Question: I live in a community governed by an HOA. This year was the first time an annual members’ meeting was not held in the community.
I believe three factors contributed to not having the meeting: a recent change in the voting procedures; the fact we only had two people submit their names as candidates for the two open positions on the board (which negates the requirement to have an election); and a limited understanding, despite repeated explanations to the president, of what an annual meeting is.
Is the HOA required to hold an annual members’ meeting? I argued that we are obligated to hold these annual meetings pursuant to our documents. Furthermore, despite the fact that we couldn’t get enough attendance to establish a quorum, we are still obligated to pursue the annual meeting until it is successfully held. Our manager said that the HOA attorney agrees with the board that, if we do not obtain a quorum, we are not obligated to try again.
My understanding is that the usage of the word “shall” in the context of an annual meeting means it is mandatory. Therefore, we must have the annual meeting, and we must do everything necessary to ensure that it is held. — D.S.
Answer: I have attended dozens of annual meetings, and the vast majority of the time, particularly in a homeowner’s association, the only business to be conducted is the election of directors. Sometimes, a condominium association will also conduct a membership vote to waive the funding of reserves, and from time to time there may be another membership matter that requires a vote (such as an amendment to the governing documents), but most of the time annual meetings are entirely perfunctory.
You are correct that the word “shall” in a legal context is usually read to mean “must.” But, there is also a practical element to the practice of law. I agree that, if you only had two candidates for two open board seats, the election was not necessary.
So, without the election, was there any business to conduct at the annual meeting? If not, chasing owners for the purpose of collecting proxies only to open a membership meeting, confirm the quorum and then immediately close the meeting is putting form over substance. It is a waste of management’s time and resources, and it does not accomplish any end.
So yes, technically, an association must hold a membership meeting each year. And, I would always suggest that, even if there is no business to conduct, associations at least attempt to hold an annual meeting. But if there is no point to the meeting, and if the association fails to achieve a quorum, I am not aware of any law or case that would require an association to reschedule the meeting repeatedly in order to simply say they did so. Remember that proxies are only good for 90 days after the originally scheduled date of the meeting. So, at some point, the association would have to start all over again with a new notice and new proxies. It’s just neither practical nor advisable to go through those motions for no purpose.
Q: I am a homeowner in an over-55 gated community of 222 homes with a budget over $500,000. According to state statutes, that means we require a licensed Community Association Manager (CAM).
For 15 years our community has used an office manager to manage the community. We just found out that she does not have a CAM license. A homeowner filed an online complaint with the state about her being unlicensed, and the state gave the association 30 days to hire a licensed management company and have the office manager work for the company. This will be quite expensive.
I believe there is a much easier and cheaper solution; just replace our current office manager with a CAM licensed one, without the added expense of a management company. The board president insists that my solution is not legal. — R.S.
A: The law does not require an HOA of a particular size to hire a licensed property manager. Instead, the law says that a person performing certain tasks for an association for pay is required to be CAM licensed — and it seems that your office manager would fit those conditions. But, I agree with you that (unless there are contractual limitations involved) the community could simply fire the office manager and hire licensed CAM to manage the community.
There is nothing in the law that obligates an association to hire a management company. In fact, you don’t even have to fire the office manager — if she performs only clerical functions, you could simply hire a CAM manager to supervise and oversee the office manager, and that would satisfy the statute, as well.
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 email@example.com. Please include your hometown.