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"majority" always means > 50%?

Started by MichaelH34 • 29 replies • 529 views

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MichaelH34 (North Carolina)
Posts: 179
Posted:
If our CCRs and the state statutes never specify any qualifier for "majority" is it always meant to mean that 51% or more of the votes have to go one way for a given item/person to win?

To be specific, we have a vote going for a budget increase in 2022.

We unfortunately gave our members 3 options and didn't go with ranked-choice voting. Yes, we're new at this and self managed. We're expecting to make mistakes and learn from them. There's one.

For discussion, our dues increase ballot has something like:

1) No increase.
2) $50/mo increase.
3) $100/mo increase.

The reason for the difference between #2 & #3 isn't particularly important other than we thought, at the time, giving the members the choice would be a good idea even though we went to no small effort to keep the increase as low as we could this first year.

We're now looking down the barrel at the possibility that we could end up with no choices getting >50% of the votes.

For those of you familiar with NC HOA law is there any wiggle room to deciding the outcome based on a plurality or are we stuck with needing a choice getting >50% of the votes or re-running this effort when/if that doesn't happen?
CathyA3 (Ohio)
Posts: 6,299
Posted:
Usually when CC&Rs say "majority" it means greater than 50%, which is the commonly understood meaning of the word. (Math lesson: 50% is not a majority. It must be at least 50 plus a fraction, no matter how small - for example, 50.000001% is a majority.) The CC&Rs will also specify whether it means a majority of the voting interests of the community or of those attending a meeting (in person and possibly also by proxy) or something else.

In cases where the CC&Rs need a super-majority such as 67% or 75%, it will say so. Usually this happens for things like amending the CC&Rs.
KerryL1 (California)
Posts: 14,550
Posted:
So....your Bylaws say a majority of Owners must vote to approve a new budget? Or is it NC law?

Agree with Cathy- a majority is any amount over 50%.
CathyA3 (Ohio)
Posts: 6,299
Posted:
Can you either limit the choices so that at least one of them has to get over 50% or go through multiple rounds of voting? For example, if you have 3 choices and none gets over 50%, you throw out the option with the fewest votes and have people vote again?

I'm not at all sure that the multiple rounds of voting would be legal in your state or in your community, but it's one way to eventually get to a majority.

If neither of these are an option, then the board needs to do a good job of educating the community and spelling out exactly what the impact will be for each of the options (ie, what you won't have money for and what the effect of that will be).

Bah, this is one more reason why I hate homeowner approval of assessment increases or budgets... :-)
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By MichaelH34 on 11/11/2021 5:31 PM
For those of you familiar with NC HOA law is there any wiggle room to deciding the outcome based on a plurality or are we stuck with needing a choice getting >50% of the votes or re-running this effort when/if that doesn't happen?
I am aware that nationwide, some cities/counties have laws that require a candidate to win a majority of those voting. When three or more candidates are vying for a position, and one wins a plurality, a run-off election is required. Meaning I think no court views a "plurality" as a "majority."

I believe Ranked Choice Voting (RCV) does get around this, and in a way the courts accept.

Granted the math-challenged will never accept that RCV is fair and spares the expense of a runoff election.

I observed debate in a city/county/state that recently adopted RCV. The greatest local disinformation campaigns against RCV will be run by math-illiterate folks.

On the other hand, if the Board adopts RCV for a vote like this, and some numbskull wants to go to court over it, I think said numbskull will have a hard time finding an attorney to support him/her.
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By KerryL1 on 11/11/2021 6:32 PM
So....your Bylaws say a majority of Owners must vote to approve a new budget? Or is it NC law?
Michael, I too would like to know why the board thinks this dues increase must be put to a vote.

California for one has statutes that are strict about certain increases in the assessments. But most states have statutes by far that leave such a decision to the board alone; no owners' fote required. I believe most HOA/COA covenants similarly leave such a decision to the board alone. Why is this the trend? Because owners tend to vote against any increase in assessments, on account of their uninformed belief that a new roof being needed 15 years from today will not apply, as they will be dead of have moved.
BenA2 (Texas)
Posts: 1,273
Posted:
I agree that majority means more than 50%. The question is, do you actually need a majority of the owners to approve an increase in the dues or the majority of voters? The exact wording of your CC&Rs are very important.

Unless you have a very small HOA, it is very hard to get 50% of the owners to vote, and getting them to vote to pay more money is going to be even more difficult. We almost never get 15%. Even when we had a controversial issue to change our CC&Rs, we only had about 40% of the owners vote.
MichaelH34 (North Carolina)
Posts: 179
Posted:
CathyA3, Re. math, yes, that's why I used the greater-than sign in more than 50% of the cases. Ordinarily I'd be content with "commonly understood" except when dealing with lawyers.

I'd swear that I found the relevant section of the CCRs that talked about needing a vote for this and in attempting to quote it back to the group I really can't find it at the moment. I've really got to re-up my note taking game.

So for the moment, assume that NC and our CCRs don't require a vote but that we're doing it to make sure we've got homeowner buy-in. Something we do feel is important our first year especially when what we really needed to do was double the dues next year.

[I really wish hoatalk used modern forum software. Pretend the last two sentences are now struck-through]

My better half, in every way, found the relevant language. NC does require homeowner ratification of the budget with the language being:

"NC General Statutes - Chapter 47F 11
Within 30 days after adoption of any proposed budget for the planned community, the executive board shall provide to all the lot owners a summary of the budget and a notice of the meeting to consider ratification of the budget, including a statement that the budget may be ratified without a quorum. The executive board shall set a date for a meeting of the lot owners to consider ratification of the budget, such meeting to be held not less than 10 nor more than 60 days after mailing of the summary and notice. 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 lot owners in the association or any larger vote specified in the declaration rejects the budget. In the event the proposed budget is rejected, the periodic budget last ratified by the lot owners shall be continued until such time as the lot owners ratify a subsequent budget proposed by the executive board."

So, we do require a vote for ratification but the requirements are reverse from what we're asking of our members but I don't believe that's the end of the world.

Since we need >50% voting "no" for the budget effort to fail, I think we're likely on a good track to pass some budget. [knocks wood]

We've only got 22 homes so going door to door to educate the no-voters or nay-voters and sway them to the path we've recommended is something we're already planning on doing. We're not looking forward to it, but we're going to do it anyway.

AugustinD
Posts: 3,698
Posted:
Quote:
Posted By MichaelH34 on 11/12/2021 7:04 AM

So for the moment, assume that NC and our CCRs don't require a vote but that we're doing it to make sure we've got homeowner buy-in. Something we do feel is important our first year especially when what we really needed to do was double the dues next year.
I think the goal should be to act in the best interests of the corporation and doing so in a way that minimizes pushback and so spares duress on the board. How to minimize pushback? Announce the proposed increase at least six months before. Repeat at every board meeting. Explain why the increase is needed. Maybe have a meeting open to owners that is run townhall style.

But I would keep in mind: A vote of the owners as you are proposing has no legal power whatsoever. It could even be argued that having such a vote, and abiding by such a vote, violates the board's fiduciary duty. Meaning if an assessment increase is needed per reserve study and operating cost considerations, then the increase is needed. How the owners would vote is irrelevant. The owners are not on the hook for decisions on this the way the board is.

Quote:

So, we do require a vote for ratification but the requirements are reverse from what we're asking of our members but I don't believe that's the end of the world.
Plus no quorum is required. This is a big deal and says a lot about how lawmakers feel about owners having input into the budget.
BenA2 (Texas)
Posts: 1,273
Posted:
Quote:
Posted By MichaelH34 on 11/12/2021 7:04 AM
CathyA3, Re. math, yes, that's why I used the greater-than sign in more than 50% of the cases. Ordinarily I'd be content with "commonly understood" except when dealing with lawyers.

I'd swear that I found the relevant section of the CCRs that talked about needing a vote for this and in attempting to quote it back to the group I really can't find it at the moment. I've really got to re-up my note taking game.

So for the moment, assume that NC and our CCRs don't require a vote but that we're doing it to make sure we've got homeowner buy-in. Something we do feel is important our first year especially when what we really needed to do was double the dues next year.

[I really wish hoatalk used modern forum software. Pretend the last two sentences are now struck-through]

My better half, in every way, found the relevant language. NC does require homeowner ratification of the budget with the language being:

"NC General Statutes - Chapter 47F 11
Within 30 days after adoption of any proposed budget for the planned community, the executive board shall provide to all the lot owners a summary of the budget and a notice of the meeting to consider ratification of the budget, including a statement that the budget may be ratified without a quorum. The executive board shall set a date for a meeting of the lot owners to consider ratification of the budget, such meeting to be held not less than 10 nor more than 60 days after mailing of the summary and notice. 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 lot owners in the association or any larger vote specified in the declaration rejects the budget. In the event the proposed budget is rejected, the periodic budget last ratified by the lot owners shall be continued until such time as the lot owners ratify a subsequent budget proposed by the executive board."

So, we do require a vote for ratification but the requirements are reverse from what we're asking of our members but I don't believe that's the end of the world.

Since we need >50% voting "no" for the budget effort to fail, I think we're likely on a good track to pass some budget. [knocks wood]

We've only got 22 homes so going door to door to educate the no-voters or nay-voters and sway them to the path we've recommended is something we're already planning on doing. We're not looking forward to it, but we're going to do it anyway.


I agree with your assessment of what is required. I also agree that if you raise the dues substantially, then you really need to communicate with the owners to get them to buy in.

I would not put the raise in dues to a vote. It is not required and you may be setting yourself up for failure. The HOA is a representative democracy. The board approves the budget and the membership merely ratify it. Your docs make clear that the majority of owners do not have to approve it. You do not even need a ballot since the docs make clear that the ratification is voted on at the meeting. Although, you may be required to have proxies and/or absentee ballots by law or other docs.

I also agree that communication is key, especially if you are raising the dues substantially. Educate all the owners and, unless more than 50% of the owners object, it is ratified. Do not overcomplicate it.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Great way to get no increase as the more choices, the less each choice will get. And yes 51% means 51% of all owners.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Ben said:

I also agree that if you raise the dues substantially, then you really need to communicate with the owners to get them to buy in.

I would not put the raise in dues to a vote. It is not required and you may be setting yourself up for failure. The HOA is a representative democracy. The board approves the budget and the membership merely ratify it. Your docs make clear that the majority of owners do not have to approve it. You do not even need a ballot since the docs make clear that the ratification is voted on at the meeting. Although, you may be required to have proxies and/or absentee ballots by law or other docs.

I also agree that communication is key, especially if you are raising the dues substantially. Educate all the owners and, unless more than 50% of the owners object, it is ratified. Do not overcomplicate it.


Well said.
KerryL1 (California)
Posts: 14,550
Posted:
I like Ben's remarks too.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Quote:
Posted By JohnC46 on 11/12/2021 8:23 AM
Great way to get no increase as the more choices, the less each choice will get. And yes 51% means 51% of all owners.

ADD ON

The 3 choices are like running a political candidate with the sole goal of bleeding off votes from someone. Even if some believe a dues increase is warranted, they votes might be bled of with two choices ($50 or $100) thus assuring neither gets a majority so no dues increase wins.

Also are you sure your docs require a vote to increase the dues? If not the vote is not binding one way or another. At best it is advisory.
MichaelH34 (North Carolina)
Posts: 179
Posted:
Yeah. I refer you back to my "learning" comment above :-)

Our docs are silent but NC law states that we need >50%, of all homes, to vote no in order for the budget ratification to fail.

My thinking at the moment is that if we get <50% voting no that we'll go with the next choice that receives the most relative votes.

I know many of you are thinking this is all a waste of time but as long as we aren't doing harm and in the end, soon, do the right thing that what we're learning is valuable.
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By MichaelH34 on 11/12/2021 12:02 PM
My thinking at the moment is that if we get <50% voting no that we'll go with the next choice that receives the most relative votes.

I know many of you are thinking this is all a waste of time but as long as we aren't doing harm and in the end, soon, do the right thing that what we're learning is valuable.
The harm I see is the board is leading owners to believe that the owners get to determine assessment increases. Backpedaling this will be hard. When your HOA needs a board that has studied the financials and infrastructure and knows an increase is essential, candidates will have a hard time winning re-election.

Imagine if the Surfside condo did as you propose. Oh wait. This is what the Surfside Board did: Caved to owners under pressure, when the board had no obligation to do what owner wanted.

At least everyone will think you're a nice guy.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Michael

Several on our BOD (and some owners) were confused about out docs concerning a dues increase. We had to have our lawyer come to a BOD Meeting (via phone) to explain it to a few of our doubting/confused BOD Members and owners. Maybe your NC Docs require more reading and might be like our SC docs for dues increases. our Docs say:

1. The BOD can raise the dues as much as it wants to once a year at the beginning of the year.

2. We do not need owners vote/approval.

3. We have to notify owners of the increase on or before 12/01 via written letter showing next years proposed budget.

4. The increase becomes effective on 01/01.

5. 10% of all owners could request a Special Meeting on or before 01/01 to vote no to the increase. It would take 51% of all owners agreeing to vote no to the new budget. If they do, then an automatic 5% increase happens.

We are doing a 14% dues increase effective 01/01/2022.
CathyA3 (Ohio)
Posts: 6,299
Posted:
I think there is harm in asking for people's opinions/votes when ultimately those opinions don't affect the outcome. They can view it as an attempt to pretend that their opinions matter, which can be more annoying than the board just making the decision as happens in my community. Homeowners are good at spotting a snow job, and you want the board to have a reputation for straight talk.

If a vote is not required, I wouldn't hold one. Instead you get buy-in through frank discussions of the budget, what each of the categories is buying, and why costs are going up. The average person isn't very skilled at dealing with numbers and dollars, and putting things in concrete terms helps them understand. Repair costs and insurance are two categories with increasing costs - you have to compete with the home building industry for raw materials which are being limited by supply chain issues, and insurance is affected by damages due to more frequent extreme weather events. Most people have heard about this stuff or even experienced it themselves - it makes your budget real for them.
MaxB4
Posts: 3,513
Posted:
Unless the governing docs specifically state that approval by a specific percentage and having a specific number in order to hold the meeting in the first place, the three choices can be tallied and the one with the highest votes can be implemented by the Board.
KellyM3 (North Carolina)
Posts: 2,239
Posted:
Hi Michael,

A majority vote is 1 additional vote beyond 50%. It's not necessarily 51% depending on the size of the voter pool.

This sounds like you're presenting a budget at your annual meeting. The annual meeting is the place for presenting the budget as passed by the board of directors subject to a majority opposition from all homeowners to stop it should they appear and organize for the Annual Meeting.

The process as I would understand it:

1. The Board of Directors determines what dues amount is needed
2. A special meeting is called for the purpose of debating/approving it subject to your by-laws/CC&Rs rules on quorum
3. If approved, the board crafts an operations budget subject to the newly approved, monthly dues rate
4. The board passes said budget in an open business meeting
5. At the HOA annual meeting, the board presents the approved budget subject to ratification.
6. Budget takes effect January 1, 2022.

NOTE: Boards can raise dues mid-year, if needed, using special called meetings so aligning a dues increase with the fiscal year is easier as an example.

step #3 & #4 is where you'd really receive dues payer engagement and know if you're solving a need or starting a war. Your budget process isn't threatened. You can do whatever you want as long as you're not sued....and lose. I'd not think of approving a budget through direct community vote, much less with a plurality unless my by-laws expressly permit it or overtly outlines ranked-choice as the best option. I cannot imagine that's the case.

Your approach is creative, though, and I've not thought about making decisions in such a way.

MichaelH34 (North Carolina)
Posts: 179
Posted:
I thought I would summarize here since not everyone's reading past replies. Understandable with this forum software

1. I understand math and wasn't asking if we needed 50.1% or 50.00001% or any other specific percentage . Thanks to this software I couldn't edit my post to change the initial "51%" to ">50%" Some people seem to have gotten stuck on that.
2. The core of my question/post was asking if I could count on a specific meaning of "majority" or if I have to question that meaning at every turn when going through HOA docs. It seems clear that barring any specific reasons to think otherwise, like an added qualifier, "majority" can be generally counted on to mean >50% when looking at HOA-related statutes and docs.
2. Our CCRs and Bylaws are silent on the budget process, leaving us to the NC statutes which are quoted above. The board can set the new budget subject to ratification by the homeowners. The budget passes unless >50% of homeowners reject it.
3. We made a mistake by including three options. It's a lesson learned and a good reminder not to make last-minute changes.

Because of the way our HOA was structured, our budget cycle starts on Jan 1 but our annual meeting is in March, so we're actually likely to be passing the new budget at our next board meeting. One reason we're going with the ballots is because we're a new, very small, HOA and are trying to get more people involved.
KellyM3 (North Carolina)
Posts: 2,239
Posted:
A majority is a majority and the common sense definition would apply throughout your documents.

What you must look for in your docs are the meeting attendance (quorum) requirements of meetings, especially if your budget fails and you must call a special meeting. In that case, you may establish quorum and THEN a majority of those in attendance - provided you have quorum - could decide an issue.

In my community, if we raise dues beyond the CPI-U inflation rate, we must petition the homeowners via a special called meeting under a high quorum. Each time this special meeting doesn't meet quorum, we'd need to call another meeting and its quorum would be lowered....but the percentage of affirmative votes would not change (I think my standard is a majority approval of special called meeting that meets quorum).

If your board is learning the ropes still, set your annual meeting in November so you can lock your budget, pass it and have it take effect on January 1st, when your by-laws dictate your new fiscal year begins.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
One has to pay attention to detail. Is it 51% of those in attendance or (like us) 51% of all owners? There are some in my HOA that think it is 51% of those present. Just had a new BOD Member question this. I had to show him.
MichaelH34 (North Carolina)
Posts: 179
Posted:
As I mentioned, our docs are silent on the matter so NC statue applies.

"NC General Statutes - Chapter 47F 11
Within 30 days after adoption of any proposed budget for the planned community, the executive board shall provide to all the lot owners a summary of the budget and a notice of the meeting to consider ratification of the budget, including a statement that the budget may be ratified without a quorum. The executive board shall set a date for a meeting of the lot owners to consider ratification of the budget, such meeting to be held not less than 10 nor more than 60 days after mailing of the summary and notice. 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 lot owners in the association or any larger vote specified in the declaration rejects the budget. In the event the proposed budget is rejected, the periodic budget last ratified by the lot owners shall be continued until such time as the lot owners ratify a subsequent budget proposed by the executive board."
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Quote:
Posted By MichaelH34 on 11/15/2021 9:41 AM
As I mentioned, our docs are silent on the matter so NC statue applies.

"NC General Statutes - Chapter 47F 11
Within 30 days after adoption of any proposed budget for the planned community, the executive board shall provide to all the lot owners a summary of the budget and a notice of the meeting to consider ratification of the budget, including a statement that the budget may be ratified without a quorum. The executive board shall set a date for a meeting of the lot owners to consider ratification of the budget, such meeting to be held not less than 10 nor more than 60 days after mailing of the summary and notice. 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 lot owners in the association or any larger vote specified in the declaration rejects the budget. In the event the proposed budget is rejected, the periodic budget last ratified by the lot owners shall be continued until such time as the lot owners ratify a subsequent budget proposed by the executive board."

There it is:
a majority of all the lot owners in the association or any larger vote specified in the declaration
KellyM3 (North Carolina)
Posts: 2,239
Posted:
Michael's HOA board of directors needs to approve a budget before presenting it at a meeting called to ratify the approved budget.

It takes a lot of effort for a community to reject a budget in NC.

MarshallT (New York)
Posts: 414
Posted:
If that's what the CC&Rs state, then 51% is the magic number.
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By MarshallT on 11/17/2021 6:50 AM
If that's what the CC&Rs state, then 51% is the magic number.
How about 50.2%?

How about any number greater than 50%, including 50.001%?
CathyA3 (Ohio)
Posts: 6,299
Posted:
Quote:
Posted By AugustinD on 11/17/2021 6:53 AM
Posted By MarshallT on 11/17/2021 6:50 AM
If that's what the CC&Rs state, then 51% is the magic number.
How about 50.2%?

How about any number greater than 50%, including 50.001%?

Yup. Since you can have an odd number of homes in a community, you'll often end up with fractions.

Example: 77 homes, 50% = 38.5, therefore you need 39 yes votes to have a majority in favor (which is 50.64935064935065...%).
AugustinD
Posts: 3,698
Posted:
Quote:
Posted By CathyA3 on 11/17/2021 8:02 AM
Posted By AugustinD on 11/17/2021 6:53 AM
Posted By MarshallT on 11/17/2021 6:50 AM
If that's what the CC&Rs state, then 51% is the magic number.
How about 50.2%?

How about any number greater than 50%, including 50.001%?


Yup. Since you can have an odd number of homes in a community, you'll often end up with fractions.

Example: 77 homes, 50% = 38.5, therefore you need 39 yes votes to have a majority in favor (which is 50.64935064935065...%).
MarshallT, do you agree?

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