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November 18, 2005
SB 61 - Making it Work for Elections in HOAs
Thanks to the numerous comments and suggestions I received relating to SB 61 - California legislation directing specific processes for certain HOA elections - I can offer what I hope is some guidance and insight. Remember that the statute does not become operative until July 1, 2006, so HOAs with elections before that date need not heed the changes. However, attorneys like myself that try to be forward thinking and are in the processes of amending documents, writing articles, and posting helpful information need to sort out the requirements now, and conform our writings to systems that will satisfy the law after that point. Although the author of this bill seems willing to entertain some cleanup measures to eliminate some of the confusion about the combined processes (public voting system and corporate voting system), the basics will not likely change. All if not most HOAs will have to incorporate the double envelope voting system (geared toward absentee voting and voting at polling places) with the corporate system (use of proxies and cumulative voting when the governing documents allow for these things). Why I say some but not all is because the process does not make sense in Associations that are very small and do not need the added expense. These associations can certainly use the secret ballot system at a meeting without having to do the recruiting for board members months prior to the election. A request will be made that smaller associations be excluded from the requirements so long as they adopt a system that allows for secret ballots.
I received many comments stating that the proxy systems and cumulative voting processes are a very important part of the processes for many associations. Minority interests are not served very well without cumulative voting. On the other hand, it tends to complicate the process of elections (and is not allowed in the public voting processes) and most practitioners for that reason advise eliminating it as the Association matures and the documents are amended to be more useful and user friendly.
I have spoken with some association representatives and practictoners who use a combined voting system already. They send each owner a package containing these things
(1) a ballot with choices that also explains how to note votes if there is cumulative voting allowed (which would only be appropriate if the governing documents allow for it), but which does not require nor encourage a signature;
(2) a No. 9 or 10 size envelope with a control number or code, but no name, address or information identifying a particular property, to be used for insertion and sealing of the ballot;
(3) a slightly larger envelope (perhaps 6x9 or so) that has the address for return of the ballot on the front and a printed proxy on the back of it providing general language of a proxy, but no specified choices. This form contains a blank for assigning someone's name to the proxy but says that if there is no name, the proxy is assigned to the Board (or some say Secretary or President of the Association) and the other smaller envelope would be put into this envelope with the proxy on it, the owner would seal the envelope and sign and date the proxy. The proxy would state that it will be counted toward the quorum for the meeting or the balloting process (the election at hand);
(4) The meeting notice if there is a membership meeting scheduled, instructions on using the ballot process, and instructions indicating, if the case, that the ballot must be received before the meeting date or, as some allow, it can be brought to the meeting and dropped in a ballot box or turned in. Owners should be told in this case that if they attend the meeting, they can ask to have the package back, or leave it to be voted as is, when they check in.
This process requires active solicitation of candidates ahead of time, a write in blank or two or more in the ballot (depending on the # of vacant positions), and an announcement ahead of time as to whether owners can send give proxies to others to take to the meeting and get the owners package back. Normally, a later proxy controls. However, if the Association plans to "close the polls" prior to check in at the meeting, this process would not allow for proxies to be brought to the meeting and used to get back the written mailed ballots.
This process seems a very good one to me. It leaves open the question as to whether someone has a legal right to nominate themselves from the floor if the documents allow it. And some of the comments I received from Associations (smaller ones especially) is that they cannot get anyone to submit their name for candidacy prior to the meeting; lamenting that they need to "recruit" from attendees to even fill the positions. I can believe this, and for this type of situation, the mailed double envelope system seems quite excessive and futile.
Stay tuned for more on cleanup that may be requested, but for now, just note that the suggestion that proxy voting and cumulative voting should be eliminated is not the popular view according to comments I received.
(And thanks for those comments!)
Posted by Beth Grimm at November 18, 2005 11:14 AM