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February 18, 2006
What Do You Do With An Obnoxious Board Member (Bully)?
What do you do when a board member or anyone else that "gets in your face", threatens you, or won't shut up even after making whatever point it is they are trying to make? This is a question that could be faced by an owner, other board members, and even the Association's service providers (manager, attorney, CPA, etc.) The "perpetrator" could be a man or it could be a woman.
Well, the simple answer is "Keep your cool!"
With that, you are more able to "tune them out", think of counter arguments (if its worth arguing with an idiot), gather yourself for the big comeback, or move on, without allowing that person to cloud your own thinking. It happened to me the other night. A candidate for the board who had just been elected and was already trying to bully a board into acting in a manner that was not legal got very heated when I opined that the law did allow what this person was proposing. This person began to argue that there was lots of information available on the web and that he/she had read on the internet that the board could do it. The other board members had no control over this outburst, and sort of collectively expressed great misgivings about whether they wanted to continue to serve with this kind of obnoxious behavior to look forward to. I silently sympathized with them, thinking "what a way to spend an evening each month." But someone had to bring a halt to scene. I was embarrassed for the instigator. I thought the person was making a fool of themselves. I simply said to the Board - and this person - "the Board has a choice, do you want to take legal advice from this person? Or from me?"
That brought things into perspective.
I believe the kind of conduct exposes the person (idiot I should say) as someone who has little professionalism and if allowed to bully others into submission, could do a great deal of damage to an association. In the person's defense, they were quite frustrated in their attempts to make something happen that was not a slam dunk favorable idea because of the cost involved. Still, frustrated or not, obnoxious behavior is not pretty or necessarily forgivable. I would hope that in any similar instance, conduct that exceeds a simple outburst of frustration would be viewed as immature and not worthy of respect.
If you know of a board member or owner, or a service provider, who acts out in this manner, there are various ways to deal with the conduct - in a legal and professional manner. (Of course, if you could just opt for sticking earplugs in your ears or placing earmuffs on your head as a symbollic measure. That might work and it is cheaper. Humor can work wonders if the timing is right.) The more serious remedies include (need to do legally - not necessarily per advice you find on the web, unless of course it is approved by your attorney) barring them from meetings and/or meaningful discussions on just about anything, or neutralizing their position on the board (see earlier blog about confidentiality issues) . The road to get there may be bumpy, and it could require an expenditure of money for the earmuffs or the right kind of help, be it someone in the legal profession or otherwise, but you do not have to put up with a bully. And resigning from service, although it might seem appealing, just leaves the bully in charge. That is never a good idea.
Posted by Beth Grimm at 3:49 PM
Elections Law - Make It Fair At Least
The saga continues. Groups are vying for changes in the new California elections laws and the legislator is getting frustrated, or so it appears, with the lack of consensus on proposed amendments. Lets face it, this is what happens with a new law that does not take into consideration all aspects of its subject matter. Do corporate and public elections systems work together? They could, with some comprehension of what needs to be done.
The rest of this blog consists of a plea to whomever decides to clean up SB 61 - be it the current author or someone else - and to you out there - to see there is light at the end of the tunnel, even if left with difficult legislation. The communication was sent to Senator Battin's office already. It is a heartfelt explanation of how the new law could be cleaned up to eliminate one of the biggest problems. I am "republishing" it because I believe it provides some guidance to associations all over the state that will have to deal with even more complicated quorum issues (with regard to board elections) under the new Civil Code Section 1363.03. Your comments are invited. Like many, I want to get it right.
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To: [the office of Senator Battin]
I assume that by now you have proposed amendments to Civil Code Section 1363.03 and related statutes from many groups and sources, and may be making some very important decisions on these very soon. As one last plea I want to give you some examples and request specifically one more chance to be explain why quorum needs special attention. I do not believe it is your goal to stifle the ability of homeowner associations in California to have a legal election for new board members. The new law has a strong likelihood of complicating all elections to which it applies. However, for votes that require a certain percentage of the membership to approve without regard to quorum - such as amending governing documents or transfer of common area for exclusive use, or assessments (which voting requirement is dictated by the governing documents and statutes such as CC 1355, 1366 and 1358, respectively), the quorum issue becomes insignificant. Not so for elections of directors. I assume your intention with the new law was to make homeowner associations elections more private, fair, and simpler, without the complications that come with proxy wars, etc. But the law of unintended consequences will reek havoc with elections for directors. Why is that?
If you are familiar with HOA documents, you know that a quorum requirement is always stated in the Bylaws. If there is none stated, it is hard to determine what it might be and the corporations code sections fill in the blanks about what constitutes "membership approval". (Corp Codes 5033 and 5034). But electing directors is not like getting membership approval. Correct me if I am wrong, but I believe that when you crafted the double envelope system that is like the public system, allowing owners to vote from home and in secret by sending the information to an independent, or dropping the envelope in a ballot box, you assumed that the Inspector could open and count the ballots in a membership meeting, before the "crowd" of attendees, or at a Board meeting, without regard to whether there were enough ballots to constitute a quorum. I would imagine it might not have occurred to you that apathy could stifle your process. Trying to effectively combine a proxy with your process, which is generally the way Associations are able ultimately to achieve a quorum, could also stifle your process (see why below), but it may well become a necessary "evil". Turning to proxy use as the only means of establishing a quorum will not eliminate the very problems you are trying to resolve unless for this one purpose you deal with the quorum requirement separately. Unless you fix this aspect of the statute, this counting of the secret ballots sent by mail may never happen, because to have a valid election, the vast majority of associations have to establish a quorum. While this process could conceivably take place at a board meeting (as you suggest is a possibility), assuming everything was done by mail, there still remains the question of what to do about the quorum requirements. The more likely scenario is counting at a membership meeting, also requiring a quorum. A more logical line of thinking is needed to deal with the model you used for this new law, fashioned after the public system. If there were a 51% quorum requirement for public elections, would any public officials ever be elected? To that end, I offer you a clause that I intend to recommend to Associations that I represent (as a proposal for an amendment to their bylaws) relating to quorum. It resolves this problem I am describing, I believe, but it does not resolve the problem for all of the 40,000 associations in California that do not have the benefit of a knowledgeable help or the expertise to think this through and do something about it for themselves. I get the calls consistently from clients - "We have had [1, 2, or 3] meetings and still cannot get people in the Association to come to the meeting or give proxies."
What will these associations do? Send out 1, 2 or 3 mail double envelope ballot packets? Invite the Inspector back two or three times (and be hit with a really big bill)? Turn back to and emphasize use of proxies to solve the problem? I urge you to consider the number one major problem for Associations in this state - apathy. It is a much bigger problem than disagreements over whether people can vote in secret. The new system will probably engender more "hiding at home", but if it is required, those who are willing to vote should have their votes count. I will share with you what I have written as a proposed quorum requirement to deal with the issues I raise. I feel that under the new system associations will have to have the help of something like this. Of course, the first complication for them is that they will have to get 51%-75% membership approval (depending on the documentary requirements) to incorporate it into their documents, using your newly passed double envelope ballot system (if they wait until after July 1st to consider this "fix"). So what I am saying is that you could fix this problem by using the following model in your cleanup language (the second paragraph is what I would suggest focussing on, but the first is given for example and explanation, setting the stage so to speak for the corporate side of things, which cannot be ignored). Note that the first paragraph is a commonly recommended one because of the very fact that Associations have major apathy problems. I recommend they strive to get the 51% of course, but if they cannot, they have a fall back position with a lower quorum so they can get to a legally valid meeting and election. I am not alone in this recommendation. I believe it is common among practictioners. But note the exception language. It is perhaps the most important part.
" Quorum. The presence at the meeting of the Members including proxies entitled to cast fifty-one percent (51%) of the votes of the membership shall constitute a quorum for any action. If, however, such quorum shall not be present or represented at any meeting, the Members entitled to vote shall have power to adjourn the meeting to a time later that same day/evening or not more than thirty (30) days away, without notice other than announcement at the meeting. The quorum requirement for the second (adjourned) membership meeting is twenty-five percent (25%). Proxies provided at the first-called meeting may be used at any adjourned annual meeting. The only matters that may be addressed at the adjourned meeting are those matters that are described in the notice of the original meeting.
There is one exception to the above-stated quorum requirement. So long as the requirements of Civil Code Section 1363.03 (attached as Exhibit A) are met using the double envelope secret ballot process and Inspector(s) of Election as set forth therein, for elections for director positions only, the Board is entitled to have the ballots that are cast by mail along with any ballots cast at a membership meeting tied to the election counted and tabulated, notwithstanding the quorum requirements. The Inspector(s) of Election(s) may deem the qualified candidates receiving the most votes to fill the vacant Board positions. Additionally, the ballots returned to the Inspector(s) and those cast at the meeting shall count toward the quorum requirement stated above if the election for directors is held in conjunction with a membership meeting. This does not change any approval requirements stated specifically in the governing documents or by law for elections on matters other than the election of directors, but it will validate the election of directors even if no quorum is achieved. The annual IRS Resolution, and a vote taken on any other measures that require a quorum of 51% of the members to respond for a valid election or meeting, may be accomplished at a meeting with a valid quorum, or by mail as set forth in Section ___. "
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If Boards cannot achieve a quorum in electing directors after reasonable attempts, they will be left to their own devices, and appoint people to fill the positions. It may not be proper, but it will likely happen because of the frustration in bearing the expense of a statutory election process that does not resolve problems with apathy.
There is one other thing to make note of - Making all elections subject to the double envelope ballot system is not feasible. I can give you an example. At the annual membership meeting, it is common practice and in fact required that the members are given the opportunity to approve the meeting minutes from the last annual meeting. These generally are handed out and read at the annual meeting. They certainly can be provided by mail ahead of time, and could be provided with your double envelope secret ballot to approve the bylaws, but one would expect that people would simply not vote if they can't remember what happened last year - and who can? Granted, this approval is a formality but conducting the vote in an open meeting where people can ask questions and talk about last year, and propose amendments if they remember something differently, is the right process for this - the same people often come to meetings and help each other remember. This process is the only effective way to get approval of the minutes of the last meeting.
I hope you are willing to consider these comments. I invite you to send them to anyone that responded with proposed amendments. Those persons and groups that have tried to assist associations with doing things properly certainly want to, but there are some very big hurdles to get over with the new elections processes and bringing them down to a manageable level would serve the industry well.
Respectfully submitted,
Beth Grimm"
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Now I ask you readers - do you have a better solution? I would love to hear it!
Posted by Beth Grimm at 3:05 PM
February 7, 2006
Adult Community - Or Not?
A condoguru visitor sent in a question about board actions. The question touched on enforcement, possible discrimination and meeting protocol. The reader asked: What if any laws govern the Board Members to conform to cocerning meeting protocols? Our HOA Board allows the Board members' children to play where and what ever they want. We live in a small association with one way in and one way out. There is no formal meeting to discuss the problems, prior to concluding to hold a meeting to give all the homeowners a chance to vote if they want the changes. Any Help with this?"
Yes. Boards are required to follow some method of parliamentary procedure at association meetings. They are required to allow homeowners the opportunity to address the Board at meetings, but the board can set reasonable rules relating to time. There are many small homeowner associations in California like yours that were built basically for adult-style living, but later had to open up to families with children when the Fair Housing Amendments Act of 1988 was passed, eliminating age restrictions in all but specifically qualified associations. This does make it difficult - because in many cases there is nowhere for children to play. And sometimes it becomes the older generation pitted against the families with children, at least in the perception of some of the owners. Considerable care has to be taken in rule setting and limitations on play. If there is not a park nearby, and the Association restricts play in the street or on the sidewalks (which makes sense from a perspective of safety and liability issues), sometimes that results in agitated or bored children and/or teens in the neighborhood and that can breed a myriad of problems.
There are solutions to this dilemma - and communication and encouragement is important. Sometimes the older folks can help the younger families. And children can bring energy to the neighborhood. It helps to try and empathize with each other. Probably one of the worst things that can happen is the older people warning tenants or prospective buyers that children are not welcome in the neighborhood or that there is no place to play and the family would not be happy there. This can lead to discrimination claims.
Posted by Beth Grimm at 9:15 PM
Combining Units - Is it legal?
A reader recently asked me: "Can an owner who owns two units take down a wall in order to double the size of his unit? This was done without the association board's approval, though I'm not sure the association cares. He still pays a double share of fees."
It has been known to have been done and is sometimes accepted by Boards. Oprah Winfrey according to news reports has combined 4 units at the top of a Chicago highrise. Whether it is allowed depends on the Association governing documents and whether the Board cares depends on the Association. Certainly, if the interior construction affects the structure adversely or affects common systems such as plumbing and wiring, and the Association has architectural review procedures, this is something that should be subject to architectural review. And if it is accepted, future owners would have to be advised that the assessments would be doubled. Sometimes a board will approve it so long as when the owner leaves/sells, they replace the walls and bring it back into conformity with the original construction.
Posted by Beth Grimm at 8:56 PM