Q: Would you please clarify the issue of a board member’s use of a proxy for an elderly unit owner with dementia? Is it true that a valid proxy should be notarized and has a 90-day life? Also, would you indicate the difference between a specific and a general proxy? When this proxy results in a tie for money issues, is it a valid vote? – T.L., via email
A: Annual-meeting season is in full swing for Florida’s community associations, so it is a good time to address member-voting issues.
First, a little history.
When I started practicing community association law in the late 1980s, member voting in condominium associations was largely unregulated (and not regulated at all for HOAs.) Unit owners could vote by general proxy, and secret ballots were not required in the election of directors.
In a massive overhaul of the law governing condominium associations more than 20 years ago, the Florida Legislature found that the existing system had the potential of allowing existing board members to solicit and vote proxies, which would allow them to remain in office and further their personal agendas.
Today, the law regarding member voting and board elections is virtually identical for condominiums and cooperatives. The law governing HOAs is similar, although not as stringent.
General vs. limited
What is the difference between a “general” and a “limited” (or specific, as you referred to it) proxy? It is generally what you would think it would be.
With a general proxy, the holder of the voting rights essentially assigns those rights to a “proxy holder” for a specific meeting, who attends that meeting in person and casts all the votes that the owner would have if personally present and voting at the meeting. The votes that are cast are in the sole discretion of the proxy holder, not the owner.
A limited proxy is different: The proxy holder is directed by the owner how to vote on any issue for which the law or the condominium documents requires an owner vote. For substantive issues, the proxy holder does not have discretion to vote as he or she sees fit.
For condominiums and cooperatives, a unit owner may not vote by general proxy for certain matters, including the waiver or reduction of financial reporting or reserve funding requirements or amendment of the condominium documents, but may vote by limited proxies “substantially conforming” to a limited proxy form that has been adopted by the Division of Florida Condominiums, Timeshares and Mobile Homes, the state agency that governs those communities.
All elections of directors must be conducted by a relatively complicated secret ballot process, and proxies can never be used for that purpose, except in a timeshare condominium.
The approved limited proxy form is not required to be notarized, but it is only valid for the specific meeting for which originally given and as may be lawfully adjourned and reconvened, provided that a proxy is not valid for longer than 90 days after the date of the first meeting for which it was given. Proxies are revocable at any time by the owner who has given one.
What’s a proxy for?
So, what purpose does a proxy holder serve?
Under general powers, the proxy holder, if attending the meeting, can represent the owner for the purpose of establishing a quorum for the meeting and can vote for the owner on other procedural matters, such as votes to approve meeting minutes and for adjourning the meeting. As the law states, general proxies may be used for matters for which limited proxies are not required and may be used for voting on non-substantive changes to items for which a limited proxy is required and given.
Dementia, really?
As for the issue of the owner with dementia, how do you know that this owner is incompetent? Has the owner been adjudged as such? It may be that you are confusing the giving of a proxy with the grant of a power of attorney.
A power of attorney is defined as written authorization to act on another’s behalf, and that power also can be limited or broader. Powers of attorney may be used in connection with association meetings if consistent with the governing documents, but I don’t have enough information to address what may be a very complicated situation in your case.
HOA requirements
I have primarily addressed condos and coops, but HOAs have certain requirements, too. The use of proxies is permitted, and that use generally only has to conform to the provisions for such use as spelled out in the governing documents.
The 90-day limitation of a proxy’s effectiveness is applicable in HOAs, as is the requirement that any proxy given is revocable. Secret ballots for director elections are not required unless the documents mandate it, but if they do, certain requirements mimicking the condo law apply.
A tie, now what?
You also asked about the effect of a tie vote.
Motions approved by a majority of the voting interests present and casting votes, either in person or by valid proxy, at a duly called meeting at which a quorum is present (again in person or by valid proxy) pass, unless the law or the documents require a higher vote percentage. A majority is 50 percent plus one. A tie vote usually means the motion fails.
Recommendations
I have no problem with a board recommending positions on items to be voted on at a member’s meeting. These recommendations and any supporting documentation can be a part of the meeting materials that include the proxy.
What I do not condone is anyone representing the board individually approaching owners with a filled-out limited proxy, asking for a signature.
What’s a quorum?
A board preparing for the annual meeting has a lot of work to do. Even determining the quorum requirement can be tricky.
In a condo or coop, the quorum is a majority of the voting interests, unless the bylaws provide for a lower percentage. The voting rights for units owned by the association, through foreclosure or other methods, cannot be exercised for any purpose. In an HOA, the quorum requirement is 30 percent of the voting interests unless the bylaws provide a lower number.
In condos, coops and HOAs, if the board has properly suspended an owner’s voting rights as a result of an owner being more than 90 days past due in financial obligations to the association, the voting interest or consent right allocated to the unit or parcel is not counted toward the total number of voting interests for any purpose, including for determining a quorum or conducting an election.
Save minutes
Because we are talking about annual membership meetings, I offer a personal piece of advice for the successful conduct of such meetings.
Avoid reading the minutes of the last annual meeting, if at all possible. I know this may sound somehow undemocratic, but I have seen countless meetings derailed, just by this.
Why? Annual meetings, by definition, occur only once a year. Often, many items are brought up, discussed, but referred back to the board for further action, all legitimately. A lot can happen in a year, but the minutes, if well-written, should only be a snapshot of life 12 months ago.
Reading them, in addition to being mind-numbingly boring, has the potential of riling up attendees, questioning all kinds of issues that just came to mind because the minutes were read. Those issues belong under the agenda item of old business, not under approval of the minutes.
So, I recommend including the minutes with the annual meeting package and having the chair of the meeting entertain a motion to dispense with the reading of the minutes. I am also okay with the chairperson, in advance of the meeting, asking either another board member or an owner who will be attending to make such a motion.
If the minutes are challenged as to their accuracy, that is another matter.
All I am saying is that automatically calling for the reading of the minutes can be a minefield for a chairperson who can let a meeting get away before it is really even started.
Board vs. membership
Finally, board members need to understand the difference between a board and a membership meeting. At a members’ meeting, even though the board president usually presides as chair and the board members are seated at the dais (or whatever passes for one in the clubhouse), it is a membership not a board meeting.
A quorum of the board does not need to be present and board members are to be treated just as other owners. They can make motions that are in order, but so can owners in attendance. I have seen many instances in which a motion is made and seconded, only the board members vote. This is wrong, and the actual vote of those attending in person and by proxy must be tabulated and should be reflected in the minutes.
Tamela Eady is a Florida Bar board-certified real estate attorney with 25 years’ experience. She concentrates her practice on community associations and real estate. The subjects discussed in her columns are not intended as specific legal advice to anyone and are subject to principles that may change. Questions may be modified for clarity or for brevity. Email questions for possible inclusion in a future column to tke@eadylaw.com.
