A little over a month ago, a number of homeowners requested a special meeting to reverse the rule changes adopted by the board of directors at the regular meeting on 21 January 2010. In response to a question from one of our board members about how to proceed on the matter, I sent an email to the board of directors outlining what I believed to be the required course of action. At the most recent regular board meeting and in an email to a number of homeowners, the board president expressed his (opposing) opinion that if the quorum requirement of 51% is not met, then the effort to reverse the rule changes simply fails without a reduction of the quorum requirement as applies with annual elections. What follows is what I found after further researching the relevant laws.
A reversal or "veto" of rule changes by an association's membership is governed by Civil Code 1357.140. According to subsection (a), 5% of the members are required to call a meeting; and according to subsection (b), they must do so within 30 days of the notification of adoption of the rules. Subsection (b) also requires the board to hold a special meeting and give notice of it in accordance with Corporations Code 7511 or alternatively, according to subsection (c), hold a vote of the membership by mail in accordance with Corporations Code 7513. If a meeting is held, then according to subsection (e), said meeting is governed by Corporations Code 7510.
Subsection (d) of Corporations Code 7510 reads, in part:
The votes represented, either in person (or, if proxies are allowed, by proxy), at a meeting called or by written ballot ordered pursuant to subdivision (c), and entitled to be cast on the business to be transacted shall constitute a quorum, notwithstanding any provision of the articles or bylaws or in this part to the contrary. [...]The latter part of the quoted section turns over requirements for quorum to the association's bylaws which in section 3.03 state, in part:
The presence at any meeting, either in person or proxy, of Members entitled to cast at least fifty-one (51%) percent of the total voting power of the Association shall constitute a quorum for any action except as otherwise provided in the Planned Development Documents. If, however, such quorum shall not be present or represented at any meeting, a majority of the Members entitled to vote thereat shall have the power to adjourn the meeting to date not less than five (5) days nor more than thirty (30) days from the meeting date, at which meeting the quorum requirements shall be one-third (1/3) of the total voting power. [...]The assertion that the measure would fail if quorum is not met on the first attempt appears to be predicated on subsection (b) of Corporations Code 7513 which states, in part:
Approval by written ballot pursuant to this section shall be valid only when the number of votes cast by ballot within the time period specified equals or exceeds the quorum required to be present at a meeting authorizing the action, [...]The language here is not clear as to whether the measure "fails" or if approval is simply not valid, in which case the matter is not actually resolved and the association needs to find another or additional means by which to come to a final resolution.
It is also worth noting (again) that this entire exercise may be academic as the rules may be unenforceable due to the fact that the board did not provide proper notice of their adoption in accordance with Civil Code 1357.130(c).
The email that Tom sent out indicated that the board passed these rules over the objections of the homeowners who took the time to write in because these homeowners didn't ALSO show up to the meeting to defend their objections (a requirement NOT set out by the documentation accompanying the rules change documents). I'd like to note that not all homeowners can make the meetings, and that parking in our meeting location is not great, an issue which would have been relevant at the meeting in question due to the rainy weather making walking not really an option. Perhaps most importantly, the deadline for comment on the rules changes had passed several days before the meeting was held. So the board basically gave more weight to people who turned up to voice their opinions after the deadline than to people who voiced their opinions in the manner set out BY THE BOARD in the original mailing.
ReplyDeleteNow several homeowners have gone above and beyond to get these rules overturned (and I'm with them, and would have signed the petition if I had been asked, if for no other reason that limiting people to two fish in an aquarium is flat out ridiculous, and the letter of these rules changes does exactly that), and the board is essentially refusing to give them the meeting that they requested in their petition.
This is pretty much a slap in the face to anyone who worked to get this special meeting called, and to anyone who chose to write to the board with their concerns and have them discounted because they weren't at the meeting - which was held AFTER the deadline for giving comment on the rules changes.
Basically, what the board has said by passing the rules changes over homeowners objections and in not allowing homeowners to speak in favor of or in objection to the rules change veto is that homeowner input is neither welcome nor important.
This impression is further emphasized by the email sent out by the board president which
a) points fingers at these homeowners and blaming them for costing the association money and
b) through opinionated wording, encourages homeowners to not turn in their ballots so quorum is not met (thus wasting the money of the association and building enmity toward the homeowners who took measures to actually be heard by the board)
This is reprehensible, as are the comments of the board secretary who stated that there was "violent opposition" to the rules changes during the open meeting. Really? What violence has occurred?
Frankly, this "meeting" would not have been called if the board had chosen to actually pay attention to the written concerns of the homeowners.
The idea that the special "meeting" is to "count" the ballots only is laughable. The request for a meeting was to try to hold an intelligent discussion regarding the rules changes and the reasoning of those wishing the changes.
ReplyDeleteThe voting by mail and the expense involved when our reserves are at 20% is not only lacking in judgment, but also irresponsible. Those on the board that agreed to this handling of this matter should be ashamed of themselves.
The issue could have been handled by calling a real meeting and hashing it out together.
@Marna:
ReplyDelete"the board passed these rules over the objections of the homeowners who took the time to write in because these homeowners didn't ALSO show up to the meeting"
It's worse than that; the board didn't give any weight to those of us (only me, actually) that *did* show up at the meeting to object, either.
"the board is essentially refusing to give them the meeting that they requested in their petition"
The petition specifically requested a "vote to have the rules vetoed". The petitioners didn't actually ask for a meeting in the petition, and even if they had, rightly or wrongly, the board is empowered to hold the vote by mail instead of at a meeting according to Civil Code 1357.140(c).
"This is reprehensible, as are the comments of the board secretary who stated that there was "violent opposition" to the rules changes"
C'mon. :) People use that phrase all the time, and they don't necessarily mean that actual violence is taking place. Arguably, he should have said "vehement" (or something similar), but I'm willing to look the other way on this one.
I agree with everything else you said.
@Margit:
ReplyDelete"The voting by mail and the expense involved when our reserves are at 20% is not only lacking in judgment, but also irresponsible."
Even if there was going to be an actual meeting, ballots would likely have been mailed anyway, and that would have been in the best interests of the petitioners because getting 81 homeowners in this association to attend a meeting borders on impossible.
"Those on the board that agreed to this handling of this matter should be ashamed of themselves."
There was no agreement (or even vote) on this particular matter. The board set the timing of the meeting, but the board's president took it upon himself to contact the association's legal counsel, decide on a course of action, and draft the letter you received with your ballot without consultation of the full board of directors.
"The issue could have been handled by calling a real meeting and hashing it out together."
I wish that were true, but I suspect that even you don't believe that it is. :)