Owners Making Motions at Annual Meeting

Yes our Bylaws state that a board member can be removed by a majority of members. However the PCA (Planned Community Act)trumps the Bylaws. No only is the PCA the governing statute for LOAs, the association adopted the entire document as part of our governing documents. (The Bylaws are being updated at this time to agree with this statute.) Again the PCA is on the level of our Covenants (an umbrella contract). So remember the language of the PCA: "Notwithstanding any provision of the declaration or bylaws to the contrary, the lot owners by a majority vote of all persons present..etc etc." So a majority of members (including proxies) at a meeting can vote to remove a director.

Someone posted that they needed to see the pertinent PCA language. See below the language from my first posting. I am reading through the responses now. Thanks everyone!

47F-3-103. Executive board members and officers.
(b) The executive board may not act unilaterally on behalf of the association to amend the declaration (G.S. 47F-2-117), to terminate the planned community (G.S. 47F-2-118), or to elect members of the executive board or determine the qualifications, powers and duties, or terms of office of executive board members (G.S. 47F-3-103(e)), but the executive board may unilaterally fill vacancies in its membership for the unexpired portion of any term. Notwithstanding any provision of the declaration or bylaws to the contrary, the lot owners, by a majority vote of all persons present and entitled to vote at any meeting of the lot owners at which a quorum is present, may remove any member of the executive board with or without cause, other than a member appointed by the declarant.

§ 47F-3-108. Meetings.
(a) A meeting of the association shall be held at least once each year. Special meetings of the association may be called by the president, a majority of the executive board, or by lot owners having ten percent (10%), or any lower percentage specified in the bylaws, of the votes in the association. Not less than 10 nor more than 60 days in advance of any meeting, the secretary or other officer specified in the bylaws shall cause notice to be hand-delivered or sent prepaid by United States mail to the mailing address of each lot or to any other mailing address designated in writing by the lot owner, or sent by electronic means, including by electronic mail over the Internet, to an electronic mailing address designated in writing by the lot owner. The notice of any meeting shall state the time and place of the meeting and the items on the agenda, including the general nature of any proposed amendment to the declaration or bylaws, any budget changes, and any proposal to remove a director or officer.

Robin

My Original Post is not intended to directly discuss the situation you have been discussing in another post. It is more general in nature ala Members being allowed to make motions at the Annual Meeting.

As I understand it, Richard's reply is that any motion to be proposed needed to be on the Agenda so all know about it. This is in sync with my thinking/issue.

Some states, California being one, REQUIRES that notice be given, and that would include the subject that might be brought up.

I agree with Sheila's pragmatic approach. The issues that involve contractual or corporate documents should absolute NOT be permitted to be motioned/voted at an Owner Annual Meeting without proper statutory Notice.

This is a lesson for homeowners to stay on top of the Annual Meeting and take control before the meeting if you want to advance an issue. Too many times, owners are led to believe that the Annual Meeting is "just for" elections and voting on the budget. They do not understand the intent of the meeting is to ALSO be a statutory type of meeting that belongs to the Owner. It is also not widely encouraged for owners to think that way by Management Company.

Owners PREPARE! That means getting a current roster of owners. You can do that with an Official Records request (allow advance time for fulfillment) or what I would prefer is a download from the Property Appraisers website of all owners and addresses, which will be in a format suitable for a mass mailing. Then send the required Notice and Agenda with the proposed motion to all the owners while observing your statutory timeline. Then, everyone is on the same playing field and a Motion can be confidently proposed at the meeting.

Directors serve at the will of a majority of Owners. Their occupancy of the office does not involve issues of law or corporate documents. It is one of the very few things that owners have input and control over. Should Owners have provided advance Notice? That depends on how you want to interpret the law. My inclination is to regard the strict language of the statutes, which provide specifically for advance notices of certain types of issues. Since there is no qualification of the law referencing removal of directors at an Annual Meeting, there is nothing that has been violated, in fact.

Certainly, however, it would be best to provide advance notification. Maybe some "glitch" language is needed in the PCA would help resolve interpretation.

That makes sense to me.

@Geno - my first thought when I read about an "advisory Motion" was what the heck was that?

So I looked it up. Parlimentary procedure has two categories of Motions: Privileged (e.g. urgent matters, adjournment, recess and Subsidiary (e.g. acting upon, referring, postponing, modifying).

Nothing comes close to "advisory motion". ALL motions are formally acted upon in some manner and must be recorded in the Official Record.

All you say is true and it may seem unfair. But what does the law require of the homeowner who seeks to conduct legitimate homeowner business at a legally noticed meeting? Was the homeowner required to write to the Board x days in advance and ask that the removal be put on the Agenda? Were homeowners canvassed prior to the Annual Meeting by the board to determine if there were any matters that they would want included on the agenda or if they wanted to appoint a facilitator for their meeting? Is is fair for the board to presumptively produce an Agenda for the Member's Meeting and not include members in the construction of the Agenda? Most owners assume the Annual Meeting is "just for" elections and that the board is in charge.

Seems to me if Annual Meetings can vote budgets, conduct elections with nominations from the floor, vote on issue propositions, vote amendments to governing documents, rules, material additions to common property, elect to not Reserve funds etc that they should be able to also remove a director. I cannot see a rationale to allow some, but not all legitimate owner voting items.

The homeowners must be deemed to be in acclamation with the results of the director's removal at a properly noticed Annual Meeting if they choose not to attend either in corpus or by directed proxy, if permitted by bylaws. If they don't care to participate, then is crying foul a reasonable basis to vacate the meeting outcome?

If there is something in the law that clearly prohibits a homeowner from conducting a removal at a quorumed Annual Meeting, then I would agree that it is beyond unfair--it would be unlawful.

The nonprofit law in most states says that notice of a special meeting must include a description of the purpose for which the meeting is called...and that the notice of a meeting of members at which removal of a director is to be considered must state that the purpose, or one of the purposes, of the meeting is removal of the director.

In NC, the PCA says "The notice of any meeting shall state the time and place of the meeting and the items on the agenda, including the general nature of any proposed amendment to the declaration or bylaws, any budget changes, and any proposal to remove a director or officer."

Just sayin: if it is not in the notice of the meeting, then it is not valid.

The discussion started (and continues) to be about an internal inconsistency of the PCA. One provision addresses Officers and Directors and is very global about its intent that "regardless of any other declaration or Bylaw" that the provision will be superior to all other documents.

Does that also include itself ie. other provisions of the PCA? There might be language in there that "cures" these kinds of inconsistencies.

The second provision (internally conflicting) provides for Meetings and specifies the required annual mandatory board meeting and the notice requirements of any Special Meeting. It also provides for notice and agenda naming all items of business at ANY meeting, but only refers specifically to the one mandatory board meeting and Special Meetings and not to any other kind of meeting. Most statutes and Bylaws do contain a specific reference to the Member (or Annual) meeting so its absence from the PCA is odd.

These two provisions definately conflict with other with respect to notice and agenda. My personal interpretation is that the plain language of the Officers and Directors provision specifically states "ANY meeting at which owners form a quorum". At that Annual Meeting, the Agenda was published by the board FOR the members without inclusion or consultation. But the Annual Meeting was still a legal meeting. The provision that was violated was the failure of the Agenda to notice ALL agenda items.

Was this sufficient to vacate the outcome of the meeting? (I dunno--that one is for the Judge.)

What was the intention of the PCA writers? Which provision is "superior" in its protection of owner rights? Why didn't the Officer's and Directors provision provide for a process for members to remove directors at a quorumed meeting? Is it realistic to expect the Board to put this on an Amended Agenda and have to re-notice the Members and reset the meeting date? Members don't "do" Agendas unless the law specifically states that a matter must be on an Agenda to have standing at a meeting, and states the process of adding it to the agenda. Is there any provision compelling them to do so and what process is the owner to follow?

A strict constructionist might argue that the writer acknowledged the Agenda in Meetings and intended to not impose an Agenda requirement in its "removal of directors" law. One cannot add a meaning to a law that does not exist and it must be taken "on its face". That would be my interpretation and reasoning. Also, I believe any ambiguity should be settled in favor of the owners. ALL owners had timely notice of the meeting AND the owner attempted to post notices of a recall vote.

This is like any badly written rule; by its ambiguity, lack of internal consistency, and absence of a stated process, owners are left without a clear path to director removal at ANY meeting.

No one has said whether the Director objected to anyone about the removal. If the Recall Motion was presented to the Board for inclusion on the Agenda for the next Board meeting, would the outcome be different?

But but but...the PCA says it rules regardless what Bylaws say. And this provision specifically speaks to the conduct of meetings aka "parlimentary communication" and not substantive issues. It is saying the Robert's Rules rule unless the Bylaws specify "Business Meetings for Dummies".

Yes you are right; the OP first questioned the right of owners to make a motion to remove a director at their Annual Meeting. I am crossing over between these two threads as they are essentially about the same thing, started with owners' objection to removal of a director because an owner had no right to make a motion unless it was on an Agenda. The two provisions of the PCA were internally conflicted on this issue and raised questions.

The OP stated that she had consulted a lawyer and the lawyer said the removal was proper under the NC PCA. I happen to agree for the reasons stated here which are no doubt different than the attorney opinion.

I would like to know more about the attorney's rationale in his opinion. OP: Pretty please?

As a side issue, what, if any, is the duty of a board to inform the owners about their "rights" for their Annual Members Meeting? Most owners think it is another board meeting where they announce the results of the election and budget. This is not laid out anywhere that I know of in terms of the process of informing owners what they CAN do at their meeting. I don't think it was originally set up to be a yak-yak session.

Directors do not need to be present at an Annual Meeting though a director presence might be helpful to facilitate. The Election Committee is able to announce the results and a quorum of owners is all that is necessary to conduct further owner voting business. Ideally, the board would be included in the conversation since they are owners, especially if owners wanted to vote on a rule, bylaw or covenant amendment. If owners knew and understood this, there would possibly be more owner participation in association affairs.

Wow! Thanks for all the comments, we had a house guest so I have not been checking on this.

Gwen in particular seems to grasp this situation well as others do too. And there seems to be an interest for more information. So here goes.

The notice for the Annual Membership meeting was sent out via postal mail, as required by the PCA, approximately 25 days before the Annual meeting.

Two weeks before the Annual Membership meeting the landowner who eventually made the motion at the meeting for the director's removal posted on the community bulletin board that he would be making a motion, as allowed by the PCA, for a vote to remove a director from the board.* This landowner also requested that the director please resign prior to the meeting to save the association from going through this process. Therefore although the "official" notice sent by the Board did not include the motion for a vote to remove the director, this director was advised, well in advance of the meeting.(*This Bulletin Board is a non-official Board site which is a landowner run communication tool accessed by approximately 80% of the landowners, the Board does postings on this site regarding various topics like weather related issues, reminder of the Annual meeting, posting of Board minutes etc. The director in question is a member of this site)

There is a conflict of interest issue with this director, although he has recused himself from any discussion of the issue in question at Board meetings, the issue is often spoken about (unintentionally) with him in attendance as it is one of the major issues of or community at this time. The line between "landowner" and "director" has become blurred. His actions have resulted in something that may lead to litigation for the association, (I don't want to give specifics) has caused damage to the association's land, will need to be remedied, has already cost the association $$ consulting with professionals and methods attempting to mitigate the ongoing problem have been performed of which all landowners are aware.

At the "regular Board meeting" held approximately one week before the Annual Membership meeting the extended agenda was developed. i.e. under the heading of "Community issues" for example we itemized things like "speeding", "loose dogs" etc. The landowner who requested the removal of this director on the Community Bulletin board asked the Board to include his motion on this agenda, which the board did. This agenda was printed and distributed to all members at the Annual Membership meeting.

The director in question could not attend the meeting. He submitted a statement that was read by one of our members. Although he stated in this written statement that he would like to continue to serve our community, there was no acceptance of responsibility for the inconvenience he has caused. The landowner who made the motion stated that due to this director's actions his judgment was in question as to whether he was able to act in the best interests of the association, and should be removed from the Board.

Gwen's good question:
"I would like to know more about the attorney's rationale in his opinion."

The lawyer I spoke to at the meeting said that since the Annual meeting was a properly called meeting the landowner had the right to call for a vote to remove the director under PCA section 47-3-103 Executive Board members & Officers. This section (47-3-103) is really about controlling the board, i.e the board does not have unilateral control of the association's matters. I only included in my previous posting the last sentence of the passage (b) regarding the "right" of landowners to vote out a director with a majority vote. (I included this passage in its entirety below BTW)

I want to mention something Gwen wrote earlier and I thought, "That's It!" The Annual Membership meeting is the MEMBERS meeting. And if the members want to remove a director at a properly called meeting (that was well publicized before the meeting in a "grassroots" kind of way) they should have that right if they have a majority support as dictated by the PCA.

The other section I included in my original posting, 47F-3-108 of the PCA regarding "meetings" is about the BOARD's responsibility to the association's members regarding what the board has on its agenda, proposed amendments, budget issues, votes etc. If the Board was asking for a vote to remove a director then this information would have to be included the notice that the Board sent to the landowners. But this is not what happened here, this was a landowner initiative, not a board sanctioned "vote".

Lastly (I agree with what one of you wrote) I am not a fan of proxies either, as I think participation in person by landowners is much more desirable, but we often need them to make sure we can conduct business.

In this situation the vote for removal would have been a landslide, however one landowner, who had a number of proxies, voted against the removal of this director, and therefore his proxies voted as he directed. This particular landowner told me in private that he agreed that this person should not be a director, but he felt because the vote was not on the "generic" agenda sent out in the official Board notice of the Annual meeting he voted in the director's favor. And I know for a fact that a few of the landowners whose proxies he held would have voted for the removal of this director if they had been able to attend.

So, think about this..... The right of the people to act outside of the board's control is specifically outlined in the PCA language, "the lot owners may remove any director at a meeting etc. etc....". This is so important. Again it's like Gwen wrote, this is the MEMBERS meeting. The Board has lots of its own meetings without landowners input, but when a meeting "of the lot owners" is properly called the lot owners have some power over their destiny and shouldn't have to live with a director they do not want representing them just because the board didn't put it on "their" agenda.

Thanks again everyone for this conversation.

From the PCA 47f-3-103

(b) The executive board may not act unilaterally on behalf of the association to amend the declaration, to terminate the planned community, or to elect members of the executive board or determine the qualifications powers and duties or terms of office of the executive board members, but the executive board may unilaterally fill vacancies in its membership for the unexpired portion of any term. Notwithstanding any provision of the declaration or bylaws to the contrary, the lot owners, by a majority vote of all persons present and entitled to vote at any meeting of the lot owners at which a quorum is present, may remove any member of the executive board with or without cause, other than a member of appointed by the declarant.

Robin posted:

The lawyer I spoke to at the meeting said that since the Annual meeting was a properly called meeting the landowner had the right to call for a vote to remove the director under PCA section 47-3-103 Executive Board members & Officers. This section (47-3-103) is really about controlling the board, i.e the board does not have unilateral control of the association's matters. I only included in my previous posting the last sentence of the passage (b) regarding the "right" of landowners to vote out a director with a majority vote. (I included this passage in its entirety below BTW)

This is the gist of my thinking as well. The plain letter of the provides no details as to other actions which must be taken by the owners in advance of the meeting. Therefore, they have nothing to guide conduct and simply may remove a director at ANY quorumed meeting.

Do I think that this is proper? Without knowing the true intention of the makers of the PCA I would say NO. The Members should have proper notice of the business desired to be transacted at the meeting. As an aside, in my state, Florida, there is NO requirement that an HOA even write an agenda prior to the meeting, so the Agenda issue has many variations. If the Maker of PCA wanted a vehicle for homeowners to follow for removing a director "at any meeting"--they surely would have spelled it out.

I believe there is an inherent problem in the writing of this provision and that is the absence of clear direction to owners what they MUST DO to conduct business at THEIR ANNUAL meeting. In my cynical moments, I might say that is by design, in an effort to discourage definitive actions such as removal of directors that might otherwise take months of disputing. Owners are also not given a specific vehicle to access the board to develop other owner issues that boards ignore or do not want to deal with, such as rule changes.

In my HOA, if owners had found a way around the board's "will", a small rule change would have saved litigation costs in excess of $100,000. As it wound up, the board, for whatever reason, WANTED to litigate to prove a power point and owners were excluded from having a voice.

This kind of thing might be what the PCA wanted to address, but did so incompletely assuming (or not) that owners would know intuitively how to do it right or would be aided by the board that represents them. If I were in the community, I would vote the entire bunch of them out for ignoring their fiduciary duty of LOYALTY to the owners by permitting the director conflict of interest.

I applaud Robin's approach and getting a consultation from an attorney but also the insight she has added to her knowledge base about the Letter of the Law vs the Spirit of the Law.

@Richard: No I do not know about the specific nature of the conflict of interest as Robin did not volunteer that info. It is obvious, however, from her general description that it is a serious and ongoing issue that the director is secretive about, has damaged the association's land and is perceived to be problematic enough to involve the association in a lawsuit down the road. Removal of director does not give any immunity in a lawsuit down the road. Robin stated she did not want to be any more specific. The general description is certainly enough for me to believe that the conflict was "serious enough" to warrant removal of a director.

IMO, the BOARD should have done this by asking for that director's resignation-publicly-as the Owner tried to do two weeks before the Annual Meeting. This board does not seem to have any ..um...well, let me put in another way--they all need to go see the Wizard of Oz to get brains, heart and courage. They unnecessarily put the community through a situation that was properly their responsibility to resolve.

Robin:

The way I personally read this section (we are not attorneys) is that proxies cannot be used via this section:

47F-3-103. Executive board members and officers.
(b) The executive board may not act unilaterally on behalf of the association to amend the declaration (G.S. 47F-2-117), to terminate the planned community (G.S. 47F-2-118), or to elect members of the executive board or determine the qualifications, powers and duties, or terms of office of executive board members (G.S. 47F-3-103(e)), but the executive board may unilaterally fill vacancies in its membership for the unexpired portion of any term. Notwithstanding any provision of the declaration or bylaws to the contrary, the lot owners, by a majority vote of all persons present and entitled to vote at any meeting of the lot owners at which a quorum is present, may remove any member of the executive board with or without cause, other than a member appointed by the declarant.

Removal must be "majority vote" of all persons "present". It potentially would only be fair if others are not given notice via an agenda regarding removal that proxy votes not be utilized. This potentially would be a question for your attorney. I would contend if proxies were used then they needed to state that they were specifically given for vote to remove the director. This would insure those who gave them knew they would be voting to remove.

So after all of the posts we have two main schools of thought:

1. As the recall of a BOD Member was not on the Meeting Agenda, it could not happen.

2. Even though the recall of a BOD Member was not on the Meeting Agenda it could be Motioned from the floor and happen as it did.

We have one minor school of thought:

1 Memeber cannot make Motions at a Meeting.

Above bold same in SC.

Ask an attorney, I did.