What If Our Annual Meeting Isn’t Annual?

by Kelly G. Richardson, Esq. CCAL | Nov 5, 2018 | H.O.A. Homefront, Reader Questions

Mr. Richardson, Our HOA hasn’t had an annual meeting in years. We receive notice that the “annual meeting” will be held on a given date to “count ballots”. For the last 2 years, when we arrived, we were informed it wasn’t a meeting but only to count or collect votes for board members. We were invited to attend the board meetings that are held in someone’s home. I have always thought that HOAs were required by law to have an annual meeting. Is this incorrect? Thanks, E.Q., Newport Beach Dear E.Q., Most association bylaws require annual membership meetings. A board meeting to count votes is not a membership meeting. Corporations Code 7510(b) requires that associations hold membership meetings as required by its bylaws and when directors are being elected. Civil Code 5000 also confirms that each membership meeting must have an “open forum” portion, with a reasonable time limit afforded members to speak. Sixty days after the membership meeting is due, the court can be petitioned for an order pursuant to Corporations 7510(c) to compel the meeting to occur. Annual meetings are a great opportunity for members to be connected to their association and each other. Best to your association, Kelly Dear Kelly, We have four candidates for three board openings. Civil 5120(b) states, “The tabulated results of the election shall be promptly reported to the board …” Does this mean verbally in the presence of the board and HOA members? Or on a slip of paper to the board? We haven’t read them out loud to avoid embarrassing the candidates with few votes. C.R., San Diego Dear C.R.,...

Boards Elections [Part 3]

by Kelly G. Richardson, Esq. CCAL | Sep 10, 2018 | H.O.A. Homefront, Reader Questions

Dear Kelly, We successfully recalled our HOA board, yet the next day after the vote the recalled directors held a special meeting and enacted lots of business. We believe that everything the board enacted after it was recalled can be reversed with a blanket resolution by the new board. What do you think? P.S., Cathedral City Mr. Richardson, Does the announcement of the election results at the annual meeting immediately remove the existing board members from office or is the organizational meeting or something else required to formalize the transfer of authority? B.H., Alhambra Dear P.S. and B.H., Once a quorum has been reached and the votes counted, there is a new board. A recall vote is immediately effective. Corporations Code 7220(b) states that a director serves until their term is expired and a new director is elected to take their place. Unless the regular election was early, after the election the old board no longer has authority on behalf of the corporation. If a former board purported to make decisions when a new board is in place, the former board’s decisions could be rejected by the current board. Best to your associations, Kelly Kelly, Our HOA recently had a total recall and election. Our board has staggered terms. The new president handed out the longer terms based on number of votes received. Our bylaws specify for the initial organizational election the drawing of lots to determine the longer terms. Should the president have followed the bylaws, as the situation is identical? J.T., San Jacinto Dear J.T., The normal practice for an election such as yours where five vacancies...

Boards Elections [Part 2]

by Kelly G. Richardson, Esq. CCAL | Sep 3, 2018 | H.O.A. Homefront, Reader Questions

Dear Mr. Richardson, We cannot get people to volunteer to be on the board. I have been on the board and told the manager I didn’t want to run. She put my name on the ballot, and said I had to stay on the board until someone took my place. What happens if you don’t have people to serve on the board? Thanks, L.W., Encinitas Dear L.W., The usual cause for difficulty in finding volunteers is that homeowners are discouraged from volunteering by seeing directors working long hours for the HOA. The less common reason is HOAs in turmoil often have trouble filling seats with brave souls. A provisional director could be appointed by the court if the board cannot attain quorum, but this is very expensive (the director will charge hourly). You cannot be forced to serve as a director. A director can resign any time, and the board then can in an open meeting vote to fill the vacancy. The manager may be misapplying Corporations Code 7220(b), which says that a director serves until the term expires and a replacement is elected. Corporations Code 7224(c) provides that a director may resign upon giving written notice. I hope your board investigates the reasons why people are unwilling to serve, and things improve. Sincerely,Kelly Mr. Richardson, We have several candidates running for the board and one candidate is the spouse of an owner of record but she is not on title. Our board president announced in an open meeting that the candidate was not eligible to be a candidate based on the president’s interpretation of the Davis-Stirling Act. Your...

Boards Elections [Part 1]

by Kelly G. Richardson, Esq. CCAL | Aug 27, 2018 | H.O.A. Homefront, Reader Questions

Mr. Richardson, What recourse does a member have if the board refuses to abide by the governing documents or state law? Our president refuses to hold the annual election in an apparent attempt to stay in power. C.S., Poway Dear C.S., 5% of the members may under Corporations Code 7511(c) send a written petition demanding a membership meeting. However, most likely the board will ignore it. I have seen members announce their own membership meeting, but this is a bad idea because it is too easy to make an error in the very technical election procedures required by Civil Code 5100-5135. A better option may be to file a court petition under Corporations Code 7510(c) for an order compelling an election. This involves legal expense, and is a last resort, but judges are normally sympathetic to these petitions and are willing to order an election. Before going to all the effort and expense of filing a court petition, make sure you have member support (and a few candidates). Best regards, Kelly Dear Kelly, Our association did not make quorum, so our election was postponed a month. Each homeowner gets 1 vote, but there were couples at this meeting so some homeowners got 2 votes. Some homeowners returned a handful of ballots they had collected. I was told each homeowner must mail or bring their ballot in themselves. Is this legal? D.P., Aliso Viejo Dear D.P., Civil Code 5115(a)(2) says that ballots may be mailed or delivered by hand to a location specified by the inspector of elections but does not specify who does that. Election rules could avoid a...

Keep the Lawyers at Bay [Ten Tips]

by Kelly G. Richardson, Esq. CCAL | Aug 20, 2018 | H.O.A. Homefront, Reader Questions

Serving as a volunteer director is often thankless, but it shouldn’t be risky. Here are ten ways to reduce if not prevent personal risk from your service. 1. Learn and follow the Business Judgment Rule Found at California Corporations Code 7231 and 7231.5 and contained in most bylaws, the Rule protects volunteers from liability while acting in good faith, for the association’s best interests, and upon reasonable inquiry. 2. Insurance is necessary Only serve if the association has directors and officers (“D&O”) insurance coverage. Civil Code 5800 protects directors from personal liability if the HOA with more than 100 memberships has $1,000,000 of D&O insurance or $500,00 if less members. 3. Refuse compensation Whether called a “stipend” or assessment reduction, reject any form of renumeration for board service. Upon receiving even one dollar of compensation the director is no longer a volunteer and loses all the immunities of volunteers. Reimbursement for a director’s time serving the HOA is not reimbursement – it is compensation. Reimbursements are repayments of out of pocket expenses. 4. Don’t get mad… or even “Good faith” doesn’t just mean a pure heart. However, it certainly does exclude any willful, malicious or retaliatory intent. The nastiest homeowner has the same rights as the saintly ones. Enforce the rules evenly. 5. Don’t take matters into your own hands HOA governance is a team sport, not an individual event. What you think is valid instruction may be viewed by the board (and the HOA’s attorney) as interference. A director (even the president) must use restraint and wait for the board to act. 6. Follow the corporate process Is...