BOARD RECALL ELECTIONS - PETITIONS

Petitions Must be for a Lawful Purpose
 

Five percent (5%) of the membership can petition the board to schedule a special membership meeting for any “lawful purpose.” (Corp. Code § 7510(e)) Because of the division of authority between the membership and the board, members' ability to petition the board for a special membership vote is limited. By statute, except for matters requiring member approval, all corporate powers are exercised by, or under the direction of, the board of directors. (Corp. Code § 7210)

Members' Limited Authority to Approve Matters. Issues reserved for membership approval are limited to the following:

• Electing directors (Corp. Code § 7220)
• Removing one or more directors from the board without cause (Corp. Code § 7222)
• Filling vacancies caused by the removal of directors by the membership (Corp. Code § 7224)
• Amending the articles of incorporation (Corp. Code §§ 7812)
• Dissolving the corporation (Corp. Code §§ 8610-8618)
• Amending the bylaws (authorizing language found in the bylaws)
• Amending the CC&Rs (authorizing language in the CC&Rs)
• Approving annual assessment increases greater than 20% (Civ. Code § 5605)
• Approving special assessments greater than 5% (Civ. Code § 5605)
• Granting exclusive use to common areas (Civ. Code § 4600(a))
• Reversing a rule change adopted by the Board. (Civ. Code § 4365)
• An action designated in the CC&Rs that requires membership approval, such as obtaining loans, capital improvements, and annexations.

The Purpose Must Be Lawful. A "lawful purpose" does not mean a petition is legal or illegal. It means the reason must be related to an issue where members are authorized to take action. For example, five members in a 100-unit association do not have the right to force 100 members to vote on installing a Coke machine in the clubhouse. For large associations, the cost of a special meeting can be significant: (i) legal review of the request, (ii) hiring an Inspector of Elections, (iii) preparing, printing, and mailing a meeting notice, (iv) preparing, printing, and mailing ballots, and (v) holding the membership meeting. To justify the expense and staff time on a vote, the issue must be within the membership's decision-making authority.

Petitions Outside Member Authority or Purpose. Not all matters within the membership's authority are necessarily for a lawful purpose. For example, the following petitions either fall outside the membership's authority or would not be deemed a proper purpose:

• Dissolving the Association. A petition to dissolve the corporation or the association is not something owners should propose to the membership for a vote. There are significant legal implications that would likely preclude any such action. Dissolving an association altogether would not be lawful without another entity ready, willing, and able to accept responsibility for maintaining the common areas. 
   
• Granting Exclusive Use. A small number of owners may decide that the easiest way to lower the dues is to eliminate all the common-area equestrian trails throughout the community by returning them to lot owners through grants of exclusive use. The wholesale transfer of an association's amenity would not be deemed a lawful purpose. 
   
• Member-Drafted Amendments. Petitioning the board for a special membership meeting to amend the articles of incorporation, bylaws, or CC&Rs with membership-proposed amendments would be invalid. When it comes to amendments, the board has access to legal counsel to properly draft amendments, ensuring they do not conflict with existing law and are in the association's best interests. Boards have a fiduciary duty to act in the best interests of the members, whereas members do not. Individuals not serving on the board have no obligation to act in the community's best interests. Instead, they are free to act in their own best interests. There is a good reason to restrict amendment-drafting powers to the board. If members could propose and vote on their amendments, they could amend the CC&Rs to eliminate all assessments and cease maintenance of the common areas. If members wish to amend their governing documents, they must present their ideas to the board so they can undergo a proper legal evaluation. If the idea is good, the board can properly draft language and prepare ballots for presentation to the membership for approval.
   
• Advisory Votes. Members can express their opinions during the open forum portion of board meetings and annual meetings; they cannot call a special membership meeting to vote on whether to advise the board on their thoughts on recarpeting the hallways. 
   
• To Reverse Board Action. Except for rule changes, members cannot call a special membership vote to veto a board's decision. Instead, the power to veto is indirect. If members are unhappy with the board's actions (or inaction), they can remove the board or wait until the annual meeting to elect a new board.
   
• To Fire a Manager. Members cannot call a special membership vote to fire a manager. Managers, whether employees of the association or of a management company, are not subject to dismissal by the membership. Such matters fall under the board's authority. If members are unhappy with management, they ultimately have recourse by electing directors who agree with their position.
   
• To Permanently Remove a Director. The Corporations Code does not provide for the permanent removal of directors. So long as the person meets the qualifications of a director and there are no term limits, they can be elected to the board even if recalled by the membership. If an association has cumulative voting, almost anyone can be elected, no matter how dysfunctional they might be. To avoid this problem, associations should amend their bylaws to eliminate cumulative voting.
   
• To Adopt a Rule. Only the board has the authority to adopt and amend rules. (Civ. Code § 4360) Members can, however, veto a rule if they follow the steps described in Civil Code § 4365, but that is the extent of membership authority. Although members can petition for a special meeting for any lawful purpose (Corp. Code § 7510(e)), forcing a ballot to add or change rules is not within their authority (unless the governing documents state otherwise). Indirectly, members can change the rules by electing board members who agree with their position.
   
• To Oppose a Settlement. Litigation falls within the purview of the board of directors, not the membership. Boards benefit from legal counsel under the attorney-client privilege; the membership does not. An association, through its board of directors, has standing to institute, defend, settle, or intervene in litigation, arbitration, mediation, or administrative proceedings in its own name as the real party in interest and without joining with it the members. (Civ. Code § 5980)

Persons Not Subject To Recall
 

The following persons are not subject to removal by the membership:

• Designated Directors. Designated directors (appointed by the declarant) cannot be removed without the designator's approval. (Corp. Code § 7222(f)) A designated director is not appointed by the board to fill an empty seat. A "designated director" is one designated in the association's articles of incorporation or bylaws. (Corp. Code § 5220(d)) Such directors serve until their terms expire as provided in the articles or bylaws, or until they resign, die, or become incompetent.
   
• Court-appointed directors. Members cannot remove a court-appointed provisional director or receiver. Any action to remove a provisional director or receiver must be done with court approval. (Corp. Code § 5220(e)) 
   
• Officers. The membership cannot recall officers, such as the president, secretary, or treasurer, since the board elects officers, not the membership. Officers serve at the board's pleasure and may be removed at will.

Invalid Petition Formats

The following petition formats are invalid:

• Online Petitions. Members cannot use online petitions to call a special meeting. Associations have the right to verify signatures. With paper-and-ink petitions, members sign their names in their distinctive handwriting styles, which can easily be verified. A petitioner can easily forge electronic signatures, and anyone can "sign" a petition (children, non-member spouses, tenants, etc.) with the click of a mouse. Electronic signatures cannot be verified.
   
• Recycled Petitions. If a petition to recall the board was submitted, a meeting was held but failed to achieve quorum, and was adjourned, the same petition cannot be recycled to launch another recall meeting. If the petitioners want to launch another recall, they must circulate a new petition and obtain new signatures.

Validating Petitions

For a petition to be valid, it must contain signatures representing at least 5% of the association's total voting power. (Corp. Code § 7510(e)) For stock cooperatives, the petition requirement is 10%. (Corp. Code § 600(d))

• Members Only. Petitions to call special meetings of the membership must be signed by members only. Signatures by spouses not on title and by tenants are not valid.
   
• Original Signatures Only. Electronic or typed signatures are not acceptable; the signatures must be original. (Calif. Code of Reg. 20930(a)(1)) Copied forms can be used, provided they contain original signatures. (Calif. Code of Reg. 20920(b)(5))
   
• Delivered to the Association. Completed petitions with original signatures must be delivered to the board or its managing agent for signature verification. Personal delivery to any officer, director, or managing agent is sufficient to put the board on notice and start the clock running on the board's duty to set a date for the meeting. The petition may also be sent to any officer, director, or managing agent by certified mail.
   
• Verify Signatures. Since only members can sign petitions, associations have the right to verify signatures.
   
• Multiple Owners of One Unit. Any person on title to a property can sign on behalf of the property, but it counts only once. If there are ten owners on the title for one unit, all of whom sign a petition, it counts as one signature, not ten. Accordingly, husbands and wives (or any co-owners of a property) get only one signature on petitions and one ballot on election issues. It is the number of units (or lots) that count, not the number of owners. If multiple owners of a property sign a petition, it does not invalidate the petition--it means that only one signature is counted.
   
• One Owner of Multiple Units. If an owner of five properties lists all five properties and signs a petition, the signature counts five times, one for each property.
   
• Withdrawing Signatures. A member who has signed a petition may submit a written request to have their name removed from the petition. (Calif. Code Reg. 20970(a))
   
• CC&R Petition Signatures. While signatures on a recall petition can be withdrawn, CC&R petition signatures cannot. Before the 2006 change in the Davis-Stirling Act's election requirements, CC&Rs could be amended by petition. In a 1990 case, a court ruled that signatures on a petition to extend CC&Rs were irrevocable. (La Jolla Mesa v. La Jolla Mesa Vista) This issue became moot since CC&R amendments and restatements now require secret ballots. (Civ. Code § 5100(a))

Verifying Signatures

Using California election rules as a guideline, exact matches are not required to confirm a valid signature. (Cal. Code of Reg. § 20960) The fact that signatures share similar characteristics is sufficient to determine that a signature is valid. In comparing signatures, the board may consider the following characteristics when visually comparing a signature to determine whether the signatures are from the same signer:

• Slant of the signature.
• Signature is printed or in cursive.
• Size, proportions, or scale.
• Individual characteristics, such as how the “t’s” are crossed, “i’s” are dotted, or loops are made on the letters f, g, j, y, or z.
• Spacing between the letters within the first and/or last name and between the first and last name.
• Line direction.
• Letter formations.
• Proportion or ratio of the letters in the signature.
• Initial strokes and connecting strokes of the signature.
• Similar endings, such as an abrupt end, a long tail, or loop back around.
• Speed of the writing.
• Presence or absence of pen lifts.
• Misspelled names.

Failed Petitions

Insufficient Signatures. If a petition fails to have a sufficient number of signatures, or if some of the signatures are invalid, and it falls below the 5% threshold, it fails. Members would need to start over with a new petition if they wished to pursue a recall election. 

Withdrawing Signatures. Using California's election rules as a guideline, once a valid petition has been submitted to the board, petition signers can have their names removed from the petition. (Cal. Code of Reg. § 20970(a)) If a sufficient number of members who signed the petition submit a written request to withdraw their names from the petition, such that the number of signers falls below 5% of the membership, the request for a special meeting can be canceled.

Moot Petition. If members are collecting signatures to recall the board, and before the petition is submitted, the board's composition changes due to resignations, appointments, or an election, the petition is no longer valid because the board being recalled no longer exists. A different board is in place. If members want to recall the new board, a new petition must be circulated. 

Serial Recalls

Because only 5% of the membership is needed to trigger a recall, the low threshold can lead to abusive recall petitions, in which individuals launch recall after recall to torment boards. They hover over each ballot count with another recall petition in hand in case the board survives the recall. Abusive petitioners will serve three or four recalls in a row to wear down directors and pressure them to quit. Associations can adopt election rules to address serial recalls.

Because neither the Davis-Stirling Act nor the Corporations Code addresses excessive recalls, we can turn to California's Elections Code for guidance. California puts the following restrictions on its recall elections: "Recalls may not be started ... if: (a) the officer has not held office during the current term for more than 90 days; (b) a recall election has been determined in the officer's favor within the last six months; (c) the officer's term ends within six months or less." (Elections Code § 11007) Accordingly, it would be reasonable for associations to adopt similar restrictions. Associations should amend their election rules to add a provision addressing serial recall elections. 

Publishing Names

There is a difference of opinion within the legal community regarding the publication of petition signers' names.

Opinion #1. Members have a right to know who signed the petition. The United States Supreme Court heard a case originating in the State of Washington, in which petitioners sought to preserve the traditional definition of marriage. Signers of the petition did not want their names released because they feared retaliation. Writing for the majority in Doe v. Reed, the Court concluded:

The State’s interest in preserving the integrity of the electoral process suffices to defeat the argument that the PRA [Public Records Act] is unconstitutional concerning referendum petitions in general. That interest is particularly strong concerning efforts to root out fraud. But the State’s interest is not limited to combating fraud; it extends to efforts to ferret out invalid signatures caused not by fraud but by simple mistake, such as duplicate signatures or signatures of individuals who are not registered to vote in the State. The State’s interest also extends more generally to promoting transparency and accountability in the electoral process.

... Disclosure also helps prevent difficult-to-detect fraud such as outright forgery and “bait and switch” fraud, in which an individual signs the petition based on a misrepresentation of the underlying issue. And disclosure promotes transparency and accountability in the electoral process to a greater extent than other measures can.

Opinion #2. The Reed decision applies only to Washington because California does not have a statute similar to Washington’s public access law cited in the case. More importantly, California’s state constitution codifies a right to privacy. This means one’s right to privacy in California is afforded a high degree of deference. For instance, California Election Code Sec. 18650, which governs public referendums in petitions (so it’s not automatically applicable to an association’s recall election), protects signatories’ privacy and makes it a misdemeanor to permit the list to be used for anything other than validation purposes. This statute applies to the petitioners.

Other laws not applicable to common interest developments expressly exclude public referendum petitions from classification as public records, making them subject to inspection. (see Govt. Code Sec. 6253.5.) The only case on point, Bilofksy v Deukmejian (1981) 124 Cal. App. 3d 825 upheld the statute and precluded the use of signatures on a referendum petition for anything other than validation purposes. Further, the State of California’s recall process (see Recalling State and Local Officials) makes it clear that only people who sign the recall petition can inspect it under California Elections Code Sec. 11301. Because the general public is not permitted to inspect a state recall petition, this presents an argument against publishing the names of petition signatories in association recalls.

Recommendation: Because the matter regarding California's HOA associations is unsettled, boards should consult legal counsel before responding to a request to inspect or publish petition names.

Meeting Date and Agenda
 

Setting Meeting Date. Once a proper petition has been submitted to the board, the board must set a date for the meeting and send notice to the membership. The board must also prepare and send ballots as provided for in Civil Code § 5115(a).

Meeting Agenda. The only business that may be conducted at the special meeting is the recall of the directors and, if successful, the election of new directors. The notice of meeting shall specify those matters the board intends to present for action by the membership.

Sample Recall Petition
 

The purpose for calling a special meeting of the members must be contained on each petition circulated for signatures. It should be positioned at the top of the page so people can read it before signing the petition. Stating the purpose is also necessary to determine whether the meeting is being called for a lawful purpose, as required by the Corporations Code. At least 5% of the membership must sign the petition. Only signatures of members on title count toward the 5% requirement. For verification purposes, the member's name and address must be legible in the column adjacent to the signature. 

ASSISTANCE: For boards needing legal assistance, contact us. Because our law firm serves only as corporate counsel, we cannot assist individual owners with recall issues. To stay current with community association issues, subscribe to the Davis-Stirling Newsletter.