Published on: February 28, 2011
“It has been said that democracy is the worst form of government except all the others that have been tried.” – Winston Churchill
Condominiums are truly self-governing communities, reflecting democracy in its purest form. Residents can vote on the issues that directly affect them and have a powerful say in how their communities are governed.
So you would think that annual elections to select the board members responsible for protecting owners’ interests and preserving their property values would exemplify democracy in action; in fact, condominium elections more often reflect democracy inaction. Much has been said about the difficulty of finding volunteers willing to serve on community association boards, but the far greater problem is achieving the quorum required to elect them. “What if you had an election and no one came?” This is not just an academic question for community associations. It is a constant challenge for many of them.
Some boards have found that adding a social component – combining the annual meeting with a cook-out or other celebration – can improve attendance. Making voting as easy as possible, by distributing absentee ballots and soliciting proxies, can also help to avoid a quorum shortfall. But sometimes no enticements boards can offer and no combination of badgering and cajoling will persuade the requisite number of owners –usually around 50 percent – to participate in the election process. In these cases, boards have several options:
- Reschedule the meeting and try again. This may be worth a try, but the chances of success aren’t great. Owners who didn’t attend the first meeting are unlikely to attend the second, and those who attended the first, may not return.
- Hold the meeting open for 30 days and try to secure enough proxies or absentee ballots to meet the quorum requirement. This is a better option than rescheduling for most communities, especially if you only need a few votes to achieve a quorum. You can almost always get enough proxies by asking for them; you just need someone who is willing to make the effort.
- Lower the quorum requirement. If quorum problems are chronic, owners can vote to amend the association documents to reduce the quorum requirements; 35 percent to 40 percent may be more feasible than 50 percent for many communities. But you don’t want to set this bar too low because of the risk that a small number of owners will control the board and the community. Although some might argue that the people who care enough to vote should make the decisions, the potential for abuse is a serious concern.
- Let the board fill the vacancies. Most documents allow the board to appoint trustees to fill positions that have remained vacant for a specified time – usually 30 days. The obvious disadvantage: If the quorum problem persists, the board can continually reappoint itself, resulting in government more by default than by and for the people.
- Ask a court to appoint trustees. If you can’t get a quorum at the annual meeting and the board can’t agree on replacements, the association can ask a judge to select the trustees. But this is a last resort; it is an impractical and expensive way to do something owners and the board ought to be able to do themselves.
Votes for Sale
Quorum problems aside, most association elections proceed smoothly. New board members replace old ones (staggered terms are best- you don’t want the entire board to turn over simultaneously), vacancies are filled and the board continues to operate without interruption. But not always. Disputes about the eligibility of candidates or authenticity of proxies, allegations of fraud and even bribery, while rare, are not unknown.
At one association we represented, a resident who owned several units had fallen significantly behind on his fees. Annoyed by the board’s collection efforts (he was able to pay, but didn’t want to), this owner decided to run for a seat himself. He showed up at the annual meeting offering $100 to everyone who agreed to vote for him and promising to wipe out any back payments they owed. Not too surprisingly, he won. His first act was to persuade the board to fire us as the association’s law firm; his second was to terminate the collection actions against him. Clearly, this owner sought a board position purely for his own financial benefit – an obvious breach of his fiduciary duty and grounds for seeking his removal.
Money also figured prominently in a dispute at a Massachusetts condominium, where owners were voting on whether to revive development rights, which had expired. With several million dollars at stake, the developer went around the complex offering several thousand dollars to owners who would sign a petition supporting renewal. But he made it clear to anyone who hesitated that the financial incentives would end as soon as he hit the 75 percent approval mark the documents required, which meant that owners who didn’t sign when they had the chance might lose out on the cash.
The developer’s strategy put immense pressure on the trustees, who, faced with the possibility that the developer would get the support he needed, ultimately settled the related litigation.
Not So Fast
These two examples, though colorful, are not representative; most condominium election disputes involve allegations that the community’s voting procedures weren’t followed or weren’t fair. And the majority of these disputes, by far, arise when owners attempt to remove an existing board.
Condominium documents usually establish removal procedures, which owners initiating a removal attempt often ignore. The documents typically call for the requisite number of owners (usually more than 33 percent) to sign a petition demanding that the board hold a special meeting at which owners can vote on removing board members, with notice and an opportunity for both sides (for and against removal) to be heard. The removal itself usually requires a 51percent vote to succeed.
Dissidents will often attempt to skip the meeting along with the advance notice and opportunity to debate the removal, which are essential to ensure that the process is fair and open. Instead, they will obtain the signatures of 51percent of unit owners on a removal petition and then unilaterally file the petition in the Registry of Deeds as formal notice that the board has been replaced.
Owners pushing to remove a board often prefer to avoid the meeting (if they are aware of the requirement) because they aren’t sure they will get all the votes they need at a single meeting. It is often easier to persuade owners to sign a removal petition by going door-to-door over an unspecified period of time and presenting only one side of the issue, than it is to obtain a 51 percent removal vote at a meeting where both sides have an opportunity to be heard.
The meeting also serves another important purpose: It provides a means of verifying the identity of voters, their eligibility to vote, and the accuracy of the balloting. Removal petitions permit no such review. In fact, petitions may be several months old when they are submitted, some owners who signed may have moved in the interim, and there is no way to verify that the owners whose names are on the petition actually signed it.
We Are the Board!
Desirable or not for either side, the special meeting isn’t an option – it’s a requirement. That’s how a Land Court judge ruled in a removal dispute triggered, like many, by a special assessment. The dispute began when a couple of owners sued the board for failing to resolve leaks in their units. After settling with them, the board hired an engineer, who concluded that the leaks were a community-wide problem that had to be addressed. When the board levied an assessment for that purpose, the owners who had sued initially over their leaks initiated a removal petition, arguing that the assessment was unfair and unnecessary. (Removal petitions are not always grounded firmly in logic.)
More than half the owners signed the petition, which the dissidents promptly filed in the Registry of Deeds, had duly notarized and then presented to the bank as evidence that they were the new board and should have control of the association’s bank records. When we notified the bank that the recall was being challenged, the bank froze the association’s funds pending a court order resolving the dispute.
The court subsequently accepted our argument that a special meeting was required, at which owners could vote for or against the removal. The meeting produced a close vote and another challenge. The association’s documents specified that in order to run for office or vote in an election, owners had to be current on their fees and assessments, a somewhat unusual but reasonable provision. It turned out that some of the dissidents had refused to pay the disputed assessment; when their ballots were disqualified, the vote fell short of the 51 percent required for recall.
Back to court we went, with the dissidents screaming at the judge, “This is America. You’re supposed to have fair and open elections!” The judge pointed out that the documents were unambiguous and that the dissidents had “constructive knowledge” of the voting requirements, notwithstanding their argument that they were unaware of them.
You Can Work it Out
No one ever really “wins” these disputes, regardless of how a judge rules on them. That’s why we urge boards confronting removal petitions or election disputes of any kind to avoid a bitter battle, if they can. They inevitably produce large legal bills and a reservoir of ill will that can foul the atmosphere in the community for years. If more than 75 percent of the owners have signed a petition to remove the board, we will usually advise them to resign. But if the margin is narrower, it may be worthwhile to have the vote, because it could go either way. The dissidents may not have a quorum at the meeting, some of the proxies may turn out to be invalid, or the board may be able to sway enough votes to defeat the removal.
The latter – defeating the removal – is a real possibility. Many removal initiatives, if not most of them, result from the board’s failure to communicate with owners – usually, about the need for a special or supplemental assessment. A meeting at which owners can voice their grievances and board members can explain their actions often is all that is required to clear the air and produce a vote supporting the board.
Most election challenges can be resolved through negotiations or by re-doing a contested vote. When a losing candidate in one trustee election claimed that some of the proxies submitted were invalid and some had been collected but not turned in, we suggested that the board re-do the election. The winner objected initially, but agreed when we pointed out that more than 50 percent of the owners were likely to vote to remove him anyway. We then persuaded the candidate who seemed likely to win the re-vote not to run again, so the election wasn’t contested after all.
As in this dispute, calmer heads usually prevail. Serving on a condominium board is an unpaid position – it is not usually the most important thing in anyone’s life. But sometimes, as in the Land Court case described earlier, election disputes end up in litigation, and those that do are usually doozies.
Who’s On First?
Pity the judge who had to sort out a disputed election at another Massachusetts condominium. You’ll need a scorecard to keep track of all the players, but here goes. The starting point is April, 2004, when five trustees (whom we’ll call Bird, Johnson, McHale, Parish and Ainge were elected to the board. Parish submitted a letter of resignation in July, 2004, but it wasn’t filed until December of that year. And the condominium documents specify that a resignation doesn’t take effect until the written document is filed at the Registry of deeds. Johnson resigned August 1, but never filed his letter.
Assuming – incorrectly – that Johnson and Parish had resigned, the other three board members met in October, 2004 and appointed Garnett and Pierce to fill the two vacancies. As it turned out, Bird was ineligible to serve on the board, because he did not own a unit at the time.
In addition to voting to fill two vacancies that did not really exist, the board (with one ineligible member voting) called a special meeting for December 4, 2004, “to discuss financial matters at hand” – primarily the need for a special assessment to finance essential repairs. Notice of the assessment infuriated Lambieer, who sent a letter to absentee owners soliciting their proxies in a move to unseat the board.
The special meeting was held, as scheduled, but when the discussion became heated, the moderator adjourned it without any action by the board. Lambieer and his supporters continued meeting, however, and voted to elect three new trustees – Lambieer, Isiah and Mahorn– whom the sitting board refused to recognize.
Meanwhile, Parish formally resigned from the board, leaving Johnson, McHale and Ainge, who continued to serve as a board of three until the annual meeting in April, 2005, when another election was held. Rondo and Perkins got the most votes, but Perkins resigned immediately. Johnson had never filed his letter of resignation but his term expired. The board appointed Bird (who now owned a unit and could serve legally) and Garnet to fill those two vacancies.
The whole mess wound up in Land Court when Lambieer filed suit, seeking to claim the three seats he said he and his supporters had won in the vote at the December special meeting. Here’s how the court sorted it out.
On the major issue – Lambieer’s claim to have been elected, with two others, to the board – the court ruled against him, finding that the special meeting at which that vote was held was invalid for two reasons:
- Only items listed on the agenda could be considered and the election of new trustees wasn’t on the list; and
- The board’s vote to schedule the meeting was itself invalid, because one of the three members (Peters) was ineligible to serve at the time, leaving the board short of the quorum required to make decisions.
The board did not fare as well on other points. The judge refused to dismiss Lambieer’s claim that the board had improperly assessed him for the cost of defending his election challenge, ruling that a trial might be necessary on that issue.
Additionally, the board had contended that in addition to selecting new trustees at the April, 2005 annual meeting, owners had also ratified the appointment of the trustees the board had named in October, 2004. The board, apparently, was trying to validate decisions made during the interim period preceding the annual election at which all the trustees (finally) were duly and properly elected. The court was unwilling to provide the legal cover the board sought, however.
“Such a vote may have taken place,” the court said, “but as a matter of law, it could not and did not accomplish what the defendants claim.”
The first problem, according to the court: Bird did not own a unit in October and so was not eligible to serve on the board. Ratifying his appointment, by any means, did not make it valid. The second, more fundamental problem, the court noted – only the trustees have the authority to ratify prior board actions. Owners have no such power.
Because no one had challenged any of the board’s interim decisions, the judge noted (no doubt to his immense relief), the court hasn’t been asked to rule on their validity. “I have only been asked to declare the identity of the trustees during the disputed time periods, which I have done in this memorandum.”
We discuss this convoluted election challenge not because disputes such as this are common (fortunately, they are quite rare), but because it illustrates the problems that can arise when an association’s election procedures aren’t clear or when boards don’t follow them. Boards can reduce the risk that election results will be challenged by taking a few basic precautions. We suggest the following:
- Review the election requirements outlined in the condominium documents and make sure the board’s election procedures are consistent with these provisions.
- Communicate the election requirements and procedures to owners well in advance of a scheduled election. This election notice should specify, among other details:
- The eligibility requirements for serving on the board and for voting in the election.
- The procedures for submitting proxies and absentee ballots and how they will be validated.
- The date, time, and place of the election.
- Schedule the election to maximize owner turnout and reduce the risk of a quorum shortfall. Don’t hold the meeting on a Friday night or on a major holiday; if you’re in a vacation community, plan the election for when owners are most likely to be there.
- Encourage owners interested in running for open board positions to announce their candidacies and submit information about themselves, explaining their reasons for running, in advance. But don’t disqualify owners who fail to do this; the board should also accept nominations at the annual meeting.
- Discuss election procedures with the association’s manager and attorney in advance. Identify possible problems and agree on how the board will respond.
- If you expect the vote will be contentious, have the association’s attorney attend the meeting and monitor the balloting. This can help to defuse tension and reassure owners who are concerned about the accuracy and honesty of the vote count. If you have reason to suspect efforts to tamper with the vote, send pre-printed, coded proxy forms and accept originals only. You can also insist that proxies be notarized, but you don’t want to make the process so complicated that owners are discouraged from voting.
The goal is to ensure that the elections are open and fair (and perceived that way) and to encourage participation by owners. That is the democratic ideal the country’s founders envisioned. Community associations have an opportunity to practice what the founders preached.