OHIO Declarant Voting Rights After Turnover Date

Started by AndrewH3 • 14 replies • 2182 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

AndrewH3 (Ohio)
Posts: 10

Posted:

Is the declarant (developer) of an Ohio condominium conversion who still owns (or controls)a majority of units years past the statutory turnover date allowed to simply vote each of their units to keep complete control of the condominium, HOA and finances? In some states the declarant cannot vote at all after the statutory turnover, or gets one vote regardless of how many units they own. What is the law in Ohio?

TimB4 (Tennessee)
Posts: 21,059

Posted:

Andrew,

For Ohio law, I'll defer to Glen.

I do have a question. What do your governing documents specify about voting?

AndrewH3 (Ohio)
Posts: 10

Posted:

The HOA docs do not address the voting rights of the Declarant after the statutory turnover - they do sync with a 3 year, 2 month time frame for turnover as required by Ohio statute. It is not an expandable condo so there is no extention of the statutory turnover.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Do the governing documents specify that each owner gets one vote per lot?

Do the governing documents specify that there are more than one class of membership and, if so, what is the difference between the classes on voting rights?

AndrewH3 (Ohio)
Posts: 10

Posted:

One vote per unit and only one class of voting rights. I know that the statute precludes the deeclarant from voting for the required unit owner 3rd seat after 25% sales - but unclear on declarant voting rights after full turnover is required.

AndrewH3 (Ohio)
Posts: 10

Posted:

The declaration calls for a secret ballot for all vacancies with the "persons receiving the larget number of votes being elected. There shall be no cumulative voting." Not sure what that means (cumulative voting). When the turnover occurs does every unit vote for 3 new members - and can the declarant with say 51% say I have a majority so I am appointing all three board seats?

GlenL (Ohio)
Posts: 5,491

Posted:

Cumulative voting means you can cast all three of your votes for one candidate instead of one vote for three different candidates. I know that this isn't what you want to hear but the declarant is entitled to vote every unit he owns. If he owns 51% then yes he can set the Board as long as he follows the criteria set forth in the CC&R's. How many units must he sell to get him out of the majority?
Your can read Ohio's Condo laws here: http://codes.ohio.gov/orc/5311

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

AndrewH3 (Ohio)
Posts: 10

Posted:

Got my answer - developer voting their units three times is the prohibited "cumulative voting".

AndrewH3 (Ohio)
Posts: 10

Posted:

So if a declarant owns 5 units, and there are three board seats open, the declarant can vote for each of the three seats 5 times? A property manager told me the opposite, that with a restriction on cummulative voting they could only vote five times total (not in the case of three board seats 15 votes). The issue with the developer is broader in that he has hired himself as the manager, is not maintaining the building, there are looming capital expenditures (its a conversion so old roof, old elevators, rotted exterior trim and bad paint), but he is not disclosing any reserves or even providing a normal financial statement that shows income at all, or expenses broken in to categories, expenses are difficult to determine what they are for - a chunk appears as initials that correspond to either him or his wife ....... I am concerned that I will need to make a pretty major disclosure if I throw my hands up and go to sell my unit.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Andrew,

Based on your postings, I don't think the issue is cumulative voting. I believe the issue is that there are two classes of membership and the developer gets more votes per lot.

Typically, within the Articles of Incorporation and/or the Bylaws, there is language creating two classes of membership. One class for the Owners and one class for the Developer.

Typically, there is language that specifies the owners get one vote per Lot but the Developer gets multiple votes per lot.

AndrewH3 (Ohio)
Posts: 10

Posted:

All one class. Every unit owner, including declarant to they extent they own unit(s), gets a vote, no cumulative voting.

DaveD3 (Michigan)
Posts: 796

Posted:

Suppose there is one board position open and 5 people running. Each owner is entitled to one vote per unit, developer included. So votes are cast, ONE PER UNIT, and the person with the most votes wins. So if the developer owns 11 units, they can cast 11 votes for their guy. 11 units x 1 vote/unit = 11 votes.

Suppose there are 3 open spots and the same 5 people running. This is like going to the polls and voting for a board of regents for a university. It might say something like "Select not more than 3" with a list of 5 candidates.
The voting representative from each unit gets to cast THREE votes. But you can't vote 3x for the same individual (that would be cumulative). So you can cast one vote each for candidates A, C, and D. Same for the developer. If he owns 11 lots, the best he can do is give 3 different candidates 11 votes each. He can't cast 33 votes for the same candidate. This isn't cumulative voting, but is bloc-voting. In the end, his guys are sure to win.

The other alternative is that you have a truly proportional vote. That is, there are 3 open spots and 5 candidates. Each unit gets ONE vote, and the top 3 vote-recipients are elected. So the developer has to pick & choose. If he holds 11 out of 20 units, he can split his vote 3, 3, & 4 among the candidates. Or he can pick his favorite 2 and vote 5 & 6 in favor of them. In the end, only ONE candidate is sure to get on the board through his vote. So if A, B, and C are his candidates, the rest of the units can split their 9 votes among D & E. If they split them D=5 and E=4, and the developer splits his 3, 3, & 4, the rest of the assn gets 2 seats. This is the best method to use in order to ensure that the board is not 100% controlled by the developer.

AndrewH3 (Ohio)
Posts: 10

Posted:

Perfect explanation - thank you so much. I get it now.

AndrewH3 (Ohio)
Posts: 10

Posted:

Interesting. An Ohio condo litigator told me that the issue has been litigated, and the declarant is not allowed to have a seat on the HOA, vote on HOA board seats, or handle the finances/management of the HOA after statutory turnover and there is president through court cases (they litigated one of them). The declarant is allowed to vote on other matters as a unit owner. Will be interesting to prove that up. It did not make sense to me that the declarant would be prohibited from voting for a unit owner board seat at the 25% sales stage, but then have the ability to appoint the entire board after the statutory turnover. This makes much more sense to me now.

AndrewH3 (Ohio)
Posts: 10

Posted:

"precident" not president

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here