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Hung Board of Directors

Started by JamesC • 17 replies • 1976 views

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JamesC (Maryland)
Posts: 282
Posted:
We have a nine member board, and this Monday, is the Annual Meeting. We will be voting in a new group of three homeowners to serve for a three year term.
We are confident of replacing three current members with three new ones.
Not to come across as having a battle field, but the current board has done nothing for the community in the past three years.
Our monthy board meeting will follow the Annual meeting when we will decide the officers.
We, the good side will have four votes, and the other side, bad ones will have four votes. (kidding, but true)
The new member who we (the good side) want to nominate to be the President will not be able to attend the meeting, because he is a detective, and is required to attend a conference that night.
His would have been the fifth vote.
Here is the question: Since there will be a four to four tie, on both the Presidents, slot, and the VP slot, is it allowed, or proper per the rules to forgo holding the appointments until the following month (June) when he will be able to attend the meeting?

Thanks:
Jim
GlenL (Ohio)
Posts: 5,491
Posted:
James, what do your CC&R's call for? Ours for instance mandates the organizational meeting be held immediately after the annual meeting and election. If push comes to shove one of the "good guys" can (provided they get the votes) assume the office of President and then later resign it prompting a new vote to fill it.
Studies show that 5 out of 4 people have problems with fractions
DonN (Michigan)
Posts: 357
Posted:
Check the law in your state and your governing documents concerning whether or not a board member may attend the meeting by telephone. That is normal practice.

If that is not possible, get a signed statement from the ninth board member regarding intent in voting. If one of the other "side" doesn't yield, allow the hung vote which means that no one is elected officers. Then call a meeting for a later date when all board members can attend.

Of course, any election of officers can be reformed by subsequent election of new officers.

Perhaps everyone will see the handwriting on the wall and act in the interest of the association.
JamesC (Maryland)
Posts: 282
Posted:
GlenL/DonN
Thanks for the response

Glen: our Regular Board Meeting will follow the conclusion of the Annual Meeting, and that is where our problem will begin. I am not joking when I say it will be a hung board, because four will vote one way, and the other four will vote another. Neither side is going to give in to the other. The ninth board member not being able to attend to break the tie.
I talked with our Management Representative last night, and was told, if we will be able to vote in a VP, then he/she could be active President, until the meeting in June, when the absent member could break the tie. That would be well, and good, but the same result will occur when voting for a VP, four to four tie.

Don: On you premise of having the tie breaker attend by phone won't be possible, because he will be at a law enforcement conference.
But, since you thought about that resolution, and maybe Glen, may know, as I see he has posted many answers on this forum, could it be done by proxy.
Can a proxy be used in such a circumstance?. The ninth board member signs over his proxy to another member of the board, and could be used to break the tie?????????????? Would it be valid?

Thanks again

Jim

MaryA1 (Arizona)
Posts: 7,043
Posted:
James,

I suggest you check out the MD state laws, including the nonprofit corp statutes. When checking the community docs don't forget to check the articles of inc. As a matter of reference, the AZ nonprofit corp act allows a board member to vote by proxy and also to deliver a written notice to the BOD Pres (b/4 5PM of the next business day after the meeting) of the director's yea or nay vote on a particular issue.

Also, you may want to review the provision that says a meeting must be held to elect officers immediately after the annual meeting. My bylaws says ". . .immediately following the annual meeting, if practicable, and in any event not mre than within 10 days thereafter." But, even if your bylaws have no such language, who is going to complain if the board schedules this meeting a few days later knowing there will be a tie vote? To who's advantage would it be to have a tie vote?
JamesC (Maryland)
Posts: 282
Posted:
To be clear: All our monthly Board of Directors meetings are held on the third Tuesday of each month with the exception of the meeting held in May, immediately "after" our Annual Meeting. The nominations for officers for the following year are voted on, at this board meeting as soon as the Annual Meeting has concluded.

I can't seem to be able to make it clear, that our problem is going to be at the board meeting while trying to vote on a President, and Vice President for the next year.
The most reasonable way would be if anyone with the legal knowledge could tell me if a proxy vote by the member who will be ansent could be used, and if it could be used to break a tie would it be valid?.

Our docs says Proxies. At all meetings of members, each member may vote in person or by proxy. All proxies shall be in writing and filed with the secretary. Every proxy shall be revocable and shall automatically cease upon conveyance by the member of his lot.

I have tried to google free proxy forms, but even though they say 100% free, they only let you download them if you agree to (the cheapest) $19.95 a month subscription. The free being after you give them all your credit card info.

Need some legal language on the proxy idea. Can it be used while voting for officer's for the board? The proxy vote being from a member of the board, and given to another member of the board?????

It would solve the whole issue.
Thanks

Jim

JamesC (Maryland)
Posts: 282
Posted:
Sorry for the last post:

I will try to make this simple: Would it be legal for "me" to nominate a fellow member in absentia to be the President of the board, and then use "his own proxy" in order to break a tie vote for him to be elected?
Has this never happened before, where you have an odd number of board members, or just when board members are odd????????

Thanks:

Jim
MaryA1 (Arizona)
Posts: 7,043
Posted:
James,

I replied to your questions earlier. Please see my response on 5/8 @ 7:32 AM.
EverettC (Maryland)
Posts: 90
Posted:
Jim,

In Maryland, directors cannot vote by proxy. Being a director involves fiduciary duties, and you cannot delegate (via the proxy)your fiduciary duty to someone else, even another director.

Too bad the 9th director can't be available by phone for 5 minutes to vote for president - he doesn't need to be present for the entire meeting. Maybe he could be "paged" when the vote on president comes up.

If a tie vote is unavoidable, maybe the meeting could be adjourned for a day or two, if the 9th director would be available then.

Everett

JamesC (Maryland)
Posts: 282
Posted:
MaryA1
I read your posts on other questions posed on the forum, and agree with most of your answers, but you say:
the AZ nonprofit corp act allows a board member to vote by proxy and also to deliver a written notice to the BOD Pres (b/4 5PM of the next business day after the meeting) of the director's yea or nay vote on a particular issue. Who would be the BOD Pres you suggest a written notice be delivered to, if we are unable to elect one?
We have a very good turn out by the shareholders at most of our meetings, but to suggest holding another meeting at a later date (other then the scheduled ones) is not possible.
We rent the gymnasium of a church for our meeetings, and it just could not happen.
Our bylaws also say, a meeting must be held to elect officers immediately after the Annual Meeting.

EverettC:
Your suggestion for the phone page is a good idea, and I will ask him, if it would be possible for him to take a call.
You say in Md, directors cannot vote by proxy. Can you tell me where you were able to find this? I have been trying for some time to find info pertaining to Md rules on such issues, but the Maryland HOA will never give direct advice because they would want to be quoted. I have never understood their purpose.

Since tomorrow is the night of our two meetings, I will put this to rest, and say thanks for the responses from those of you who took the time. It has not been my intent to gooble up this much space, but had no choice in seeking an answer.

Thanks again:

Jim

MaryA1 (Arizona)
Posts: 7,043
Posted:
James,

It would be delivered to the person who is the Pres now, unless, of course he's voted out of office and wouldn't be at the meeting. However, it could also be delivered to the Board Sec, or really any other board member. If it would be impossible to have another meeting and, if it's true that Board members cannot vote by proxy per MD law, then this may be your only out.

BTW, do you rent the gym for board meetings too? Sounds like an awful large room for just a board meeting.

Please let us know what happens. I surely hope it all works out to the best.
EverettC (Maryland)
Posts: 90
Posted:
Jim, several years ago, before I got on our board, the board had been allowing directors to give their proxies to other directors when they could not attend a meeting. Our HOA attorney advised that it was not legal under MD law. However, I do not have any citations to back that up.

Although not definitive (and not applicable to you since, as I recall, you do not live in Montgomery County), the Manual of the Montgomery County Commission on Common Ownership Communities (CCOC) states, at page 40:

"Proxies
Unless there is a VERY specific authorization in the documents or in applicable statutory law,
board members may NOT vote by proxy. The reason for this is that each director is elected in
his or her personal capacity to serve as director and vote on behalf of all other constituent
owners. By accepting this obligation, the director is effectively already voting for that
constituency as their proxy holder. That proxy could not be further assigned without the consent
of every member of the constituency. Accordingly, directors who cannot attend a meeting suffer
the same fate as our Senators and Representatives in Congress who cannot attend a session: their
vote is not counted."

See, http://www.montgomerycountymd.gov/content/ocp/ccoc/pdf/final_draft_manual_9_09_05.pdf.

Hope that helps,
Everett
DonN (Michigan)
Posts: 357
Posted:
JamesC

Are you sure you can't arrange participation by telephone? The election can't take very long. Does the ninth board member have a cell phone? It should be easy if the state law and/or governing documents permit participation by telephone.

Normally, proxies do not apply to board meetings. Check your law and governing documents. The reason is that the voting should take place after the discussion/debate. Board members must hear/participate before voting.

Otherwise, let the meeting proceed with eight board members in attendance. Proceed with separate motions for election of each officer. Let the votes be four to four, in which case each motion is not approved. Then move to adjourn the meeting to a new specific date for election of officers.

The meeting could be contentious, but conduct yourself in a professional manner. Brush up on Robert's Rules of Order concerning rules from small boards.

The management representative is not a proper source of guidance regarding this fundamental governance issue, in my opinion.
SusanW1 (Michigan)
Posts: 5,202
Posted:
There's no real rush for the eleciton of officers. Let the tie stand; adjourn to a later date for completion of the election.

RONR says:

PROVIDING FOR COMPLETION OF AN ELECTION
If an assembly wishes to adjourn when an election is incomplete, an adjourned meeting should be provided for. If such an adjourned meeting is impossible or impractical and the organization will hold another regular busiess session before a quarterly time interval has elapsed, the election is completed at the next regular meeting.

JoanneD1 (Arizona)
Posts: 447
Posted:
Read the CC&R's or Bylaws or ask you PM. I don't see why not.
JamesC (Maryland)
Posts: 282
Posted:
Solution:

To all who posted your comments, "THANKS"

I contacted my own attorney, who directed me to Maryland State Law, which says if the member could not attend, and was unable to have access to a phone (as some of you suggested) he could cast his vote by electronic transmission. I contacted the owner of the "NEW" management company we had just hired (fired the other company)
and they confirmed it would be legal.
Had the wife of the ninth member contact him, as he was attending a law enforcement conference, and could only be contacted in the event of an emergency. (This kinda, sorta, was an emergency)
He simply had to send notification, that if he were nominated, and would have been able to attend the meeting he would vote for himself.
During a bathroom break, he notified his wife to send the transmission from their home computer to the management company, with the ipf address serving as electronic confirmation.

Things went great as we had a tremendous homeowner turnout at our Annual Meeting, during which time we deposed three incumbent board members, (including all officers) and with two others resigning, we filled five positions. Immediately following that meeting, we held the Board of Directors Meeting, and had our officer elections.
Things are great in our community this morning, and we are hoping to bring about improvements, like collecting over $24,000 in deliquent homeowners fees, and do some much needed community improvements.

Thanks again to all of you.
Best regards in your endevors with your own communities.

Jim
MicheleD (Kentucky)
Posts: 4,491
Posted:
Jim:

Congratulations and so glad that you all were able to solve the problem.

Now comes the hard part, actually making changes and improvements, but it seems you are on the right track and it does bode well that you were able to get such a great turnout from concerned homeowners.

This is exactly how it's supposed to work, the members taking ownership of their responsibility in the association.

Please keep us posted and hope that we can watch your HOA grow and prosper!
MaryA1 (Arizona)
Posts: 7,043
Posted:
James,

I'm so glad you posted the good news! Congratulations to you and all the other board members. Now it's time to get down to work. The first order of business might be to go over the community documents to at least familiarize yourselves with all the more important articles. Also don't forget about state laws, including the state nonprofit corp statutes.

The BOD will be faced with challenges but if its a congenial group, made up of members who aren't afraid of a little work, those challenges can be overcome with little or no difficulty. It's not always an easy job and it's most always a thankless job, but someone has to do it. Kudos to all of you who are willing to meet the challenge.

If there is ever anything we can help you with, please don't hesitate to post.

Good luck!

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