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September 30, 2006
Restraining Orders - Who, What, Why? How?
I receive lots of questions about how to deal with dangerous people in a CID. Board members often inquire about restraining orders. Here's a recent question asked of me:
"Can a community , i.e., the HOA, get a restraining order on someone who visits one of the residents here? This person is believed to be very dangerous and has been arrested in the past. We believe the police are watching this person and may be getting ready to arrest them. Even so, can we (the HOA) request a TRO out on him so he cannot come into the community."
It's not cheap or easy to get a restraining order. Get legal advice and assistance if you are serious about considering the possibility. The association has to be able to have papers prepared properly for the court, identify the person and serve papers on the person. The court papers require specificity about what orders are desired, and declarations supporting the allegations need to be prepared. Sometimes there are three court visits involved, sometimes only 2. The 3 would include a temporary restraining order, a preliminary injunction, and eventually a trial, if there is resistance. If someone gets a temporary restraining order, that is not the end of things. The court allows the defendant a proper hearing to show cause why the restraining order should not be extended. Court proceedings are far from inexpensive. There are situations where individuals can get "stay away" restraining orders without the assistance of an attorney to keep someone who has threatened them away from them or places they live or work. Superior Courts in California should have packets for individuals to get which state exactly what is needed to file for the restraining orders.
For associations, it is not as easy. That is because the Association does not have its personal safety at stake. It is an entity, not an individual.
The Association would have to have some proof supporting the need to keep the person away, proof that they are a threat. That means witnesses must come forward and made statements that would become a matter of public record. Lots of times owners or residents are not willing to do that. Sometimes there is a belief or someone knows for sure that the person has harmed someone or been convicted of a felony involving serious criminal behavior; sometimes someone knows that its a registered sex offender, but even being a released convict alone is not enough to keep someone out of a neighborhood (if they are out of prison legally). There would have to have been some threats of some kind to residents or some conduct that justifiably gives people a reason to fear for their safety. Even known or suspected gang members probably cannot be banned by a restraining order from entering an HOA, unless the police have something to offer or owners under a threat can offer testimony as to the propensity . (If a community is gated, of course, access is more difficult.)
If entry is unauthorized and someone is on parole, or if that someone is in a location that their parole terms say they should not be, or if the parolee is consorting with people that they are banned from being around, and the police are called or the parole officer is contacted it is possible that passing certain information on may result in a parole violation or arrest, and that may take the person out of the picture. However, please note that I am neither providing legal advice here nor advising any such contacts without getting legal advice and assistance because HOA reps have to be very careful not to defame someone. People often make incorrect assumptions or get their hands on information that is slightly skewed by the time it reaches them.
If the Board has witnesses willing to come forward, and analyzes the benefits that support the expenditure, and assuming the money for the court action is legally available to be spent (again, I am suggesting legal advice be sought in your own state), and restraining orders are approved by the court, then they are filed with the police department and a violation of a restraining order subjects the violator to arrest.
If the person is coming into the development at the invitation of a resident, and there has been no conduct exhibited that supports the need for a restraining order, it will be difficult to impossible to get one, but an association can spend a lot of money trying.
Posted by Beth Grimm at 9:38 PM
September 26, 2006
More on Dogs .... Who's in Control?
Pets are an ongoing topic - especially dogs. A reader said: "The CC&Rs for our association state that no animals shall be permitted outside of any dwelling, except under the control of a responsible person. Based on this section, we have found it difficult to take action if the resident does not have their dog on a leash but feels they have voice or other control of the animal. Our County has a leash law that says when off the owner's property, dogs are required to be on a leash. Can we use the County's leash law to supersede our CC&Rs?"
I do not think it is necessary to "supersede" the CC&Rs. In my opinion its a matter of interpreting what "under the control of owner" means. It is my feeling that an association can integrate the local County or City requirements into the association rules and I believe it is also appropriate for the Board to interpret "under the control" to mean on a leash, at least when outside of the unit or patio or garage (to the extent that those are enclosed). Most localities have leash laws for dogs, and there is good reason for that. A lot of people may think their pets are under their control only to be proved wrong when something occurs that triggers the pet's natural instincts to take over. All one needs to do is listen to the news just about every day to read about a pit bull or other dog that went surprisingly "out of control."
Voice commands and other control modes that do not involve a leash are in my view purely subjective, and most often views shared only between the pet and the pet owner. A leash is an objective form of control that the world can understand.
As I have said before, I love animals, and at one time owned a perfect dog, for more than 16 years. She was always "under my control", leash or not. But that did not stop me from keeping her on a leash when I was out in public in places where control was important and people fearful of dogs might be present. Ever heard of common courtesy?
Now I expect to hear the question: what about cats - do they need to be on a leash too? Under the CC&Rs as quoted, that seems to be a fair interpretation, except that any dog or cat that is being carried could also be considered "under the control of owner" - from an objective viewpoint.
Posted by Beth Grimm at 11:07 PM
Apathy in Elections- It Keeps Comin' Up
Here is another and very common question/dilemma relating to HOA elections: "We have never had a real election because as far back as I can remember, we have not had enough volunteers to need a vote. The same board members have been serving for about 15 years. Do we have to send out multi-part ballots and what should we do about this?"
So the question arises as to whether an Association needs to go to the expense of sending out a ballot under the new law if there are no nominees, or not enough for a "contest". It’s a tough call. If the Board does not send out a ballot, any member of the association can challenge the election. It only takes one. Of course, if that one (and all others) are given a fair chance to step up, and the Board can prove by showing it sent communications to all owners asking for candidates, maybe the challenge will fail. Sending a ballot out before an annual meeting with write-in blanks seems a reasonable solution, because even if there are not enough candidates for a contested election listed, the Board tried in good faith to comply with the law. On the other hand, it may make more sense to give members notice that the Board is considering sending the ballot out after the annual meeting, and plans to use the meeting to generate interest in serving. Then, the Board can try to pump up the interest to get candidates and do the ballot thing after. Which process is more likely to win over a hearing officer if there is a challenge? If one or the other leads to a real election, the Board wins. If one or the other or both lead to deeming board seats filled by acclamation, it's hard to tell what a hearing officer would do. The same applies to the situation where a board tries and tries to get a quorum of ballots for the election of directors. Can they appoint? I would say that’s a reasonable response to a difficult problem. I believe the key is “good faith” because staying “legal” is not always an option. But only time will tell if I am right.
Posted by Beth Grimm at 12:54 PM
Tiebreakers in HOA Elections - What are the Options?
There are some problems that may come up in the coming months and years - and the new elections law kind of complicates them. Maybe we can brainstorm some solutions for you before it happens. This is a real question sent to me recently: I am on the Board of Directors for ***. We have just had our elections for Board of directors (3 openings). We have voted in 2 board of directors and had a tie for the third one. We took another vote with only the two names on the ballot, and again we had another tie. What is the procedure for having a tie breaker? I cannot find anything written regarding tie votes on elections. Please help.”
Tie votes have happened in the past so they are not new. However, when there was a tie in past elections and the association was using proxies, an association could have a runoff election the same night as the meeting. In fact, the Association could have two runoff elections the same night. Now, under the new laws, in order to have a runoff election it appears to me that the Association needs to close the meeting, prepare new ballot packages (of the double envelope secret mail variety) and mail them out to the members, appoint inspector(s) to receive and count the ballots, hold the counting at another meeting (board or membership) and hope for the best. Sometimes there might be another tie, and another, etc. etc.
So when there is a tie, what is the procedure for a tie-breaker? These are possibilities that come to mind:
Vote again. Ask the volunteers subject to the tie to agree to flip a coin. Ask either to step down. Ask another board member to voluntarily step down so the two candidates in the tie can both serve. Go to court and ask for a determination. Take the next best vote getter for the Board.
If the Board does anything other than a runoff election, or go to court (an expensive endeavor), it seems to me that the candidate not getting the position because of the tie can cry foul and challenge the Board and the election. Sometimes the volunteers in the tie might be willing to step down, why not ask? Sometimes another board member might step aside to let new blood in. Why not ask? Sometimes the “contestants” might be willing to agree to a coin toss to settle as a tiebreaker, especially if they want to prevent protraction of the problems.
I would say look for a reasonable response to a difficult problem. The key is “good faith” because “legal” does not always present an option.
I am sure others out there have other suggestions and there may be some authority on this issue I do not know about. By the way, I speak only "Californian" for the purpose of explaining and understanding legal issues. Maybe there is a parliamentarian with a parliamentarian type of solution?? I do not profess to be an expert on that subject. If I receive any feedback from this blog, I will share it.
Posted by Beth Grimm at 12:48 PM
September 22, 2006
Who Gets to Call the Attorney for the Association in an HOA?
A reader sent me this question, and I think it is a good one. Here is the scenario (a common one): "Our board president consulted with an attorney regarding questions that the rest of the board were not knowledgeable about. The bill came to $600.00 for several phone calls and a consultation. Can the president meet with legal counsel wtihout other board members present and expect the HOA to pay for it? Please help. This doesn't seem fair."
When I get a call from any board member, especially the president, I believe that I have a right to assume that if the person is an officer, he or she has the authority to call me and ask for advice, but I generally ask anyway whether they are a board member, an officer, and if they are authorized to seek advice. Depending on the answer, I may
1. Ask for written confirmation of the authority and the questions, and possibly for the name or names of my authorized contacts.
2. Include the advice given a statement that I asked and was told the officer was authorized, to memorialize it.
3. Ask for written board approval signed by a majority of the board members, or all of the board members in some cases.
4. Come to an agreement to represent the board member if the association is not one of my clients and the board member is seeking advice related to their position on the board or the association.
The answer for the question of the authority to contact the attorney comes either from the documents or, if not specific, sometimes from past practices that have been acceptable to the Board members. Sometimes (many times in fact), authorized practices are not memorialized in writing but just happen over the course of time. When they are questioned, it is time to consider a written policy on the subject.
Whether it was inappropriate for the president to seek legal advice would depend on many things. It would depend on what the governing documents for the association say, what the nature of the inquiry is, and what past practice has been accepted. Usually the president can seek legal advice, but sometimes there are limitations on the authority. If any board member objects to this practice, he or she can propose that the Board adopt a policy with some parameters and limitations. However, it is not helpful to make the authority so limiting that in an emergency situation, someone on the board and especially the president, who generally has more power and authority than the other board members, cannot get legal advice. Preventive legal advice can save an association thousands of dollars.
The same question could be asked of the manager's authority to contact legal counsel. That should be made clear to the manager. And it should be discussed. When a manager contacts me about an association problem, I always try to remember to ask if he or she is authorized to contact me about the problem. I do specifically ask if the problem involves the manager or something the manager believes he or she should do but the board does not seem to concur. Some attorneys have a problem understanding that their representation is to the Board, not management (unless contractually it is otherwise clarified), and so go forward to help the manager to the detriment of the Board. I like to know everyone is on the same page before doling out legal advice. And it is important for counsel to be clear about who the client is.
But in the case above, I have to say the answer to the question is - it depends on the circumstances, the situation, the particular questions the president needed answered, the urgency, the documents and the common practices of the Association and Board.
Posted by Beth Grimm at 11:45 AM
September 15, 2006
Are Proxies Overrated? More To Think About ...
SB 1560 is still as of today, to the best of my knowledge, sitting on the Governor of California's desk - waiting to be signed. Everyone worked on this clean up legislation diligently since it was discovered the new elections law was a disaster waiting to happen (last year sometime) and now we sit and wait for the Gov to come through.
Lots of people think this clean up legislation will be the saving grace for associations and end the proxy wars, because ...
The good news is that under SB 1560, if/when it is signed, the ballots returned to an association will count toward the quorum for any election and achieving quorum so as to hold the controlling votes has been the most widespread purpose of proxy wars in the past. Even without the interest needed to generate a "proxy war", many an association was saved by sending out yearly proxies, asking owners to sign in case they could not attend the annual meeting, and keeping them on file.
So now, can we rejoice that proxies will no longer be necessary to have an election, especially for the Board?
Don't jump up and down too fast.
If you eliminate proxies, what are you going to do if an owner wants to give the proxy to another to vote at a time when the ballot packages are not yet ready (such as leaving the country or state for a job or to take care of a sick relative). Some of us have been pushing retraining owners to hand over the ballot packages (after validating them, which includes signing the outer envelope) as a means of allowing owners to let someone else vote on their behalf if they do not want to lodge their own vote. That works, as long as their is a ballot package to hand over.
What if you are holding the election for directors without tying it to the annual meeting (because neither your documents nor the law says you have to have a meeting). Then, you may establish a quorum for the election (if you are lucky) but not for any separate annual meeting you still intended to have, and at which you intended to vote on the annual IRS election or approval of last year's meeting minutes.
What if you do combine the mail ballots with a meeting and there is a tie. In the past, the proxies generally enabled the Board to hold a runoff election right there and then. Not any more. Now, the Board will have to go back through the double envelope ballot system, I presume.
What if you are at a recall meeting and the entire board is recalled. In the past, the new board could be elected that same night because of attendance and proxies. What now - do you have to go back through sending out the double envelopes mail ballots for the new Board? Who will conduct that election - the old recently recalled Board?
What if you cannot get a quorum of returned ballots, can you send out followup packages and let the members know you need them to vote? If they send in a second package, can you count it? I am presuming the answer is no because ballots are not revocable once received by the Inspectors.
I have had dialogues with readers, other professionals, the aide to the author of the two elections bills, and many many people and like one of my readers said. "Every day its a new headache, isn't it?"
Lots of people are calling me because I write rules asking how to resolve these issues. All I can say is try to anticipate the issues BEFORE your first meeting under this new law, and get help from someone who knows. You can ask the author of this law or his aide, but remember the old adage, ... you get what you pay for. And also remember that this law was written because of what appears to be a presumption on the part of the author that HOAs needed major reform in elections - so don't expect any sympathy.
And I have news for you. New, complicated law is not going to solve elections abuses. I have already seen and heard of some in the making. And at the same time I have seen many, many service providers and boards trying to figure out how to have a [guaranteed] legal election under this new law, given many past experiences that do not fit into a neat little box of fixes under this new law. Folks, there ARE NO GUARANTEES.
Take an aspirin and call me in the morning! (Not really, if everyone who was baffled by this law called, my paying clients would never get through, and I - and they - might get testy).
You can check out my website. I am setting up affordable telephone conference and face to face learning seminars for this and other issues. 2 hours of brainstorming, $25 plus telephone service fees. Sound interesting? Go here:http://www.californiacondoguru.com and check out the learning opportunities. The more interest, the more classes.
Posted by Beth Grimm at 5:10 PM
September 11, 2006
Holding Onto Election Materials in HOAs - Challenges to Elections - What's the Limit?
SB 1560 - SB 61 - In California, the law on elections has been written, rewritten, praised, condemned, twisted, turned and warped out of control. SB 61 was the 2005 version of the law which became effective January 1, 2006 but not operative until July 1, 2006. SB 1560 is the clean up bill which is not yet signed by the Governor but which will take effect immediately when it is signed and becomes "operative" on July 1, 2006, which would make it retroactive when it is signed. What we are in now is "limbo" - nothing new. We have been in "limbo" all year because of this urgency legislation that could change things any day. Associations that hurried to comply with SB 61 had rules written prior to July 1 yet if their election is held after July 1 and after SB 1560 is passed, they may be out of compliance with the law because the way SB 1560 is written (as operative July 1) any rules written under SB 61 could be, in part, wrong. If they have election rules written today (September 11) to encompass SB 1560 but the bill is not signed into law before an election takes place or at all, then they will be out of compliance with the rules written that take into account SB 1560 - confused enough yet? Check out my website for a continuing diatribe on the changes and quandries California HOAs have faced and are facing because of SB 61 and SB 1560 - see the guru at http://www.californiacondoguru.com.
I have a reader who thought they had figured out one aspect of the new elections law. This is her question and her own answer and it is a good example of the problems one can encounter if one does not have intimate knowledge and understanding about these bills, the process, and the conflicts and challenges they present to the public:
Question From Reader: "Is there a law which states how long you have to hold ballots after an
election if the inspector of elections has verified the count?"
Her Own Answer After She Proudly Thought She Had Figured It Out On Her Own: "I found the answer to my question by way of SB1560. CC 7527 says 9 months, so I guess the answer is 9 months. But as far as I can tell, SB1560 has not been signed by the governor. Regardless, 7527 has been around "forever" so of course it prevails."
My answer to all of this: NOT EXACTLY!!!!!
Here's why:
SB 61, the original bill, said this about holding the ballots:
"(h) The sealed ballots at all times shall be in the custody of the inspector or inspectors of election or at a location designated by the inspector or inspectors until after the tabulation of the vote, at which time custody shall be transferred to the association.
(i) After tabulation, election ballots shall be stored by the association in a secure place for no less than one year after the date of the election. In the event of a recount or other challenge to the election process, the association shall, upon written request, make the ballots available for inspection and review by association members or their authorized representatives. Any recount shall be conducted in a manner that shall preserve the confidentiality of the vote."
BUT SB 1560 SAYS THIS ABOUT HOLDING THE BALLOT MATERIALS:
"(h) The sealed ballots at all times shall be in the custody of the inspector or inspectors of election or at a location designated by the inspector or inspectors until after the tabulation of the vote, and until the time allowed by Section 7527 of the Corporations Code for challenging the election has expired, at which time custody shall be transferred to the association. If there is a recount or other challenge to the election process, the inspector or inspectors of election shall, upon written request, make the ballots available for inspection and review by an association member or his or her authorized representative. Any recount shall be conducted in a manner that preserves the confidentiality of the vote.
(i) After the transfer of the ballots to the association, the ballots shall be stored by the association in a secure place for no less than one year after the date of the election."
So now, if SB 1560 is signed, the intent seems to be that the Inspectors will hold the ballots until the time for challenge has passed, rather than after the votes have been counted. Someone could argue that the Association has to hold the materials for a whole year once received. However, I verified with the legislator's office staff that the intent is still, although the language is rough, that records shall be retained for the year after the election, and the time the Association holds the materials combined with the time the Inspectors hold the ballot materials is a year together, not counted separately.
For every crazy glitch provided by the new Elections Reform Law, there has to be a practical solution. I suggest (but YOU CANNOT CONSIDER THIS LEGAL ADVICE) that the Inspectors DESIGNATE (as they have the option to designate "or at a location designated by the inspector or inspectors until after the tabulation of the vote,...") that the Association keep the ballot materials in a sealed box that says the Inspector(s) must be contacted before opening the box of materials. Otherwise, for an association that uses members for the inspectors or an inspector that does not have storage capability, there is another conundrum created by this new law. So this may help with the "storage " issue, but not the "challenge" issue.
About possible challenges, it looks like the intent is that the Inspectors are expected to hold the ballots during the times of possible challenge (which per Civil Code Section 1363.03 would be 9 months) and then Association is expected to hold the ballot materials for the rest of the year (which would be for 3 more months after the 9 months the inspectors are expected to hold them). Why am I saying this? Because Corporations Code Section 7527, identified in 1363.03 allows members of a corporation 9 months to challenge an election.
And, there is still a conflict, Civil Code Section 1363.09 which was part of SB 61 and remains unchanged by SB 1560 says: 1363.09. (a) A member of an association may bring a civil action for declaratory or equitable relief for a violation of this article by an association of which he or she is a member, including, but not limited to, injunctive relief, restitution, or a combination thereof, within one year of the date the cause of action accrues. Upon a finding that the election procedures of this article, or the adoption of and adherence to rules provided by Article 4 commencing with Section 1357.100) of Chapter 2, were not followed, a court may void any results of the election."
1363.09 presents the remedies for violation of the new elections statutes! It provides a one year statute of limitations for actions related to elections, which is (when SB 1560 is signed into law) presents a direct conflct with 1363.03 which incorporates Corporations Code Section 7527. Are you dizzy yet? I am not done.
Now, for this part of my reader's [law-challenged] assumption: "Regardless, 7527 has been around "forever" so of course it prevails."
Once again, I have to say "NOT EXACTLY".
The Corporations Code Sections that govern elections do not "of course prevail." Many practitioners (including this one) wish they did, because the Nonprofit Mutual Benefit Corporations Code was well thought out and contains few inconsistencies and no conflicts that I can find within its own pages. I cannot say the same for the new Elections Reform Laws and the Davis Stirling Act. If you have not yet read anything that points out the many confusing crossover issues as to how this new law integrates with the Corporations Code, and how it conflicts with the existing provisions of the Davis Stirling Act, I suggest you visit the guru (my website at http://www.californiacondoguru.com), click on the link to the information about SB 61 and the new elections law, and click again on the choice to see everything that is wrong with SB 61. I have yet to figure out everything that is wrong with SB 1560 - as I am still receiving questions leading to new ways of thinking about application of it. But I suggest you read these passages from the bills SB 61 and SB 1560 and determine whether anyone who can figure out what controls - and when - deserves a big prize!
SB 61
"(b) Notwithstanding any other law or provision of the governing documents, an election within a common interest development regarding assessments, selection of members of the association board of directors, amendments to the governing documents, or the grant of exclusive use of common area property pursuant to subdivision (d) of Section 1363.07 shall be held by secret ballot in accordance with the procedures set forth in this section. ...
(j) The provisions of this section apply to both incorporated and unincorporated associations, notwithstanding any contrary provision of the governing documents."
SB 1560
" (l) The provisions of this section apply to both incorporated and unincorporated associations, notwithstanding any contrary provision of the governing documents. ...
(m) The procedures set forth in this section shall apply to votes cast directly by the membership, but do not apply to votes cast by delegates or other elected representatives. ...
(n) In the event of a conflict between this section and the provisions of the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code) relating to elections, the provisions of this section shall prevail."
So I think what this all means about challenges to elections is that whether or not your association is incorporated, there is a one year statute of limitations on challenging elections in effect that will remain in effect, even after the [seemingly botched] attempt to conform the statutue of limitations to 9 months so it would be consistent with the Corporations Code Section 7527. Furthermore, I believe HOAs have to hold on to the ballot materials for at least a year. The change of language to include reference to 9 months for anything seems to be of no effect. And if you have delegate voting, the new balloting procedures do not apply to the delegates votes so the Corporations Code and documents would still control as to the delegate voting (but may apply to the election of the delegates).
.
But the bottom line is that you need to ask your own attorney about this if you want a legal opinion because, once again, I remind you that I am only here to inform! And to make you think before you leap.
Regards ........................
Posted by Beth Grimm at 1:33 PM
September 7, 2006
More on the New Elections Law - What Issues Does SB1560 Solve? Present?
I have had a little more time to digest what matters SB 1560 addresses and what issues it raises and I am answering some of the individual questions I have received in this blog. Much of it will also be incorporated into a communication that will be directed to all managers and board members that have received rules from me. I am always open to questions and try to answer them here and on my website, a location where you will find much more about the new elections reform law (http://www.californiacondoguru.com. Just click on the link to SB 61 information on the first page.
All of this presumes that SB 1560 will be signed into law sometime between now and the end of September. I am informed it is on the Governor’s desk and has gone to his office without opposition. However, be advised that things can change. I will keep web visitors informed with any news to the contrary indicating a problem. Timing under this new law is all but impossible because we were dealt a reform law that was extremely difficult to analyze and apply, given the constant flux of pending cleanup legislation, and now are looking forward to clean up legislation that will fix some things, and cause problems in other areas. Well, nothing is perfect. Worst of all though, it all comes with a price tag.
ACHIEVING QUORUM: SB 1560 adds a component that makes it clear that association documents and/or California law dictate the quorum that is required for an election. For Board elections, the quorum is generally listed in the section discussing the annual meeting, but may be a subject in and of itself. In any event, the annual meeting generally has a quorum requirement tied to it. Some documents allow for a certain specified quorum for the first meeting and lowered quorum for an adjourned (second and subsequent) meeting, called for lack of a quorum at the first meeting. Although you will see below that meetings may or may not be required, holding all of the elections that take place on an annual basis in conjunction with a meeting could be helpful if you have a problem generally getting a quorum for elections. The quorum and voting requirements for other elections covered by the new law for the most part will be different than the annual meeting quorum - as it is dictated either by another clause in the documents or the Davis Stirling Act. (See Civil Codes 1355, 1366, and 1363.07, the amendment section of the governing documents, and Corporations Code Section 7222 and other sections related to recall elections..)
PROXIES - DO YOU NEED THEM? SB 1560 says that ballots that are returned to the Inspectors can be counted toward the quorum requirements of the Association. Thus, proxies may no longer be necessary for your association. However, beware: If your documents do not require a meeting for elections of directors, but you do need to pass the annual IRS election (check with your CPA), or want to make sure you have the best chance at a quorum for approving minutes from the previous annual meeting, then you either need to hold the IRS election vote on the same ballot as the written ballot for directors’ election, at the membership (not board) meeting where the ballots are being counted, or with a quorum otherwise established (via a valid proxy for example).
Visit the website for much more on proxies. Click on the link to the September 9 posting there. See if you think you should do away with proxies altogether. There are ramifications to that. What if an owner is leaving the country and wants to give his or her right to another to vote? If no ballot package is ready, you will need a process to make that happen. Thanks to readers raising these questions, I can help you think about them ahead of time and integrate practices into your rules and guidelines that address these questions that may also come up for your association.
ABOUT MEETINGS - HAVE EM OR NOT? SB 1560 says that there is no requirement to have a meeting with an election under the new processes, unless the governing documents provide otherwise. Most governing documents call for an annual meeting, at least, but are not so “dictatorial” on nominations from the floor or use of proxies. In other words, sometimes the language is mandatory and sometimes it is discretionary. So these are things that you need to pay attention to in setting up your processes for the annual elections. Most governing documents do not require meetings for other subject matter elections and some allow written ballots for all elections. Some limit this option to all elections other than the board elections, sending a clear intent that the annual elections for board members should be done at a meeting. In these cases, I believe the Board can either send out the ballot ahead of time whether or not there are enough candidates for an election, or seek nominations at the meeting and send out the ballot afterward, but there is no way other than use of proxies to establish the meeting quorum if you sent out the ballot after the meeting.
I hope this helps. You need to consider these things in setting your own association rules. Help is available (see proposal for writing rules and guidelines on my website). And please keep in mind that we as attorneys cannot do this work for free. It is complicated and sometimes mind boggling to write processes and procedures that anticipate all of the possible problems you can run into in applying this new law. Remember that it is the legislators in Caliornia that are causing the stress and need for paying to have rules written and then revising rules that are already in place, and not the lawyers. Please do not “shoot the messenger!”
Beth
Posted by Beth Grimm at 10:09 AM
September 1, 2006
Method of Assessment Payments - Who Decides?
Who decides how assessments are paid? Here is a question from a reader:
Can an HOA decide how you pay your dues? Can they require that you use automatic bank deductions? Use a certain bank? Accept only money orders?
Basically, the answer is "yes" to the question as to whether the Board of an HOA can generally decide where assessments are to be sent/deposited and it would probably be reasonable of the HOA Board to require that they be made in some form other than cash. And an Association can get advantages and savings sometimes by working with a certain bank. These options make sense. Many Associations require that payments be sent into a bank directly to be deposited by the bank and the accounting for the deposits is then sent to the manager or Board. The reason for these processes is streamlining in collections and recordkeeping of deposits. This should save the Association money over collection by the bookkeeper or manager, and also serves as a check and balance with regard to control over funds coming in. However, I believe that requiring automatic deductions from personal bank accounts is taking things a bit too far. Not everyone wants an HOA to have access to their bank accounts. This method of payment would assist the association and owner in getting assessments paid on time, but unless the association governing documents said that the Board could require automatic deductions, and even then .... well, I would not recommend it. In California, an owner can request the overnight mail address for mailing payments (which requires a street address rather than a PO box for some overnight services), and can request a receipt and I believe these entitlements, although unnecessarily onerous in most cases, indicate that owners have some rights too.
As for requiring payments to be made by money order, I believe that Boards could require payments in some form other than cash, as there is no way efficiently to deal with cash. But requiring a money order over some other form of payment such as a personal check seems again to me to be taking things too far.
Sometimes I am not given all the facts and this seems it could be such a case. I could understand and would believe a reasonable exception to be a case where an association may demand payment in some form that is guaranteed negotiable such as a money order or cashiers check. If an owner was chronically delinquent in his or her assessment payments and the Board was asked to enter into a payment plan with the owner, it is likely in that case that the Board may require negotiable payments or automatic deductions to be set up so that it did not have to continually deal with the chronic late payment of payments under the agreement so you can see that there are two sides to every question. .
Posted by Beth Grimm at 9:28 PM