way to do it but how do (or can) we simply and easily cover all bases.

The more I type, the more I believe I might be overly thinking this.....LOL

Thanks

JohnC46 (South Carolina)
Posts: 14,265
Posted:
ADD ON

You ask, why is he hungup on proxies? Allow me to answer my own question...LOL

I am in my 5th association and I have never seen a required physical quorum to "change" anything. All of the "changes" I have seen (CC&R's, Bylaws, recalls, BOD elections, etc.) came as a result of "votes cast" by those not there.

This is why I consider the votes of "those not there" to be critical.

Thanks

CarolR11 (Colorado)
Posts: 2,563
Posted:
As both Larry & I have noted, your board, if permitted by SC statutes, can allow mail-in (absentee) ballots to count towards quorum. H/O's who vote this way do not have to be physically present at a meeting. Our last 5 annual elections have been settled by H/Os not physically present. We would not have had a quorum of H/O's otherwise.

Or do I misunderstand your point about proxies--I have no experience with them.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By JohnC46 on 06/22/2012 4:59 PM

1. Mailed in ballots were cast before they knew of whom was nominated from the floor so mailed in votes cannot go to anyone nominated from the floor.

2. Proxies dictating one is to vote for me as dictated (Directed Proxy????) says they cannot vote for those nominated from the floor.

3. Proxies dictating one can vote for me for anyone they so desire (Undirected Proxy????) to vote for could allow them to vote for those nominated from the floor.


This is an easy fix. The nomination process should be open to all (with or without nominating committees) and should close before ballots are mailed to members. If someone wants to wait until the meeting to make a nomination from the floor he limits himself to only the attendees who have not yet voted.
CarolR11 (Colorado)
Posts: 2,563
Posted:
Sorry, John, I did miss your comments of why proxies matter to you. As it seems to be entirely about nominations from the floor. I think that Larry's advice makes sense. It's hard for me to imagine that there'd be enough voting support from proxy-holders to elect someone who's nominated from the floor.

But, again, I have no experience with this topic.

On another topic, and if you have common area amenities that are worth suspending, place that in your bylaws in cases of delinquencies and rules violation non-compliance. It, at least gives the Board that option. In CA, there must be proper notice for a hearing to suspend such privileges.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Larry

I understand what you are saying and perhaps I am overthinking it.

Thanks

JohnC46 (South Carolina)
Posts: 14,265
Posted:
Carol

I understand your suggestion on amenity limits. A good idea, but we have no amenities.....LOL

Please all, keep the suggestions coming. They are all good and can help all of us even if not applicable in a specific case.

Thanks.

JeanI (Louisiana)
Posts: 112
Posted:
We did away with proxy voting and substituted absentee ballots as per California. See: Sterling-davis Act for details. JI
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Jean

Thanks, I will.
CarolR11 (Colorado)
Posts: 2,563
Posted:
Here are some pretty good reasons for eliminating proxy voting if SC permits it:

ELIMINATION OF PROXIES
Associations may amend their articles and/or bylaws to eliminate proxy voting altogether. Corp. Code §7613(a). Arguments in favor of eliminating proxies include:

1. Fraudulent Signatures. Proxy forms may be signed by using unverifiable signatures. By statute, signatures for proxies now include "typewriting, telegraphic transmission, or otherwise." Civil Code §1363.03(d)(1)(B).

2. Fraudulent Voting. The required two-page format for proxies creates the potential for election fraud. Since there is no way to verify that proxyholders actually vote their ballots according to the owner's instructions, the proxyholder can change an owner's vote.

RECOMMENDATION: Since ballots count toward quorum (Civil Code §1363.03(b)), proxies are no longer needed for that purpose. To simplify elections, associations should also consider eliminating cumulative voting and quorum requirements for the election of directors.

Read more: Elimination of Proxies http://www.davis-stirling.com/ElectionCentral/ElectionLaws/ElectionProcedures/5BallotsProxies/EliminationofProxies/tabid/2016/Default.aspx#ixzz1ykO0ZQ6S from Davis-Stirling.com by Adams Kessler PLC.
------------------

You, know, John? You may want your bylaws to state who may serve on the board. There have been a large number of queries on this forum, e.g., can the the spouse of the owner of record, serve, etc.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Carol

Thanks.

I am copying all that everyone has said, we will be discussing all.

In SC an HOA (one consisting of standalone homes such as ours) can pretty well do it anyway they so desire as long as it stays within The SC Articles of Incorporation. We are not burdened by the myriad of rules/laws that FL and CA have, especially the Davis-Sterling Act. Seems Davis-Sterling covers so many things that I expect they have something to say about someone sneezing and getting germs on the ballot.......LOL

I think mail-in ballots (like absentee ballots) are a good idea, especially when many owners do not primarily live there. While not an issue here (over 95% of our homes are owner occupied), it bears paying attention to.

Which also raises the question of how many "might/do" not apply here things do we want to cover? Our present Bylaws are 5, double sided (10 single) pages long. They do not need to be like many in FL and CA as in ad nauseam and make for litigation.

Again, thanks for the posts. Please keep them coming. All will be considered.

JohnC46 (South Carolina)
Posts: 14,265
Posted:
Carole

******You may want your bylaws to state who may serve on the board. There have been a large number of queries on this forum, e.g., can the the spouse of the owner of record, serve, etc.*******

As of now ours say that only lot owners are eligible to vote and serve on the BOD and when the lot is owned by more then one person, the owners (regardless of how many to me) must designate one owner who is eligible to vote and/or run for election.

I would say as vague as ours are, being a spouse but your name not on the deed as an owner does not qualify you to do anything in this HOA.....except maybe try and keep the owner happy...or not...their choice.....LOL

Thanks for that reminder. On my list for discussion.

CarolR11 (Colorado)
Posts: 2,563
Posted:
Our Board should give final approval of our restated bylaws tomorrow night, so I've just reviewed them again--they're 19 sgl. spaced pages, but there's lots of white space. Our HOA attorney advised moving some materials to the bylaws from our CC&Rs.

The biggest influence of Davis-Sterling (part of CA Civil Code) has to do with elections and with proper notice to HOA members of all kinds of meetings One 2-page item moved from our CC&Rs is Member Inspection of Books & Records and all that Members may inspect are listed. Don't know if this is a good idea, but it may be cleaner to list only the records that Members may NOT inspect, which is CA are very few.

Most of our bylaws, like yours, comply with state Corps. Code and involve directors and definitions of the types of board meetings that directors may call. Included here is that the president or any two directors other than the prez may call a meeting. Given the troubles that another post details, when only the prez may call a board meeting, if the prez refuses, the rest of the board is stuck. You really cannot trust that every prez will be a decent person--sometimes the office does nasty things to individuals.

Directors' Powers & Duties also were moved from our CC&Rs to the bylaws, and the ability of the board to delegate to committees and to management also is in this section
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Carol

I most certainly appreciate your help/comments and they will all be discussed.

That said, what with you being in CA and Davis-Sterling, I would feel someone is "legally" able to crawl up my whatever in CA (based on Davis-Sterling) no mstter what I did without kissing me first......LOL

CarolR11 (Colorado)
Posts: 2,563
Posted:
(Had to end my last post as the print on my screen became huge! Has to do with a new email program I have, and I don't know how to make the print small again.)

Our old bylaws were virtually silent on committees (we have 5) so there're details now drawing mainly from Corps. Code.

Officers' titles & duties are spelled out also from Corps. Code. The prez, for example, may not simultaneously serve as treasurer or secretary. This has to do with checking signing--our bylaws require two officers' signatures on checks over a certain amount.

While there, I think, plenty of HOA boards in CA that don't like the aspect of Davis-Sterling re: the board taking action only in duly noticed meetings, except for emergencies, I don't think there are many complaints about other aspects. I especially like the protections that it provides to HOA members from abusive and ignorant boards. Sure, our current board comprises good people, but we had the opposite situation in '05 & '06.

Thursday evening of this week, I'm going to hear Judge Sterling speak at an educational symposium along with one of the attorneys from davis-sterling.com. It's being held at a winery (of course!).
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Carol

I would not hide any records of any type from the membership per se. While I do not think every detail has to be made public, I would not say or do something in private then I should not be expected to be held accountable for in public.

I am more interested in protecting other people then myself. As an example. If a fellow homeowner complains about another homeowner, I would say we should take this issue to executive session to investigate and take action but until said time we should protect both homeowners identity.

Real life example. Once had an issue in a member owned association (not homeowners but a fraternal association run/organized much like a homeowners association) where an employee complained to the BOD about another employee's salary. We went into Executive Session and asked the complainer to voice their reasoning. At the end of the session we explained to the complainer why one employee was of more value to us and why that employee earned more. We also told the complainer that they were important to us and hoped they accepted our reasoning and we really wanted them to stay, but the final decision was theirs. The complainer stayed.

Personally, if I am going to complain about you (example only....not you personally...LOL) then I would shout it publically to the world. Let the chips fall where they will but that is really not the way to do it.

I once wrote an anonymous letter to a fellow homeowner saying that they were leaving their dog outside all day, every day with no protection from the elements and if they continued, I would report them to ASPCA. They soon built a dog house and started keeping the dog inside more. Had I needed to, I would have formally complained to the ASPCA.

Bottom line is I see little to no reason to hide anything. I think once the hiding begins, it is nothing but the first crack in the dam.

As I read my own reply, it feels like I am picking on you. By no means am I and I respect/value your opinions.

Now I would certainly put in a cost for photo copying/delivering records, as I do not want the CCO (Chief Complaining Officer) to cost us money......LOL

JohnC46 (South Carolina)
Posts: 14,265
Posted:
Carol

A retired FBI agent once told me the thing he learned in his 30 years at the FBI was that when push come to shove the real criminals were the politicians, judges, and lawyers.

Be sure you have a few glasses of wine and smile baby...smile...LOL
CarolR11 (Colorado)
Posts: 2,563
Posted:
Sorry, John, I lost you on your public vs. private response--not sure what you're referring to?
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Carol

My last response about the FBI agent was in response to your post about going to a reception for Judge Sterling..of Davis-Sterrling..at a winery

"""""""A retired FBI agent once told me the thing he learned in his 30 years at the FBI was that when push come to shove the real criminals were the politicians, judges, and lawyers."""""""

I say again...be sure you have a few glasses of wine and smile baby...smile.

If it were me, I might accuse him/her (Sterling) of doing more harm then good......LOL

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