MEMBERSHIP PETITIONS

Petition Must Be For a Lawful Purpose
 

Members 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. The allocation of powers is found in Corporations Code § 7210, which states that except for matters requiring member consent or approval by some statute or by the corporation’s documents, all corporate powers are exercised by, or under the direction of, the board of directors. Powers allocated to the membership (by their governing documents and various statutes) generally include electing and recalling directors, amending governing documents, and approving assessments above a certain percentage. The most common lawful petition is one to remove one or more directors from the board.

Invalid Petitions

To Amend CC&Rs. Petitioning the board for a special membership meeting to amend the governing documents with a membership-proposed amendment is invalid. When it comes to amendments, the board has access to legal counsel to evaluate and word amendments correctly so as not to conflict with existing law and for the association's best interests. In addition, directors 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 similar obligation to act in the community's best interests. Instead, they are free to act in their own best interests. There is 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 maintaining the common areas. If members want to amend their governing documents, they must present their ideas to the board so they can go through 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.

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), the membership 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 employees of a management company are not subject to firing 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.

A Recycled Petition. 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.

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.

Validating Petition Signatures

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 Association. Completed petitions with original signatures must be delivered to the board or its managing agent to verify signatures. 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. With paper-and-ink petitions, members sign their names in their distinctive handwriting styles. As such, signatures cannot easily be forged, and associations can readily verify them.
• 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 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 that their name be 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).) 

Publishing Names

There is a difference of opinion in the legal community on publishing the names of petition signers.

Opinion #1. Members have a right to know who signed the petition. The United States Supreme Court heard a case that originated in the State of Washington, where 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 an extent other measures cannot.

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 people submitting the petition.

Other laws not applicable to common interest developments expressly exclude public referendum petitions from being classified as a public record, 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 using 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 homeowners associations is unsettled, boards should consult legal counsel on responding to a request to inspect or publish petition names.

Terminating a Petition

Once a valid petition has been submitted to the board, petitioners may wish to withdraw the petition. If a sufficient number of members who signed the petition submit a request in writing withdrawing 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.

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 the election of new directors in the event the recall is successful. The notice of meeting shall specify those matters the board intends to present for action by the membership.

Sample 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 for determining if 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 issues affecting community associations, subscribe to the Davis-Stirling Newsletter.