Voting, Proxies, Absentee Ballots, Arizona Law, and Fair Voting

This general subject area is a difficult one and should be well debated. The purpose of this post is to initiate dialogue and a healthy exchange of views. The discussion below attempts to frame the issues as I understand them. Some of the discussion repeats comments I have made in other posts. I am sure that others have important thoughts to add. Observations and even "horror cases" of unfair voting could make important contributions to this dialogue. The experience from the recent Arizona law that prohibits proxies and requires absentee ballots would be an important addition. Collectively, we may be able to define how fair voting can be achieved.

The reality in most owners associations is that attendance at annual and special members' meetings is typically small, thus creating the possibility of the actions being dominated by a well-organized minority that may attend the meeting if the only voting allowed is in person. Consequently, some form of participating — much broader than just voting — without attending is required.

Municipal law provides for absentee ballots, but there is generally no meeting to debate and shape the motions/resolutions before voting. Consequently, the challenge in owners associations with members' meetings is greater. Moreover, there is no independent press that can provide public reporting and debate (letters to the editor, etc.) of the issues and considerations.

The proxy is intended to provide an alternate way for a member to participate in the meeting and vote by having someone act in your stead. That is well in theory, but in practice is prone to abuse if general proxies are allowed. A board member or a group of members may collect general proxies (act for me as you see fit) from a number of members and in effect control the meeting even though those soliciting the general proxies have not disclosed how the general proxies might be used. Further, some boards actively solicit the proxies using the official communications from the association. Because the abuses are very difficult to control and because there are other methods for providing absentee participation, my view is that general proxies should be prohibited.

Directed proxies provide the opportunity to participate in the meeting by the instructions in the directed proxy. Such might include a statement or argument regarding a motion that the member directs be read at the meeting — just as that member could attend and make the statement. A directed proxy might also direct that a motion be made to amend (or any other proper motion) and reasons/arguments therefor regarding a motion/resolution on the agenda. It seems to me that there is value in requiring that directed proxies be authorized with legally-correct forms provided with the notice of a members' meeting for members to use.

Another abuse concerns the information provided to members by the board. One of the roles of the board is to administer the procedural matters for members' meetings. The law should state that such administration shall be conducted in a neutral and even-handed manner. The board should be required to provide full and accurate information on each motion/resolution, and even certify that the information is full and accurate. That includes no omission of information that, if omitted, could make the information provided misleading or deceptive. Explanations are part of full and accurate information, but advocacy and recommendations on how to vote are not. There in no independent press to provide alternate points of view. Votes of the members can certainly be improperly influenced by a board communication that advocates one side of an issue and intentionally omits information that the board considers unfavorable. As in municipal law, officials can explain a referendum but cannot advocate or recommend.

Then there is the issue of being fully informed before voting. Perhaps one of the more difficult parts is getting a fair vote — particularly for associations that have poor attendance at members' meetings. A statement from an attorney that I believe captures the fairness issue is, "It is a basic principle of corporate law that a vote or proxy is only valid, and beyond attack, if sufficient information is given to the member casting such a vote or issuing such a proxy to enable that member to make a fully informed decision before voting." Each member must provided with the opportunity to make an informed decision, which can be made by directed proxy for those unable to attend the meeting. But the member must be fully informed BEFORE voting. That is the challenge.

The debate that occurs at the members' meeting may add to the information. The purpose of the debate and consideration at the meeting is (1) to provide each member the opportunity to argue his/her point of view and persuade others, and (2) to listen to the arguments of others and possibly be persuaded by those arguments. But those members not attending the meeting don't hear those arguments unless (a) voting is postponed to a second meeting or date, and (b) the new information from the meeting is summarized, added to the prior information, and both included in a notice a second meeting (or date) for the purpose limited to voting. It probably doesn't matter whether or not the voting is by directed proxy at a meeting for voting only, or by a closing date by absentee ballot.

I look forward to reading your ideas for achieving fair voting, and observations regarding unfair voting practices.

Brian, how are you able to assess a fee like that? Is it in your Bylaws?

DonN

Very interesting post, I too have thought and though hard as too what would be fair to me (as a board member) and to my friends and neighbors as homeowner ( as I once was).

I like BrianB idea of the using a particular dollar amount, the problem I see with this, (at least in our sub-division) is that we have a difficult enough time just collecting yearly assessments, let alone any additional money for the homeowner to be able to vote is very unlikely, here.

I feel that only the homeowners that attend (annual meetings) vote should count! Not 2/3 or 25% of eligible voters. That’s one of the most ridiculous things I’ve heard since being a board member, this year.

Same thing goes for meeting quorum. You can reduce quorum which I feel will in turn come to hurt the community later. “If” there is a way to keep quorum at what ever percentage( 75% or 2/3) but this should be 1st of eligible voters and secondly this should be constituted by only members present.

As I have said before “if you’re not present or you don’t have someone at the meeting to represent you (proxy) then your vote should not count” It’s very simple to me. Why reduce quorum %?

I would be willing to keep our current quorum percentage at 25% “if” it was 25% of eligible, present members. It wouldn’t even matter to me “if” we had to increase the percentage, but at least it would be of eligible votes either by being present or by proxy (if legal)

If I’m wrong please tell me otherwise. I see it like this. You have earned the right to vote and to use the amenities, when you pay your assessments and any fines you may have accumulated. I feel it is a privilege not a right for your vote to count. “If” you are not present or you have not submitted a proxy then your vote shouldn’t count!

I have been there done that as many have said! I know many of you may have also dealt with not successfully establishing quorum to even vote.

Because you can’t attain quorum, so the board has spent money to find out! This is beyond frustrating to me and the other board memebers, not to mention the homeowners that have submitted proxies or have attended, and are eligible to vote.

Explain to me how that doesn’t sound ridiculous? HMMMMMMM Anyone?

I have a pretty good feeling that many of you would agree with this purposely. I would assume many of you have thought of this same kind of thing.

Please, explain to me as to why it couldn’t be done? Or why I shouldn’t, “if” I can?

Great post.

I’m anxious to read what other posts. There ideas and suggestions.

Chuck W.

Don, thanks for your well reasoned, thought provoking post. With regard to AZ statute prohibiting proxies I think this is a bad idea unless absentee ballots are allowed to achieve a quorum. Otherwise, it can be extremely difficult to ever have a members meeting!

With regard to other voting I believe that all members should have the right to vote but it is their responsibility to exercise that right. Not every motion can be discussed, and certainly not fully with all comments, prior to a meeting. Therefore, I think the only actions which need to have input from all members are amendments to the Declaration and Special assessments.

I think election of Directors can be by absentee ballot when there are sufficient candidates identified in time to use that method. However, realistically some HOAs require arm twisting at the annual meeting to get enough candidates to fill the open positions on the Board.

Absentee Amendments can also be used, if desired, to amend Bylaws.
I believe most other items should be voted by those represented at the members meetings. If the Board uses their power to "plays games" in order to maintain control it is the responsibility of the members to decide whether or not to replace them.

"Absentee Amendments can also be used, if desired, to amend Bylaws." should read
Absentee "BALLOTS" can also be used, if desired, to amend Bylaws.

But again I would prefer this either be voted on by those members who have sufficient interest to attend a duly called meeting; or if after discussion at the meeting there are significant changes to the proposed amendments it is done later by ballot voting without another meeting.

i don't think there is a practical difference between directed proxies and absentee ballots, except in arizona, one is legal, the other not.

What if you did the reverse? Everyone that attends the annual meeting and casts a vote gets a $50-$100 dues credit (or enough to matter to people in your community). Maybe also give a half credit for an absentee ballot. Go ahead and budget the $50-$100/per household in your dues calculation. The excess would go to some other budget item or reserves.

You could partially justify the rebate by saying member attendance saves the HOA money and allows the HOA to continue operations without extra meetings, extra mailings, paying someone to go door to door, etc.

By the way, that's how our tax code works: money back for doing what the government likes us to do, like buying a home or renovating inner cities.

What a great posting this is. Having seen the proxy abuse and fraud, I'm a big advocate of reform here. Undirected proxies are limited to 5, but what is to prevent the proxy solicitor from just getting a quick signature from the solictor's neighbor. Then the soliciting neighbor completes the proxy as if it's a mail-in. Sure... folks shouldn't sign documents that are not completely filled-out, but if you knew the solicitor, you might just do it in order to get him/her out of your doorway or foyer.

It's a real shame that no-one participates in the annual election voting process and it usually takes two meetings in order to reduce the quorum requirements to where we can actually have an election.

I didn't see Brian's answer as to whether this refund/incentive process is in the CCR's, but I've love to know more and figure out if it's legal.

Sooner or later, I feel like on-line secure based voting solutions make take over as part of the solution, but it's trust issue (I know). Some of the very, very large HOA's in our area are using them, but I'm can't get any feedback from anyone involved. I would like to try anything to make the process were it's easier for the residents to vote and provide some incentive to do so. It's silly that less than 10% of the residents are voting.

Barbara,

You might want to start a new post for this question and clarify it a little. This subject of this posting is voting and proxies. Thanks.

Since I posted the question about motions at an annual meeting that started the original thread a week ago, I have become reasonably satisfied in my own mind that I was correct in believing that the actions by the members were invalid, although not for the reasons that I originally supposed. The real problem was, as DonN suggested, was that the entire membership were not notified and did not have a chance to vote. Without this notification I believe that these motions do not qualify as “…other business as may properly come before the meeting.”

While it seems obvious from reading a few posts that some associations fail miserably in even holding the election of Board members, I believe our election process is an example of how business is properly brought before the members meeting. A nominations committee is established six months in advance of the meeting. They set and publish a schedule for the process, mail nomination forms to all members, post announcements on bulletin boards, the web page, our newsletter, and then go out and twist arms. About three months out nominations are closed, candidate pictures are taken, background data collected, and this information is published in the media mentioned above. A candidates brunch open to all residents is held and questions from the floor are solicited. At the annual meeting, the candidates are again allowed 5 minutes to address the members. The vote is by secret ballot and members are encouraged to mail them in before the meeting but they may carry them in as well. Either way they must register (one person per residence) as they enter. If the ballot was mailed it is returned to the resident until that point during the meeting when they are collected for a final count. This gives people who come to listen a chance to change their minds. I know for sure that some of those five minute speeches did change some votes. Absentee ballots do count towards a quorum and towards the final tally. One sixth of total residents constitutes a quorum for us. Only ballots are allowed to count towards a vote and they are either mailed in a sealed envelop or turned in at the meeting. There are no proxies although I believe we would allow a sealed ballot that was brought to the meeting by a resident’s neighbor if there was a valid (e.g., illness) reason.

If an election held in this manner is an example of a transaction that is properly brought before the meeting then I believe it should serve as a model for other business as well. A ballot question requiring a vote should be submitted to the Board in sufficient time to be posted to the entire membership. To be accepted on the ballot the submission must be accompanied by a petition from a specified percentage of the entire membership. I think that the correct percentage is the same as that required by a member to call a special meeting (one-sixth). The submission should also include the question in the exact form it is to be placed on the ballot and any background information the submitter wishes to be posted with it. A review by the HOA attorney may also be appropriate.

The Board then has the obligation to provide this information to all of the members via all of the media available to it. I am quite certain that our Board would, if at all possible, call a town meeting to discuss the pros and cons. While I agree with DonN that the Board must be scrupulous in ensuring that all sides of the question are presented fairly, I strongly disagree that it must remain neutral. If the Board has a position for or against the question it has an obligation to the Community to let that opinion be known. They are elected to run the HOA, not referee it. Hopefully, the mechanics of voting will allow the ballot question to be sent out at the same time as the election ballot.

Any motions or questions raised at the members meeting itself, do not properly come before the meeting. This does not mean that they should be disallowed, but only that voting must be deferred until all residents are properly notified. The discussion itself may be useful to the members present, and hopefully described by the HOA media for the benefit of those who are not. If the person making the motion wishes to pursue it he or she may do so by raising a petition for a special meeting. The same notification and voting procedures as described above would apply.

I read the Arizona statute and would love to have more information on the thinking that went into it. However, it appears to me that is derived from the principal that all residents must be notified and given a fair chance to votes on matters that materially effect them. I think that the processes I have outlined above are entirely consistent with this law.

Proxies are used in our annual meetings. We have a concern about proxies and quorums for by-law changes. If an amendment changes the original item which was on the proxy form, and we do not have a quorum for bylaw changes without the proxies, do we carry the item over to another meeting? This is presuming that with proxies we have a quorum for bylaw changes.

Our AZ mgmt company has distributed the ballots to all homeowners to complete and return to the mgmt company. There are a few issues ongoing and the current Board has made a decision that would effectively block a large group of residents from access to their units for a 24 hour period by a street paving project. As a prospective new Board member, I feel a duty to advise all members of this inconvenience. I've communicated my legitimate concerns about the lack of an equitable solution to the street closures, but those seem to have been ignored . Even though notices were recently provided to all members, many will feel they have no choice in the matter. As there are some members with mobility challenges, something must be done to accommodate all residents.
I would like to know if the current members who have already submitted their votes in sealed envelopes to be opened the day before the annual meeting to be held next week, to be able to submit revised ballots given the information recently disseminated. I'm wondering if a vote previously submitted, but not yet officially counted can be corrected & resubmitted to reflect the members opinions of this current Board's obvious lack of consideration for all members collectively. They may very well want to change their votes to another candidate with a greater vision and expressed concern for the community.
As the Board is voted in by the members, they work for ALL the members. The annual meeting and voting should be postponed. Thoughts?

You're much better off, Scott, starting a new thread if you'd like replies. In addition, it helps if you be as succinct as possible and break your prose up into shorter paragraphs.