Changing By-Laws to reduce or eliminate quorum requirements for Annual Meeting and Elections

My opinion is that it is a good idea.

My HOA hasn't done it because, for us, Bylaws changes are very expensive and a big hassle so we suffer along with our current quorum requirements.

We are actually only about 5 years old. For the first few years, our developer strong-armed their employees (who also happened to buy into the complex) into being on the Board. More recently, the last two reliable regular attendees to Board Meetings ran unopposed and become Board Members. At this point, we have a full Board but no possible replacements on the horizon.

Currently, our quorum requirements for the Annual Meeting aren't onerous. If needed, we can hassle people to give us proxies to get us to quorum.

If Annual Meetings are scheduled but continually fail to reach quorum, I think that the current Board continues to serve. If somebody resigns from the Board during this period, the Board can usually appoint a new Board Member. In this way, it would seem to me that the current Board could serve years on end without being re-elected and could appoint and not have to elect new Board Members. It's not fair, to be sure, but seemingly legal.

In a large HOA like yours, it will be a real challenge. Getting your neighbors to an Annual Meeting such that you achieve quorum and can have elections seems to be about the same effort or less as amending your Bylaws to lower the quorum requirement. Bylaws Amendments are usually more strict and harder to pass. If you could get elected to the Board, it would be easier to make the Bylaws Amendment happen.

If you have ever had to suspend the annual meeting and go knocking on doors to get your quorum, you would reduce. But do not eliminate. Our by-laws have the quorum for the annual meeting and elections at 45 out of 236 units. This works fine for us. If you are a small community, I would go with the suggestion of the 10%.

Our association allows for business to be conducted, including elections, even if there is not a quorum present at the annual meeting EXCEPT for raising dues rates. (When that's up for a vote, believe me, they all show up anyway) That means that motions can be made and passed at the meeting by a majority vote.

You snooze, you lose -

Business MUST get conducted at Annual Meetings.

If people care so little about elections and hearing the report from the board,then so be it.

If their pocketbook gets hit, they tend to show up for the meetings.

I pulled this from Davis-Stirling.com to getr their insight also.

Eliminating Quorum Requirements

QUESTION: I have an HOA that has not amended its voting rules. They have had 2 membership meetings to open ballots but still do not have a quorum. We are on the 3rd meeting and still no quorum. What's next?

ANSWER: Almost all associations have trouble achieving quorum at their membership meetings. Nagging owners to send in their ballots is the traditional method for encouraging participation. Some boards are so frustrated by low turnout that they threaten to fine owners who don't vote (not a good idea). There are three ways to deal with the problem. The board can (i) continue scheduling meetings until it achieves quorum, or (ii) go into court for an order lowering quorum to the number of votes cast (which is only good for the meeting in question), or (iii) end your attempts at quorum, leave the existing board in place and pour your energies into amending your bylaws to end quorum requirements for the election of directors.

No Benefit to Quorum. As most associations already know, requiring a quorum only causes aggravation and expense. Many owners will either sign blank proxies or send blank ballots to help meet quorum. That does not make for better elections. Forcing owners to vote may actually decrease the quality of elections if people don't care and simply vote for the first name on the ballot. People who care about the election should decide the outcome.

Normal Election Process. By eliminating quorum requirements for the election of directors, board elections become like all other elections at the municipal, state and federal levels. In other words, elections would be determined by those who are interested enough to vote. This eliminates wasted time and money holding multiple meetings trying to achieve quorum. The Davis-Stirling Act anticipates the removal of quorum requirements:

A quorum shall be required only if so stated in the governing documents of the association or other provisions of law. Civil Code §1363.03(b).

RECOMMENDATION. In addition to eliminating quorum requirements for the election of directors, associations should consider eliminating cumulative voting and proxies.

What seems more fair, having the vote of 3 board members to get appointed or say 39 homeowners that cast ballots?

And if we applied the same quorum principals to our government elections, what do you think the results would be. IMO, our HOA are no different with the exception of the scale of local governmemts. Even our Neighboring Council setup within our City has elections just like government, where every count does count. I live within the City of Los Angeles and the district I reside in has 75,000 registered voters. If we used the same rules than we have in our Association then for the election to be valid 37,501 voters would need to cast a ballot for the election to even count, being we have no proxies. A good trunout for this district is maybe 5,000 voters.

What I have proposed is changing ONLY the quorum requirement for electing a board member. Any other changes to reducing or eliminating quorum requirements or voting percentages are not that important, as I feel that changing actually laws should be more difficult and thought provoking.

I don't believe in proxies as I feel people can be forced into signing something they really don't want to and maybe they are content sitting on the sidelines. They can also be collected and then destroyed by individuals.

And what if the BoD do not perform their fudiciary responsibilites. Be quiet and thought of as a fool?

Richard,

I see a major potential problem with your proposal to eliminate a quorum. A quorum provides for a certain number of voters to elect your BOD. If there was no quorum, then any number of members could elect the BOD. That number could be just the current board. With apathy the way it is in HOAs, I can see an election turnout of only the board and perhaps a few other members. Is this how you want your board members elected -- with only a hand full of people making the choice? Why not try the mail-in ballot approach. My assn, like yours, was having difficulty meeting the quorum requirements for our annual meeting. A number of years ago they eliminated the problem by amending the bylaws to require mail-in ballots which count toward the quorum. Since then we haven't had a quorum problem. Several years ago our legislature outlawed proxies and required mail-in ballots, but with mail-in ballots there really is no need for proxies.

::sigh::



. . . and, for a private enterprise, there is nothing wrong with that. You expect them to appoint absolute strangers who may not even want to be a part of the board? The appointment is only until the next election anyway, and the board deserves to have the ability to fill in the gaps if it needs to.



Again, only until the next board election. I know scads of people who are likely "qualified" and knowledgeable, but not a one will fill the 4 empty slots we have. Go figure.



Speak for yourself. Oh, that's right, you do. You also just happen to broadbrush any and all HOA enterprise with the same deduction. It's your right, though, or rather, it's your opinion. Others mileage may (and most likely does) vary.



Sorry to burst your bubble, but most HOAs do not exist to create or fulfill a "sense of community." If that is your goal, start a social organization in your neighborhood. An HOA exists, by and large, to manage the common areas, address common expenses and enforce covenants. That's pretty much about it. To be honest, it's a pretty boring venture. Most people know that, too.

Fewer and fewer people are interested in "getting involved" for many many reasons. It would seem to me that an evolving board dictatorship, as you claim to have, would be the perfect reason for many common shareholders to get involved. If you and a scant few are the only ones who perceive the board that way, then I don't know what to tell you. Obviously the majority of the common stakeholders do not consider the actions of the board to be threatening to their personal priorities for their home.



I can't help you with this one because you refuse to see the distinction.


Define "control" because the "control" exists in the governing documents. The board only administers the governing documents. The common stakeholders control who is on the board, as it should be. And the quorum goes a long way to prevent or minimize the very thing you are railing against.

I'm very sorry you are running into brick walls in your organization.

You need to focus, however, on finding out what your fellow stakeholders care about in terms of HOA priority and work to get them interested in what you can bring to the party.

The board will continue to be able to "prevent" you from obtaining a seat at the table as long as you continue the "us against them" mentality. People, by and large, don't like to get involved in that sort of thing.

You need to bring to them (your fellow stakeholders) the answer to the age-old "What's In It for Me" question.

ELIMINATING quorum is not your answer, but you will discover that very quickly, no doubt, if you be able to obtain it.

REDUCING it might help and Mary's suggestion to amend the bylaws to accept mail-in ballots and have them count towards quorum is an excellent start.

That is a HUGE juicy nugget that you can wrap all kinds of "what's in it for them" around, if you have the insight to figure it out and make a campaign out of it.

Best of luck to you. I fear you will develop an ulcer if you don't take a few steps back and take a brief time out.

You clearly have bigger problems than you will admit to since I never once advised you to "shutup."

In fact, were you to have actually read my entire post, you would see that I quite felt you could get something working if you put the energy into finding out what the residents care about and tailoring your appeal to hit those hierarchy of needs/wants.

But, hey, you do what you do best, play the victim, 'kay?

Again, if you've read my post above, you would see that I in no way presumed you were fighting "alone."

But you can develop a "community" without being in the perceived driver's seat of the HOA board.

In fact, you'd be better served working the "community" for face time and support, as you appear to be doing.

But I will also say that you will continue to run into apathetic residents and such if you try to use the "us against them" mentality.

You may not be doing that, but based on your comments in various threads here, that's what it appears.

If you want to broaden your support beyond the 50, you need to find out what's important the other stakeholders and then SHOW (don't tell) them how you can benefit them in that area.

The HOA is a BUSINESS. There are business functions it must conduct.

If you want to run a "community," then you need to be aware of the distinction between what you THINK your HOA SHOULD be and what it really is.

Richard,

What people????

Richard,

I don't want to turn this into a political forum, but. . .

The shame on you, Richard for thinking the stimilus bill has gotten people back to work when the unemployment rates are higher than ever and I won't even comment on the healthcare bill. I think you're living in La-la land.

I won't comment any further on these political issues.

I just wanted to see what people would say if I turned the tables around a bit and I got just the response I thought I get. Sounds likes your bllood was boiling just a bit. Kind of how my feel about my HOA.

Don,

I must disagree with you on this. This is just my opinion, but it does come from experience.

A quorum requirement may work in some instances, but should have be in effect when it comes to electing Board members. Let's say we have 317 units and the requirement needs to be 159 units present in person or proxy to conduct an annual meeting and to elect a board. Take away the requirement, have a fair and open election, set any new board members, if a quorum of board members present you can conduct your annual meeting.

You mention that not having the quorum requirement in place allows a well-organized small minority from taking over. What if that's the case here in that board members are appointed rather than elected and essentially can stay in as long as they want, needing only three board members to appoint them.

A few people here have say that these are corporation rules and not government rules and this is a business. I totally disagree. Our families as a whole spends more time withing their community than they do in the corporate world. It is a business in that we have dues to collects and bills to pay. We have rules that we must abide by. But, more than anything, they are a community of families hoping working for the same common goal.

If the board doesn't uphold their fudiary responsibiltes, then what? As we have in our governmemt elections, we can easily vote them out. Your governing docs should have some type of ethics for board members and the membership should hold them to it.

Our quorum is a majority of members in good standing, so we need 159 members for quorum. We are not allowed to adjourn to a new meeting with a reduced quorum if first quorum is not met.

And this is where you are wrong and this conflation is what keeps tripping you up

An HOA is a business, and it is a private enterprise and not a public entity.

In fact, very rarely to I see written into the corporate documents anything at all about promoting the social aspect of the community as part of the association's charter. But even in those few cases where it is included, the main thrust of the association is to conduct the business of the association.

The COMMUNITY of the "PEOPLE" is entirely different, is more of a social construct, and you can and should promote community "flavor" and common social goals, etc. But stop trying to make the goal of the corporate body that is the association fill that role.

But conflating the two you area causing yourself an enormous amount of grief and wasted effort.

It's not "more than anything, they are a community of families. . . "

It's "in addition to the corporate association, they are a community of families. . . "

Quit trying to force a square peg into a round hole. By stepping away and looking at it from this perspective, you may well find better solutions to your conflict.

Now don't try to misinterpret my statement to quit trying to force a square peg into a round hole as admonishing you to quit trying to do anything.

I'm not saying that at all. I'm simply saying you are going to continue to frustrate yourself until you understand what an association is, what it is not and how you can work within the parameters of both of those to reach your goal.

Here's more gasoline for the fire.

I would say that an HOA is not even a business; an HOA is just a form of joint ownership.

Except mine isn't an "opinion," it's an actual fact.

An HOA is a business entity; it's a private enterprise.

Period.

Sometimes it's a corporate, sometimes another type of similar structure.

But it does not exist for what you think it exists for.

No amount of you "opining" otherwise will change the legal classification of what an HOA is.

That doesn't mean that people cannot make their community into what they want of it, socially, but, unless the governing documents also include that as part of the CORPORATE CHARTER then that warm and fuzzy you're looking for is not a responsibility of the board or the members of the association. It's a nice bonus if people want to put the time and effort into building it, but it's not part of the contract.

If YOUR board isn't doing ITS job per the governing documents, then the other members of the association are at fault as well for abdicating their own responsibilities to the association.

You're right, what goes on there may not be "tolerated" in a corporate environment, but it's the responsibility of the private stakeholders to FIX it.

It's not a public function to fix it.

There are some states that have strict laws covering condo and homeowners associations, but they are no different than laws that cover and regulate any other businesses. And in most cases, even then you would still have to file a legal action to actually obtain satisfaction, as very few states have an effective agency to which you can complain for redress or remedy of a "bad" board.

If yours is broken, then you need to find a way to make your fellow STAKEHOLDERS take responsibility to help fix it.

You already have made some great steps in that direction, but the job isn't over.

But, again, as long as you keep trying to equate a PRIVATE BUSINESS to a PUBLIC ENTITY, or think that you can change into a pseudo-government, then you WILL continue to get frustrated.

Fred,

I was reviewing some posts from last year you had about reduced quorum requirements. Did you ever get yours resolved. Shoot me an email offline at [email protected]. I will give you some insight into what we are experiencing here. It almost mirrors yours to the Tee.

Richard

Daniel,

I disagree.

I live in an HOA that is a planend community of single family homes. I do not jointly own anything with anyone. My home and the property it sits on is owned solely by me. The common areas are owned solely by the HOA.

An HOA is most definitely a business. When property is owned and maintained, income is generated, expenses are incurred, taxes are required to be paid, etc., etc; that surely smacks of a business to me.

Don

"Setting the quorum requirement too low can lead to actions controlled by a well-organized minority, which is also poor governance."

Look at the numbers per the governing docs. This is based on a 5 member board

1) Three board members to appoint a new board member
2) Three board members present to hold and continue a board meeting
3) Three board members to pass any vote.

But, if a member of the association wishes to run for a board position and get elected as per the governing docs, then the burden is solely on that individual to make sure quorum is achieved, not any of the board members who may be running. This then enables the board in power to serve as long as they want. If I had to choose between a disorganized group of individuals and a well-organized group, I might tend to lend towards the organized group. Besides, as I have mentioned previously, chaos has not run amok with our city elections, I can see that happening in an HOA. I think there are more problems overall with the present way of elected board members.