Condos and HOA's

How to get the proxy votes needed for approval

This is the time of year when most condominium and homeowner associations have their annual meeting. When there is something to vote on, such as amending the governing documents, approving a property enhancement project, or waiving the annual audit, proxies are sent to the owners so that the requisite vote can be obtained to approve the amendments or alteration project or to save money by waiving the audit.

What many associations face at the meeting is the apathy of owners, who will not be at the meeting and also fail to mail in their proxy, resulting in a lot of owners views not being heard. Usually it is not an intentional act for owners to not send in their proxy. Rarely is the reason they did not send their proxy in is because they are against the questions being asked. Usually they don’t believe their vote is really needed or they just forget to send in their vote.

Many owners, who regularly invest in company stocks and bonds, get proxies from their invested companies all the time and lots of those proxies go to the circular file rather than being completed and sent back to the company. The same thing seems to happen with community association proxies.

If an amendment to the governing documents went out with the annual meeting documents, a lot of time, effort and consideration went into preparing the amendment by the board or a committee and the association’s attorney. The amendment may have been requested by a lot of owners or the board believed the owners would want to consider the amendment.

If proxy questions were included to waive the annual audit or roll over any excess funds, and if the requisite approval of those questions is obtained, then the association will save a lot of money in CPA expenses and possibly in taxes.

So you have good things that will probably result from obtaining the necessary approval of proxy questions, but many times these good things will not happen because not enough proxies are returned because of apathy.

In order to avoid this downside of not obtaining enough “yes” proxy votes, we suggest that associations form a committee to get the vote out. They should open the proxies as they are returned. A few days before the meeting, they should get on the phone or email owners, who have not yet sent in the proxy and ask them to do so. Owners can email or fax back copies of their signed proxies and the copies can be counted the same as the originals.

If you get to the meeting and such a committee was not formed, and therefore the requisite number of “yes” proxies was not obtained before the meeting, there is still a way to salvage the time and effort that went into the proxy votes.

At the meeting, it should be noted that many owners did not have the chance to vote yet, and that in order to give the chance to chime in on the proxy questions, the meeting should be adjourned to be reconvened at a date, time and place (within 90 days) for the purpose of the proxy votes only. If the date, time and place for the reconvened meeting is specified at the meeting, then no additional notice of the reconvened meeting, neither mailed nor posted, is required.

The remaining agenda items can then be addressed in the normal course of business at the original meeting.

Once the reconvened meeting date has been set, a committee can be formed to get the vote out so that enough approval votes will be in hand at the reconvened meeting for the questions to pass.

Rob Samouce, a principal attorney in the Naples law firm of Samouce & Gal, P.A., concentrates his practice in the areas of community associations including condominium, cooperative and homeowners’ associations, real estate transactions, closings and related mortgage law, general business law, estate planning, construction defect litigation and general civil litigation. This column is not based on specific legal advice to anyone and is based on principles subject to change from time to time. Those persons interested in specific legal advice on topics discussed in this column should consult competent legal counsel.