Proxy Letters - Rigged Election Help

Hi DeeDee,

Welcome. Perhaps one thing that could help is if the members/owners in your association had a better understanding of exactly what a proxy is and how it works.

Do your founding documents (Articles of Incorporation, Bylaws, CC&Rs) say ANYTHING about proxy use?

Also, a bit more about your community...how many units/homes, single-family or condo, when transition happened from the developer, etc...

DeeD, the use of proxies should be set out in your bylaws. You should probably start there.

But, generally, anyone can assign their proxy to whomever they chose, within certain parameters.

Most HOAs require that the proxy holder be a member of the association. Some don't make that distinction.

By the way, what he is doing is not so much "rigging" the election as it is exploiting the membership's apathy. That's hardly illegal.

I'm not too keen on your phrasing that you are trying to "stop" him from getting the proxies.

If your governing documents allow for proxies, he has every right to obtain them, if people are willing to give them to him.

Also, how many directors does your governing documents say the HOA can have?

Do you have an alternative to elect to the board of directors? Would that be you willing to go out, knock on doors, secure enough proxies for election to the board, and then work to better the community?

One other question, I'm not sure that it's within an HOA board's job description to keep the neighborhood crime stats low.

If crime is on the rise, you might first try to speak to your mayor and/or police chief (or local district) to see what all of you can do to help reduce crime.

But that's probably a separate topic.

Do you have a copy of your Bylaws or Declarations? This is different for every HOA, but should be in your Bylaws.

How many homes in your HOA. Do you pay dues? Have a management company?

How many Directors and Officers is your HOA supposed to have on the BoD? Is there an annual meeting of Members? Are there open meetings of the BoD, if there is one? Is your HOA incorporated? Is there a procedure for nominations to the BoD?

If this is accurate, you should also speak with an attorney. What you describe probably violates your state's corporation laws, if the HOA is incorporated. You can probably find those statutes on-line.

In general, I suspect the answer is yes -- anyone may send proxies designating himself or another homeowner. You probably need to read your Bylaws carefully to follow the correct procedure. You should probably work with other homeowners to make a slate of candidates for a complete Board of Directors, rather than just a different Pres and Sec.

Your Bylaws and state corporation laws probably require the HOA to provide records (such as budget and financials and meeting minutes on request, but enforcing that if they don't comply may be difficult.

I don't have the articles regarding proxies with me. Our HOA bylas are very vague. There are about 80 singel-family homes in our subdivision with 20 incomplete lots. I forgot to mention that the President is also the developer. We are clueless on how to stop him. I fear the he is trying to elect another business partner. He elected himself last year and has completed one year of a three year term. There are heated arguments at our annual meeting. He has been asked to step down and he refuses. We believe that he has elected himself so that he can retain power over the subdivision business is slow and he is not selling any homes. We reached the point where he was going to turn the subdivision over to an official HOA. Well he became the official HOA and is now still over the subdivision

Can we white-out or alter the original Proxy that has the President/Developer's name typed? Or can we distribute a new Proxy that has a blank space that will be used to write in the person's name that is designated to cast the vote on the owner's behalf.

I have been searching online all morning for information on Tennessee's HOA laws and rules and I can't find anything. Can someone point me in the right direction.

Thanks

Yes, the President is the Director. He is using the title of President. The subdivision was supposed to transfer over once 75% of the homes were completed. He changed the number to 90% and then he changed it again, established the HOA and elected himself as President to further retain power Since the housing market took a turn for the worse, he had stopped building for almost a year (he has recently started building again). He won't keep the grass cut on the vacant lots he owns or common areas. And has no real involvment with the community except during an election period.

I suspect that scratch-out and replace or write-in would be legal, although it may be something that could be questioned or that he could use as an excuse to ignore. Sounds like he can speak with confidence, and as soon as he comes up with something, you would find it difficult to convince or dominate him.

You really should get advice of an attorney on this, and it will depend on details in your Bylaws. You could post the relevant sections of your Bylaws here for people to review.

I distributed alternate proxies. I could send you the language we used. Best to get the language from the current proxies in use or a template from your state gov or Bar Assoc or corp help site of some kind. We copied language from our BoD's proxies, and modified it for our purposes.

We changed the name of the designated proxy-holder (voter) from the name of the HOA Secretary to one of our group of homeowners.
We made sure the proxy stated that it superceded any prior proxies (meaning any proxy the homeowner had signed at an earlier date).
We made sure the proxy was valid for several HOA meetings within a few months, in case there was no quorum at the first meeting, and it had to be continued at a later meeting. These are all standard elements of our proxies.

The regular BoD proxies had a ballot; the proxy required voting for the candidates that the homeowner selected on the proxy, but empowered the HOA Secretary to decide how to vote for the homeowner on any other matter. Our alternate proxies simply gave our designated homeowner the power to vote for the signing homeowner, since we did not know what would come up or who would be nominated to run for the BoD.

You might go the other way. Do your Developer's proxies just empower him to vote as he pleases? That would clearly explain how he is empowered to chose the rest of the BoD. (Do his mother and business partner own homes? Our Bylaws don't require that Directors be Members (homeowners), although I think they always have been. Also, he may assign ownership of unsold lots to them.

Anyway, you may wish to run and get other homeowners to run for the BoD. You may wish to put a slate of candidates on a ballot directly on your proxies. If homeowners not only sign over their proxy to you or other designated homeowner, but also vote for specific homeowners on your slate, then it may be a much stronger and clearer indication of support (although legally, it's still just single votes).

We took our proxies door-to-door to collect signatures. If we did it again, we would send and receive them by mail, as the BoD does, but we might also go door-to-door. We would distribute the direct canvassing to more homeowners, rather than just a couple of us covering the entire neighborhood.

Because you are a new HOA, you need to look closely at the rules for taking over from the Declarant (the Developer?) and for how many votes the Developer has for unsold and for undeveloped lots that he owns. Other people here can say more about how that situation works -- I'm in an old HOA and don't undertstand it well. If your Developer owns half the HOA and has half the votes, then he may be entitled to run the show until he sells more and you have more homeowners. I'm sure he is still required to provide budget and financials and other records on request.

Is your HOA incorporated?

You are a small HOA; have you spoken with a large portion of your fellow homeowners? Do you all feel the same? When you say they are not tuned in, do you mean they want to work with you, but don't know how to get this done? That they are apathetic and don't want to get involved? That they agree with you in principle, but won't put the time and effort into helping?

Dee if you haven't gone through transition then you are indeed living in a dictatorship with the developer as the dictator. And you will be stuck there until transition or until you move, I know it's unfair, un-American and probably fattening too; but you voluntarily agreed to it when you bought in. You need to go back and re-read or read your documents paying particular attention to the rights of the Declarant.

As to him changing when the transition takes place that may or may not be valid, often VA and FHA loans have language in them prohibiting a change in the documents without their approval. Other lenders may have similar language but pay attention especially to government backed mortgages. Depending on your county you may be able to go on-line to the County Recorders website and read everyone's mortgages, I can here.

You should also be able to tell if he actually changed the turnover % with a document filed with the county or if he just told everyone he changed it. If he is not living up to what he said he would do get as many people as possible to contact your city/county trustees to put pressure on him. They live to serve especially if you go in force with lots of registered voters.

We actually didn't sign up for this. The original builder of the subdivision pulled out and sold his remaining undeveloped lots to this guy. It was agreed upon by the previous builder that he would turn over the subdivision after a certain % of homes were completed. Well right before that happened, he sold the undeveloped lots to the current President/Developer - who then says he modified the old bylaws when the properties changed hands and this is what we are currently stuck with. I will post a copy of the Bylaws and seek further clarification.

Thanks to everyone for all of your help.

Well, now, that's a horse of an entirely different color!



First of all, this "developer" may not have "developer" perks.

Has the bond been released for the roads and the drainage?

If not, in whose name is it, his or the original developer?

I ask because our developer sold the undeveloped lots in one section (phase) of our development to a builder, who then started calling himself "developer" and tried to use that to legitimize his not paying assessments for any of the lots he owned.

As far as our county records were concerned, he was not "the" developer with certain "rights" reserved in the governing documents, such as not having to pay for owned lots and not having to abide by the CC&Rs.

Under the opinion of the county attorney, he had none of the rights that the actual developer had.

We placed liens on all of his lots and enforced against any violations.

BUT, you will still need to thoroughly understand your documents and will most likely end up having to get some legal advice along the way.

DeeDee,

Now since you've let us know this Pres is indeed the developer this definitely is a "horse of a different color" as Michele said. Purple looks good to me!

When reading through your gov docs, please pay close attention to the article in the CCRs that covers transition. It may be under "membership voting rights". Class A (members) and Class B (developer) membership should be defined and also a provision stating Class B membership shall convert to Class A upon "transition" (my CCRs say "conversion"). Then it should go on to outline when transition occurs. For example, my CCRs say conversion shall occur when the total number of Class A votes (1 vote per member) exceed the total number of Class B votes (3 votes per unsold lot); on 12/31/1975; or such earlier time as the declarant shall designate in writing. The last sentence gives the declarant the option to decide when transition shall occur. If your CCRs do not give him the option to change when transition shall occur, then he has no authority to change the % -- UNLESS he has amended the CCRs. Since he has the majority vote of the assn (the members) he can do this w/o even asking the members to vote.

Regarding the proxies: if the Pres is sending proxies to the members stating they must be given to him then he will just void any that come in assigned to another member of the assn. As I stated in a previous post, many boards will do this and get away with it although a court of law may rule it to be illegal.

While the developer is in control of the assn it's not uncommon for his friends, family members and/or business associates to be members of the board. This is how he maintains control of the board votes. The CCRs usually assign more than one vote to his Class B membership and this is how he maintains control of the assn. (member) votes. When transition occurs there will not be enough unsold lots for him to have control of the assn votes.