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TRANSFERRING VOTES
 QUESTION:
I have a question regarding votes in a board election. One of the
candidates received x number of votes. After the votes were tallied this
person wanted to transfer the votes he received to another candidate. I
told him I didn't think that was allowed.
ANSWER: You are correct, he cannot transfer his votes. Once ballots have been cast, they are irrevocable. Civil Code §1363.03(f). Once the votes have been tallied, the election is officially over and the results announced. Civil Code §1363.03(g).
Changing votes after the election is over is something a banana
republic would do. I know some may disagree, but we have higher
standards for HOA elections.
Proxies. There is nothing in
the law that allows a candidate to take votes cast for him and transfer
them to another candidate. The only device that comes close is a proxy.
Members can give a candidate an undirected proxy with the power to cast
the member's votes in any fashion he deems proper. Even so, once the
proxyholder has cast those votes, they are irrevocable. Unfortunately,
proxies lend themselves to fraudulent voting, which is why I recommend eliminating proxies (along with cumulative voting) from elections.
RENT RESTRICTIONS
IN THE RULES
 Rent Restrictions.
We adopted a 1-year minimum lease restriction in our Rules &
Regulations. Will this be grandfathered by SB 150 since the rule is in
our governing documents?
RESPONSE: Yes, I believe they will be grandfathered. Rules are part of an association's governing documents. Civil Code §1351(j).
Unfortunately, rules are not as strong as CC&Rs, but at this point
they are better than nothing (provided they are not in conflict with
your CC&Rs). Since time is running out, boards should contact their
association's legal counsel for appropriate rental restriction language.
MANAGERS AT MEETINGS
QUESTION:
The September 4, 2011 Los Angeles Times said that "Management employees, like
any other vendor, do not belong at association board meetings. Although
they may be invited to attend, they should not be taking minutes or
offering suggestions on the conduct or content of the meetings." Is that
true?
ANSWER: No it's not
true. But what should you expect, it's the L.A. Times. I noticed that
the paragraph did not cite any statutes or cases to support
the writer's position--that's because there are none. Board members are
volunteers and need to rely on vendors such as managers, lawyers and
CPAs to assist them in carrying out their duties. Even paid
professional directors on the boards of publicly traded corporations
rely on managers, lawyers and CPAs to assist them in carrying out their
duties, all of whom attend meetings at the board's invitation.
Increasing Burden. With
the increasing burden put on HOA boards by the legislature and the
courts, it is no longer possible for directors to fulfill their duties
without professional assistance. The law specifically
authorizes boards to delegate duties such as management, preparation of
minutes, preparation of budgets, etc. to others. Corp. Code §7210. Can managers attend
meetings and take minutes? Of course they can.
Professional Certification.
Managers can be an extremely valuable resource for boards. Professional standards for managers have steadily grown
over the years because of excellent training programs put on by the
Community Associations Institute (CAI) and the California Association of
Community Managers (CACM), which lead to certifications by each
organization. The top certifications are the PCAM (Professional Community Association Manager) and the CCAM (Certified Community Association Manager). Each requires a specific number of years of experience plus classroom training taught by attorneys and seasoned management
professionals.
RECOMMENDATION:
The smartest thing associations can do is to hire certified managers to attend
their board and membership meetings, take minutes, and make suggestions
on the conduct and content of meetings.
OPEN MEETING ACT
FEEDBACK
 Open Meeting Act.
I disagree that there is an "open
meeting" issue when a majority of directors are on the Finance
Committee. If what you say is accurate, directors would
essentially be prohibited from serving on committees where there would
be a quorum of directors present without giving notice to all the
owners. Other attorneys have opined exactly the opposite. -Robert B.
RESPONSE:
Directors are not prohibited from serving on committees but when it
comes to a quorum of directors I take the more conservative position—one
I believe the courts would take. The Open Meeting Act defines a board
meeting as follows:
"Meeting"
includes any congregation of a majority of the members of the board at
the same time and place to hear, discuss, or deliberate upon any item of
business scheduled to be heard by the board, except those matters that
may be discussed in executive session. (Civ. Code §1363.05(j))
To
get around this restriction, some argue that board members serving on
committees cease being board members and become committee members. It's a
creative argument but I don't believe it would survive judicial
scrutiny. The statute makes a specific exception for
executive sessions of the board but no exceptions for committee
meetings, workshops, or any other kind of meeting where a quorum of
directors get together to discuss HOA business.
Standing Committees.
The Open Meeting Act was modeled on the Brown Act, which means we can
look to the Act for guidance whenever in doubt--something the courts
would likely do. Under the Brown Act, there are two kinds of committees:
standing committees and ad hoc committees. Standing committees are
required to be open to the public. (Govt. Code §54952(b)). A parallel
for HOAs would be the Architectural Committee. As such, architectural
committees, with or without directors, should be open to the membership.
Ad Hoc Committees.
Ad hoc committees are advisory in nature, created for a specific task
and automatically dissolved when their task is completed. Under the
Brown Act, an ad hoc committee with a quorum of the board on the
committee must be open to the public. (Govt. Code §54952(b)). I believe a judge would find the same principle was intended in the language of the Davis-Stirling Open Meeting Act.
RECOMMENDATION:
If a quorum of directors is on a committee, I believe the committee
should give four days notice of its meetings and post an agenda. If
boards want to avoid giving notice when ad hoc committees meet, then a
quorum of directors should not be on the committee. If your
association's legal counsel believes differently, you should follow your
attorney's advice.
ETHICS FEEDBACK
Why the Need?
Why is there a need for a written ethics policy? The board in my
association drafted an ethics policy. A board member, who is also an
attorney, refused to sign it because ethical requirements are already covered by statutes and case law. -Arthur Z.
RESPONSE:
The value of a duly adopted written ethics policy is that it clearly
describes what directors can and cannot do. Because directors are
volunteers, they don't always know what is allowable and what is not.
Even so, you cannot make directors sign an ethics policy unless it is
required by your bylaws as a qualification for serving on the board. If
you amend your bylaws to include it as a requirement, candidates who
refuse to sign can be disqualified from election to the board of
directors.
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