Question: We are a small HOA community with 50 homes and an approximately $180,000 budget. As the time comes near to do the compiled financial statements that are required by Florida Statutes 720.303(7), we are looking at ways that we can better handle those requirements. We would like to hold a membership meeting to approve a different type of report.
If we hold a “properly called meeting,” what would we need for a quorum? Did the state recently change the percentage needed to determine a quorum? Would a mailed-in proxy vote count as attendance at the meeting? Does the approval have to be a majority of those attending the meeting, including the proxies, or a majority of all owners? Can we vote to do the “cash receipts…” for more than one year, or do we have to have the meeting each year? And finally, for how many years may we continue to do this before we are required to do the more formal report as required in the statute? — N.S.
Answer: A “properly called meeting,” in the HOA context, is a meeting that has been noticed as provided in your governing documents (usually by mail around 14 days in advance, though in an HOA this varies), and in which a quorum of the membership participates. You may remember from prior columns that a “quorum” is the minimum amount of members of an assembly who must participate in a meeting for the meeting to be legal. The quorum will be specified in your bylaws (usually in the first couple of pages) — but the HOA Act provides that the maximum quorum allowed in an HOA is 30 percent. I frequently get questions from people who doubt that this is really a maximum requirement, and not a minimum — but yes, for some reason, the HOA Act does specify a maximum legal quorum requirement. So, if your bylaws say that a quorum is a majority of the membership, in actuality it would be adjusted down to 30 percent.
Generally, members of an HOA may participate in a meeting in person or by proxy. A proxy form is a document that grants to another person the ability to attend a meeting when the person entitled to attend cannot be there. The proxy can be any person at all but usually, the form allows that if left blank, the secretary or another officer of the association will be appointed as the proxy. In the case of a vote to adjust the financial reporting requirement, the proxy would typically be a limited proxy, where the voter specifies on the proxy form how he or she would like to vote. In the case of a limited proxy, there is no need to identify a special proxy holder, other than the default officer — they are obligated to vote how you indicate on the form.
The HOA Act states that a lesser reporting requirement may be approved by a majority of the voting interests present at a properly called meeting. So, you first need to achieve a quorum of participation in person or by proxy — at least 30 percent of your owners participate. Once you meet the quorum requirement, the vote is conducted among all the people who vote at the meeting in person or by proxy. In a 50-lot HOA, you need 15 lot owners to participate in the vote for it to be legal, and you need a majority of the total persons voting to approve the change in the reporting requirement. Even though the quorum is only 15 lots, if all 50 of your lots vote, you would need 26 votes (a majority of those voting) to approve the report of cash receipts and expenditures, instead of a compilation. In an HOA, you can conduct this vote each year, and there is no limit on the consecutive amount of times you can vote to lower the reporting requirement.
Ryan Poliakoff is a co-author of “New Neighborhoods — The Consumer’s Guide to Condominium, Co-Op and HOA Living” and a partner at Backer Aboud Poliakoff & Foelster, LLP. Email questions to firstname.lastname@example.org. Please include your hometown.