Proxy default keeps same leaders in charge

newsQ: I live in a community of 646 single family homes. We have seven members on the HOA’s board of directors, who are elected at our annual meeting. We also have a professional management company. At our annual meeting, the members of the HOA are given the option of attending in person and voting for the board members, or sending in their proxy to our management company. Our proxy form states that if no name is designated on the proxy form, then the HOA president, by default, has the authority to cast the vote associated with that proxy.

This year it became obvious to me there is a potential abuse associated with our process. The president held more proxies than there were owners attending the meeting in person. As a result of the high number of votes he held, he essentially controlled who was elected to the HOA board. If we make no change to our process, the board president has the ability to put his team in place, thus control the HOA’s agenda. This is very dangerous. If we had counted only the votes of the residents in attendance, the three people elected to the board would have been different from the three elected by the votes cast by the president.

What are your recommendations?

The N.C. Non-Profit Corporation Act contains a section that governs proxies for member meetings. Unfortunately, the statute does not offer any specific guidance on the format of proxies, but most every HOA (and publicly-held corporations) utilizes a format like the one you describe – the member may appoint a specific person as their proxy.

But if no particular person is specified, the corporation’s president or sitting board of directors, by default, are designated as the proxy.

The statute does say that the form of a proxy can be most anything in writing, or even a phone call or voicemail from the member: “A photocopy…facsimile transmission, or equivalent reproduction of a writing appointing one or more proxies, shall be deemed a valid appointment form within the meaning of this section. In addition, …a member may appoint one or more proxies (i) by an electronic mail message or other form of electronic, wire, or wireless communication that provides a written statement appearing to have been sent by the member or (ii) by any kind of electronic or telephonic transmission, even if not accompanied by written communication. . .” Thus, a member does not have to use the proxy form provided by the HOA; he/she can use virtually whatever format will satisfy this statute.

HOAs are creatures of democracy. If homeowners in your community are dissatisfied with the way the HOA is being managed, then they need to be proactive and either attend the meeting in person, or specifically appoint as their proxy someone who will cast their vote as they wish. Assigning their voting rights to the sitting president will certainly ensure that the status quo prevails.

Charlotte attorney Michael Hunter focuses on community and condominium association law for the firm of Horack Talley

(Read whole news on source site)

“Ask The Experts” Articles have been Reprinted with permission from the Charlotte Observer

* These articles and related content on this website are provided without warranty of any kind and in no way consitute or provide legal advice. You are advised to contact an attorney specializing in Association Management for legal advice related to your specific issue and community. Some articles are provided by thrid parties and online services. Display of these articles does in no way endorse the products or services of Community Association Management by the author(s).

“Ask The Experts” Articles have been Reprinted with permission from the Charlotte Observer

* These articles and related content on this website are provided without warranty of any kind and in no way consitute or provide legal advice. You are advised to contact an attorney specializing in Association Management for legal advice related to your specific issue and community. Some articles are provided by thrid parties and online services. Display of these articles does in no way endorse the products or services of Community Association Management by the author(s).