Professional Manager not following NC HOA LAW

Phyliss

Proxies must be allowed by state articles of incorporation (most do allow them, including SC) and allowed (or at least not prohibited) by your association docs. If allowed by both, then they can be used.

Proxies represent the owners wishes so it is not like "strangers" are voting in your association.

Proxies can be directed or general.

A Directed Proxy says (orders) the proxy holder to vote as directed by the proxy giver (owner). As an example you will vote NO on the proposed budget.

General says you can vote any way you desire to vote. As an example they could vote YES or NO on the proposed budget.

Proxies usually count toward a quorum regardless of the type of proxy.

Your docs will clarify what constitutes a quorum (amount of homeowners needed) and it can vary depending on what is being voted on. I doubt it could be a few as 3 but if that is possible then yes, two proxy holders could vote one way and the 3rd owner whom is actually there vote another way and the proxy holders win but that is an extreme example.

Hope this helps.

DARN LACK OF EDIT FUNCTION.
Re-posted for the purpose of cleaning up the appearance of links as the initial posting gave some confusion.

Phyllis,

I am not a North Carolina HOA Real Estate law professional or professor or one in any other State. I did do some research on the issue and this is what I found:

Is it possible that you are looking at an old version of the law?

Doing an internet search led me to the North Carolina General Assembly website. Using the links there, I was able to locate NC Condominium Act. From there, I located § 47C‑3‑103. Executive board members and officers. Item (c) of that statute says [emphasis addedd]:

Within 30 days after adoption of any proposed budget for the condominium, the executive board shall provide a summary of the budget to all the unit owners, and shall set a date for a meeting of the unit owners to consider ratification of the budget not less than 14 nor more than 30 days after mailing of the summary. There shall be no requirement that a quorum be present at the meeting. The budget is ratified unless at that meeting a majority of all the unit owners or any larger vote specified in the declaration rejects the budget. In the event the proposed budget is rejected, the periodic budget last ratified shall be continued until such time as the unit owners ratify a subsequent budget proposed by the executive board.

Now the statute does defer to your CC&Rs if there is a larger number of votes required (more than the majority of votes cast) to reject the budget. Therefore, you need to verify what vote is needed by reading your CC&Rs.

As for the use of proxies, that is addressed in paragraph (b) of § 47C‑3‑110:

(b) Votes allocated to a unit may be cast pursuant to a proxy duly executed by a unit owner. If a unit is owned by more than one person, each owner of the unit may vote or register protest to the casting of votes by the other owners of the unit through a duly executed proxy. A unit owner may not revoke a proxy given pursuant to this section except by written notice of revocation delivered to the person presiding over a meeting of the association. A proxy is void if it is not dated. A proxy terminates one year after its date, unless it specifies a shorter term.

Based on this research, it appears that your management company was proving information based on the current version of the law.

Hope this helps,

Tim

PhyllisC

I just googled NC Statute 47C-3-103 (c) and this is what I found:

(c) Within 30 days after adoption of any proposed budget for the condominium, the executive board shall provide a summary of the budget to all the unit owners, and shall set a date for a meeting of the unit owners to consider ratification of the budget not less than 14 nor more than 30 days after mailing of the summary.

There shall be no requirement that a quorum be present at the meeting.

The budget is ratified unless at that meeting a majority of ALL the unit owners or any larger vote specified in the declaration rejects the budget.

In the event the proposed budget is rejected, the periodic budget last ratified shall be continued until such time as the unit owners ratify a subsequent budget proposed by the executive board.

ALSO:
§ 47C-3-110. Voting; proxies.
(b) Votes allocated to a unit may be cast pursuant to a proxy duly executed by a unit owner.

§ 47C-3-109. Quorums.
(a) Unless the bylaws provide otherwise, a quorum is deemed present throughout any meeting of the association if persons entitled to cast twenty percent (20%) of the votes which may be cast for election of the executive board are present in person or by proxy at the beginning of the meeting.
-------------------

As I read the above, re “the proposed budget” there is:

1. No requirement that a quorum be present at the meeting (to consider the budget only).

2. A majority of all the unit owners, not just those owners present at the meeting, must vote to reject the Budget in order for the Budget to be rejected.

3. At any Association Owners Meeting (regardless of why called), votes allocated to a unit may be cast pursuant to a proxy

So in my opinion, I am not an attorney, what you have been doing since 2006 is mostly correct, in that there would have to be a MAJORITY VOTE of ALL Owners, physically present (or represented by proxy) voting against the Budget for the Budget to be rejected.

However, if a vote is required at the Association meeting on another subject, or perhaps to vote for Directors, then for that vote, it is a majority vote of only those Owners who are physically in attendance, or represented by Proxy, at a Meeting at which there is a Quorum of at least twenty percent.

Phyllis - A QUESTION: The upcoming meeting you mentioned – is that an Owners Association Meeting for the sole purpose of ratifying the Budget?

==========================================================

What are you saying?

Are you saying AT THAT MEETING means they must be there in order to ratify? Most are saying they can only reject if a majority are there and do so, thus if no majority thee, it is approved.

You ssy previous managers have ALWAYS done it this way does not mean they were correct and/or the law has changed.

You say Proxies are NOT allowed at the Budget Ratification Meeting. I would have to see more specific doc wording on this. If it does not specifically say proxies are not allowed at this meeting, then they might well be allowed. Same as can and must in docs mean two different things.

Hope this helps.

However, Per NC § 47C‑3‑110 (see link posted earlier in thread), "Votes allocated to a unit may be cast pursuant to a proxy duly executed by a unit owner."

Therefore, Per law, the member may vote at that meeting in person or by proxy.

Lets summarize the issue from the original posting.

1) Proxies Phyllis is of the understanding that for votes rejecting a budget, proxies are not allowed.

NC Corporate law authorizes proxies for all matters but defers to the governing documents.
NC Condominium law authorizes proxies for all matters. It does not defer control to the governing documents.

In my opinion, based on the condominium law (cited earlier in the thread), proxies are allowed and any section of the governing documents prohibiting them would be overturned if challenged in court.

2) Number of votes required to reject a budget Phyllis is of the understanding that this takes 51% of the membership.

NC Condominium law specifies a simple majority but defers to the governing documents if they require a greater number. Per Phyllis, her governing documents specify 51%. Therefore, the percentage required is 51%.

As for what the 51% is of (votes cast or entire membership) Phyllis is of the understanding that it is the entire membership. The MC for Phyllis's Association is of the understanding that it is of the votes cast.

NC Condominium law specifies "all the unit owners." In re-reading the statute, I am changing my earlier opinion. That section of the statute clearly uses the phrase "all the unit owners" earlier to mean the entire membership when it specifies whom the budget is to be mailed to. Therefore, it is logical to conclude that that phrased used elsewhere in the same paragraph would mean the same thing. Based on this logic, I am now of the opinion that a rejection would require 51% of the membership.

Summarizing these conclusions would indicate that the following procedure should be used:

1) Board adopts a budget.
2) Board sets meeting date to be no less than 14 days and no more than 30 days from mailing of meeting notice.
3) Within 30 days of adoption, Board sends meeting notice and summary of budget to the membership.
4) Meeting is held with following notations:
a) No quorum is required.
b) Members may use proxies.
5) Vote is held and budget is rejected if 51% of the entire membership votes to reject it.

Seems like Phyllis was incorrect on the use of proxies and the MC was incorrect on the number of votes needed to reject.

Since there is a difference of opinion, the Board may want to seek a legal opinion on the issue from their Association attorney.

Again, the quote from the law is: "The budget is ratified unless at that meeting a majority of all the unit owners or any larger vote specified in the declaration rejects the budget.” "...AT THAT MEETING a majority of all the unit owners... rejects the budget". I read this to mean that the majority of the unit owners must go to the meeting and cast their votes to reject at the meeting. This implies that if proxies are sent in, they would not be counted in the tally of owner attendees, or in the tally of the votes cast to reject. It's not that proxies are not allowed, I mis-wrote on that, but that they would not be counted. An owner has to physically appear at the meeting in order to cast his vote. That is my understanding. This was run through lawyers in the past before the very first budget ratification meeting was held and that is why out HOA has always handled budget ratification meetings this way. However, those opinions and old records are no longer available. That is why I was hoping a legal professional would respond. Then I could send it to the BOD which would encourage them to get a new one from the current HOA law firm. I really appreciate everyone responding to my problem, though. Thanks -PC

First off there are no one posting on here from the legal profession. Even if there was they would not give legal advice. Too subjective to a lawsuit and bad legal advice. Each state and HOA is different.

The translation your giving this seems to be geared to what you want it to say. A meeting is not a majority of homeowners. It is more like the majority of the owners who decided to attend.

What is your overall issue and how do you want it resolved? The HOA budget is never set in stone. It is just a guideline to try to stay within the lines. A HOA is to spend the money it collects on the costs it takes it to operate. Hence why it is classified as a non profit. It is not a non profit in terms of charity. Maybe and understanding of budgets would help.

Phyliss is saying:

I do not accept nor like the answers given me here so I will continue to shop for answers until I get the answers I like.

I say, enjoy the shopping.

Phyllis,

If you need a professional legal opinion, the internet is not the place to get one.
You need to seek out a local attorney.

Phyllis,

You also came here seeking advice. Granted, you did specify you wanted advice from someone in the legal profession but had you read the "how we give advice" post pinned on the first page, you would know that this isn't what we do.

All of us have served on Boards or Committees of their Association and we have given you the benefit of that experience in our opinions and advice. By serving in these positions, most of us have had the need to read and understand the statutes. More often than not, collectively we have a pretty good understanding on how to interpret them.

You wrote "that proxy holders cannot be counted in the attendance tally, nor vote to reject the budget, if a vote is held." Per my understanding, you appear to base this solely on your interpretation that when the statute specifies that "AT THAT MEETING a majority of all the unit owners. . . " requires members to show in person and not by proxy.

It appears that the general ensconces by members of this forum is that based on § 47C‑3‑110 of the NC Condominium act, cited earlier in the thread, which says "Votes allocated to a unit may be cast pursuant to a proxy duly executed by a unit owner." This statute did not limit when proxies could be used. Therefore, failure to allow proxies to be used at the budget may result in a violation of this statute.

Phyllis, if you serve on the Board of Directors, simply make a motion that the board consult with the Association attorney.
If you are not on the Board of Directors, ask to be given time to address the board on this issue.

If you are truly concerned, find a local attorney and seek a legal opinion. This will likely cost you between $300-$600.

Kelly

Most of us agree with you, but not Phyliss. She continues to shop for an answer she likes.

Happens quite often on this chat. One comes here looking for validation of their "thinking/beliefs" versus the correct/proper answer.

I hope she enjoys her shopping trip.

Phyllis,

Thank you for sharing the attorney's opinion.

You're much better off starting a new thread Marjorie. In your new post, also state your issue a little more clearly. Are you asking your current MC for the previous MC's records?