NC HOA proxy question

Our board refused to allow a non-member to vote a valid proxy for a homeowner. Our bylaws do not limit the exercise of a proxy to members but the president is claiming that only members can participate. I'm an attorney, but don't deal with this area of law. I've found blog post type articles that indicate that unless specified in the bylaws, one need not be a member to exercise a proxy for a member, but I can't find the authority to back it up. And, the argument that the president is making is not right because the participant is the person who signed the proxy.

Is there anyone here who is more versed in the actual case and statutory law who can send me in the right direction to back up that the board is full of it? And, is the AG the one to whom such a matter would be taken? The homeowner obviously is the injured party here but there's no real showing of monetary damages - but we're a 1963 community so it sounds like this is a violation of the NC Nonprofit Corporations Act.

Thanks!

Per (a), Non-Profit Statute below is limited only by the HOA docs. Per (b), appointment is effective when received by an authorized person. No restriction on who can be chosen anywhere in statute - but wording in (f) is odd because it says the corp is "entitled" to accept, but not that corp "must" accept a proxy.

§ 55A-7-24. Proxies.
(a) Unless the articles of incorporation or bylaws prohibit or limit proxy voting, a member may vote in person or by proxy. A member may appoint one or more proxies to vote or otherwise act for the member by signing an appointment form, either personally or by the member's attorney-in-fact. Without limiting G.S. 55A-1-70, an appointment in the form of an electronic record that bears the member's electronic signature and that may be directly reproduced in paper form by an automated process shall be deemed a valid appointment form within the meaning of this section. In addition, if and to the extent permitted by the nonprofit corporation, a member may appoint one or more proxies by any kind of telephonic transmission, even if not accompanied by written communication, under circumstances or together with information from which the nonprofit corporation can reasonably assume that the appointment was made or authorized by the member.
(b) An appointment of a proxy is effective when received by the secretary or other officer or agent authorized to tabulate votes. An appointment is valid for 11 months unless a different period is expressly provided in the appointment form.
(c) An appointment of a proxy is revocable by the member unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest. An appointment made irrevocable under this subsection shall be revocable when the interest with which it is coupled is extinguished. A transferee for value of an interest subject to an irrevocable appointment may revoke the appointment if he did not have actual knowledge of its irrevocability.
(d) The death or incapacity of the member appointing a proxy does not affect the right of the corporation to accept the proxy's authority unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises authority under the appointment.
(e) A revocable appointment of a proxy is revoked by the person appointing the proxy:
(1) Attending any meeting and voting in person; or
(2) Signing and delivering to the secretary or other officer or agent authorized to tabulate proxy votes either a writing stating that the appointment of the proxy is revoked or a subsequent appointment form.
(f) Subject to G.S. 55A-7-27 and to any express limitation on the proxy's authority appearing on the face of the appointment form, a corporation is entitled to accept the proxy's vote or other action as that of the member making the appointment. (1955, c. 1230; 1985 (Reg. Sess., 1986), c. 801, s. 35; 1993, c. 398, s. 1; 1999-139, s. 1; 2008-37, s. 6.)

47c-3 (I think) addresses the right to refuse a proxy, and its' based on a good faith belief that the signature is not genuine, or the person granting the proxy is not a member. It protects a board that makes such a refusal in good faith, but does the same thing in that it never addresses the flip side - in that it never says explicitly "these are the only circumstances under which they can be refused."

If I were dealing with someone who had any respect for someone knowing about the law, it would be easy enough to say "show me the basis in law you are using for denying the proxy. Oh, you can't, can you?" But his tactic is apparently "I'm going to cobble together 5 various statements."

Here was his justification for the denial. ("He" refers to the person holding the proxy, who is not a member).

(1) He was not a property owner and therefore not a member of the Association.

(2) It was a meeting of the members of the Association.

(3) To participate in the meeting (e.g., voting, making motions, asking questions) you had to be a member of the Association.

(4) There is nothing in the Bylaws authorizing a Association member to assign her right to vote to a non-member.

********
Here is the relevant section of our bylaws.

*Article II*: *Section 4. *_*Proxies:*_Any Certificate Holder may
exercise his vote by proxy. Such proxy, to be valid, shall be in
writing, signed by the Certificate Holder, and filed with the
Corporate Secretary/Administrator prior to the meeting where it is
used. However, no individual shall hold or exercise more than five
(5) proxies.

What I'm getting stuck on is how I show him his argument is garbage and that absent a limitation, a homeowner can d*mn well assign her proxy to anyone she wants to. I.e., that the default is permissive assignment, not limitations on that power.

That's what I've been trying to do - unfortunately I don't have access to West or Lexis or anything like that. Was hoping someone might know off the top of their head and be able to send me in the right direction; I've already spent a couple of hours kind of randomly going down rabbit holes so was optimistic someone on here had dealt with a similar issue and could simplify it.

Good point about the abuse of unfettered discretion.

These are exactly the same sites I've been looking at, and the same statutes. I just can't find the precise gotcha - "such and such says you have to take it absent a limitation in the bylaws"

Julie,

Proxy is basically a limited power of attorney. The proxy representative can be anyone the member believes is competent to act on the members behalf and cast a vote for them at the meeting.

See:

Proxy Voting article from parli.com (a parliamentary organization). From that article is the following:

In a Guide for Voting, it states that “The word proxy has two meanings. One meaning is the power of attorney given to another person to act in one’s stead. The other meaning designates the person who holds the power of attorney.

My suggestion would be to give them choices:

a) The Board needs to allow the designated proxy representative to attend the meeting

b) The Board needs to seek an opinion from the Associations attorney concerning the validity of proxy representation being akin to limited power of attorney and any requirements to allow them to attend the meeting an cast a vote on behalf of the member once the proper notification has been delivered of the representation to the Association.

c) The Board, by refusing to allow a members proxy representative to vote, risks having the entire election invalidated. (the choice will be if you want to bear the expense of making such a challenge in the courts).

d) Pay an attorney to write a letter on the members behalf to the Association concerning proxy representation.

Here are some additional resources:

Proxy from Nolo.com

Robert's Rules on Absentee Voting from Roberts Rules for Dummies

Just remember that there may be a time limit to challenge elections.
If there is, it would be within the applicable State statues.

Crystal,

That's an interesting jump, that the person is an attorney.

Depending on someones experiences, learning the legal language isn't that difficult. I picked up a lot of it from my military experience, being the executor of my mothers estate, dealing with a couple of legal actions and being involved with the Association.

As for Julie being the member, I took the expectation that she was, perhaps, the spouse of a member who wasn't considered a member herself (perhaps because the name isn't on the deed).

Tim, my only real stake in this personally is general interest in not seeing people have their rights denied, and the whole "they came for the X and I was not X so I said nothing, and then they came for me and there was nobody left." If board members will do this now, next time it *might* by my proxy, or it might be something they're doing incorrectly that does directly affect me. Because I am an attorney (whether or not whats her face believes it), I have some inroads into this to be able to help other members out. And I'm between major work projects right now, I have investigators in my family, and the more I dig into this the more rotten it gets. I enjoy this type of thing intellectually, and I might be able to right something that was done wrong. I almost wish that I were the homeowner, except because I'm not, there are more people in the group of "people who are not going to let this slide." I also am NOT an attorney who is *representing* the homeowner as a client. My point in that was that I'm not starting at zero, I've looked at the NC Gen Stat, and there's no need to use layman-speak with me.

I think the fact that nobody here has been able to point easily to a specific statute or case that affirmatively and explicitly shows that the limitation is not permissible under the bylaws as written shows that I'm not just being lazy and "asking someone to do my job" or overlooking something that I could have easily found. Lawyers work collaboratively and bounce ideas off each other all of the time. I had a friend who, before he retired, would frequently ask me about "what do you think about such and such defense."

The two members whose proxies were denied were neighbors, but not of mine. They were in a different district with different board members elected.

I'm torn between being irate at having my veracity challenged, and just being amused at the suggestion, much like one would be amused at a small child who insists there is a monster hiding in the closet. (Not at you, at the previous poster).

JulieL9 (North Carolina) :

As to the ( ? voodoo ? ) restriction on whom a property owner can designate - "member only' proxy donnee or recipient - did you also search for a "member" definition within the governance documents ?

If only owners of record on title could be selected as proxy-donnees ('Proxies') then presumably otherwise mentally sound resident spouses or partners could not be. Could mortgagees/chargees executing a pre-emptive clause within a registered loan security document, be similarly impaired ?

These would seem to be serious impairments of fundamental property owners'/ investors' rights where merely conjured up without a lawful express enactment being bought into. Would it pass a reasonableness test ?

You might also look for a line of North Carolina condo/HOA judgments that require HOA/condo owners' rights to be construed less restrictively rather than adding restrictions if there is ambiguity.

Some of the posters here have brought such forward from other states eg Larry B13's Arizona Court of Appeal decision Dreamland v Raimey 2010. http://caselaw.findlaw.com/az-court-of-appeals/1519074.html.

At justia.com a search for 'proxy choice denied' raises over 5000 returns ( but none for me where linked to condo nor HOA). There may not be lots of examples of such an unusual restriction being dared.

Maybe there are some good reasons ? As shrieked in my own jurisdiction : " Aren't proxies great ! no eyes and no ears "

How long should lawyers/auditors/ADR professionals/others ? keep banging their heads against the wall if the rest of the Board is totally incorrigible ?

μη δωτε το αγιον τοις κυσιν μηδε βαλητε τους μαργαριτας
υμων εμπροσθεν των χοιρων μηποτε καταπατησουσιν αυτους
εν τοις ποσιν αυτων και στραφεντες ρηξωσιν υμας

“Give not that which is holy unto the dogs, neither cast ye your pearls before swine, lest they trample them under their feet, and turn again and rend you” Matthew 7:6

Linda,

Thanks for the back story. It's always a shame when personality conflicts affect how Associations are ran. A good reason not to have that one individual reelected.

Now the question you may want answered is if those two votes would have changed the outcome.
If they would, you may want to encourage the Board to hold a new election.
If they would not, take the issue as a lesson learned and move on.

Crystal,
Can you read? Did you see the part where I said I am a licensed attorney BUT NOT IN PRACTICE? Or the part where I said I am NOT REPRESENTING THE HOMEOWNER AS HER ATTORNEY? As such, none of your arguments have any bearing on anything. Do you get that being a licensed attorney is NOT the same thing as going to work every day at a law office and seeing/representing clients? Do I need to post a link for you about alternative careers for lawyers, other than the practice of law?

By the way, I have ALSO called my attorney friends. It was not an appropriate time of day to do so when I first posted.

Again, if it was any of your business I'd be happy to give you my bar number so you can look me up, but your inability to use logic suggests you are a little unhinged.

Since you clearly don't understand how the actual practice of law works, that people collaborate, or that if a friend said "oh there was a recent case on such and such" and that for a legal client the representing attorney would then go research that statute himself or herself rather than just tell the client "someone on a message board said. . . "

My actual involvement in this case is NOT in the capacity of being an attorney.

Please just be quiet if you're going to continue to accuse me of lying. Did it ever occur to you either that none of my lawyer friends have had this exact issue come up before? Or do you think that all lawyers know all law in all areas? You don't even make sense.

Is there a way to block a forum member from commenting further on your post in here? Good lord.

If you can't grasp the logic of why an attorney (or other party who has been through this before) would be more likely to know the specific statute or case than a randomly selected law school classmate of mine, I can't help you, and will defer to the adage about arguing from fools, because of what might not be obvious to those at a distance.

Bob, I think all of them have accepted it now. I am not sure whether they will continue to allow everyone to exercise proxies, or will decide that the bylaws should be amended - and really either is fine, as long as they are being followed consistently. While I think it logically makes sense to allow me to designate a non-member to vote my proxy, when and if the bylaws say differently that will be the rule.

I'll check back in with anything more specific that I find out that might be of use to anyone else, as long as I don't end up having to unsubscribe the thread based on being accused of being a liar. Again, the only reason I mentioned being an attorney was to indicate that I wasn't starting from scratch, had done the research I could, and didn't need the "for dummies" version. I readily admit that I in fact have no capacity in this area of law. I wouldn't take on a client with these issues for just that reason. (And, rather than advising a client that I "read something on the internet," I'd indicate "you might be able to bring a claim for such and such; I can't handle it myself, so I'd recommend you consult a real estate attorney who does handle HOA claims.")

For the record, this is essentially what I've done here; I've told the homeowner that I have some indication she may be able to try to get the election invalidated, and that if she's interested in doing that, she should find an attorney who handles these kinds of cases and get their advice since they know better than I do. The problem is that people with absolutely zero legal knowledge go off half cocked about things, like trying to claim they can sue for defamation if someone is mean to them on Facebook, or not understanding that the First Amendment only applies to government regulation, and I'm trying to serve as a reality check for the homeowner rather than having her threaten a lawsuit that has no basis, or wasting the time of another attorney if she doesn't have anything she can do.

I appreciate the contributions and advice from everyone that has tried to help. I found this forum in the course of trying to do the legal research I could for case law without having a paid subscription to LexisNexis. For what it's worth, I work in legal education and preparing students for the bar exam, which means I have a fairly wide range of knowledge on the big issues and how most states handle them. I'm not a specialist in any field, much less in the one at issue here.

Julie L9 N Carolina : thank you for the postings & for service to the profession via legal ed.

This site, respectfully, has a special value for those whose jurisdictions (like my own) which chose to legally put enormous restraints on NON-condominium property owners associations.

My own legislature gives big powers instead to corporations legally registered under its condominium statute. This includes leaping ahead of & stomping first mortgagees/first chargees.

Florida style MRTA battles are almost unknown in my jurisdiction, arguably because of the comparative legal vulnerability of non-condo owners associations. Good learning scenario at this site.

Crystal B (Maine):


With greatest respect, it makes eminent sense to post such a question here in the poster's circumstance.

There may be few or no judgments nor law provisions directly about CCRs attempting to deny or disqualify from an owner/member/stakeholder/shareholder, that owner's discretionary choice of a particular individual (or corporate entity) merely on the basis of : "Is the Proxy recipient (donnee) an owner of record also ?" Sounds more like property & civil rights issue.

I spent an unsuccessful half hour looking for that issue at the public sites. Maybe the most bizarre proxy challenges get sucked up by victims after a meeting, or fail to leap the hurdle of legal costs & risks. Or maybe common sense prevails.

It makes sense to ask such here whatever her professional status, but identifying her background was a risk that few others will make.

Judge Judy also shrieks "I DON'T CARE what your state laws provide !" ( ie "I am a big star of an entertainment ADR show)

I understand completely, no harm, no foul here!

I'm sure you have gotten your answer by now, Julie. I'm not a lawyer either, but have studied the NC Statutes for several years regarding my Condo HOA, incorporated in 1972. First, it's not unusual at all for an old HOA, or one under the control of a difficult to replace Board, to be totally unfamiliar with the law, and does things as they "have always been done," even though they are incorrect. NC statute 47C, The Condominium Act, and NC statute 55A, the NC Not for profit act, both address proxies and the fact that a non-member or attorney in fact can be assigned an owner's proxy.

Now, 2 things to consider. First, both Statutes take precedence over an HOA's Bylaws. Sometimes they will defer to the HOA's Declarations, so the first place to start is the HOA's Declarations then their Bylaws. Both the statutes have sections that defer to HOA's Bylaws and or Declarations, and the sections will state that in the beginning. Both statutes begin with an "Applicability section," that will tell you what sections apply to what. 47C, the Condominium Act applies to condo formed after 10/1/86, but have sections that apply to earlier HOA's.

Lawfirmcarolinas.com is an NC firm representing HOA's but has a tremendous amount of info for the owners. Under their resources tab, you'll find 47C and they have bolden the sections that apply to older HOA's. a very nice feature.