THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, July 27, 1996 TAG: 9607250282
SECTION: REAL ESTATE WEEKLY PAGE: 02 EDITION: FINAL
COLUMN: COMMON GROUND
SOURCE: G. ROBERT KIRKLAND and MICHAEL INMAN
LENGTH: 81 lines
Q. At a recent meeting of our homeowners association, we were to vote on the election of officers and two amendments to the bylaws. The quorum requirement is 50 percent and two-thirds of the members must be present in person or by proxy to vote on a proposal.
With the proxies counted (most of which were given to the association president), we had a quorum. These proxies were directed proxies instructing the holder on how to vote on the amendment.
There were a number of members present who were unhappy with one of the amendments and made a motion different from the proposal set forth in the proxy.
There was clearly a lot of sentiment in favor of the motion on the floor and it was seconded and discussed thoroughly.
The proxy gave the president and other proxy holders the right to vote on the issues set forth on the proxy and ``any other matters that came before the assembly.''
The president voted against the motion and had so many proxies assigned to him that his votes by proxy combined with other negative votes defeated the motion. This doesn't seem fair.
Was this matter handled in the proper fashion? It seems that the directed proxies should have restricted the president from voting the proxies at all on the motion from the floor. What do you think?
A. We believe the president was entitled to act in the manner that he did because of the language in the proxy that stated that a proxy holder could vote on any other matters that came before the assembly. The motion apparently was different from the one set forth on the proxy, so it is considered ``another matter.''
There is probably no greater source of controversy within associations than that raised by voting by proxy - and yet proxies seem to be critical in most annual meetings for the purpose of meeting the quorum requirements. Most bylaws require a significant percentage of owners to be represented in person or by proxy in order for a meeting to be conducted at all, which is referred to in the documents as ``having a quorum.''
It is typical for the proxies to appoint the president or another party who may be filled in by the handwriting of the grantor of the proxy. Most people simply sign the proxy giving the authority to the president.
This is not a bad idea because the president should be in a position to know everything that is going on. He will have sat in on meetings and read and reviewed documents that are essential to proper management of the association.
The president, of course, is a member of the board of directors and a unit owner as well, and one would expect that he would act in the best interests of the association, having extensive knowledge of the details of the affairs of the association.
We recommend that proxies allow for the assignment of proxy to any person to whom the grantor wishes to give the proxy but, indicating that if no other person is named, then the president shall be considered the proxy holder.
One of the disadvantages of allowing one's vote to be cast by another party is that new issues can be brought up for vote on which you cannot vote or dictate how you wish to vote, which is apparently what happened here.
While it is understandably disappointing that the president could carry enough weight with the proxies to defeat a motion that carried the sentiment of the group of owners present to consider the business at hand, in order for the system to work there is just about no other way to deal with the proxy situation. It is another demonstration of the results of lack of participation in person by those affected, i.e., the homeowners who live in the association.
One final note to the issues of proxies. You should also be aware that proxies can be tricky as far as their wording and format go. They are not something that should be prepared by the board, or even a manager, if there are amendments being proposed that are set forth and voted upon on the proxy.
You are urged to have your proxies either prepared by, or at least reviewed by, your legal counsel if there are any complex or controversial issues coming up for a vote. MEMO: G. Robert Kirkland, president of a Virginia Beach property
management consulting firm, and attorney Michael A. Inman specialize in
Virginia community association issues and are affiliated with the
Southeastern Virginia chapter of the Community Associations Institute.
Send comments and questions to them at 2622 Southern Blvd., Virginia
Beach, Va. 23452. To submit questions by phone, call 486-7265; by fax:
431-0410; by E-mail, grkirkland(AT)aol.com by CNB