Proxy can offer multiple alternatives for waiving reserves


Question: A prior president of our condominium convinced a majority of our residents that the proxy for voting on a waiver of reserves had to be written such that the only votes offered would be for either collecting the full statutory amount, or for a complete waiver. His justification was that, if a third alternative (less than full reserves, but still a reasonable and adequate amount) was on the proxy, no single alternative would reach a majority vote, and the result would be that a full reserve would be implemented. Of course, when presented with just those two reserve alternatives, full and none, the full waiver always won a majority, and so we have never collected a reserve.

There’s a new board now, and I’m trying to convince them that the board can recommend a vote for a partial waiver of reserves, and that they can draft a proxy that will allow owners to vote for multiple options, without it automatically resulting in a default to a full statutory reserve.

I’ve searched the statutes and I cannot find a specific section backing me up. Can you help us out of this paralyzed state? — B.M.

Answer: As you are aware, in order to either waive collection of reserves or approve collecting less than full reserves, the decision must be approved by a majority of voters participating in a meeting at which a quorum has been attained. While members may vote at meetings in person or by proxy, the vast majority of people vote by limited proxy. Your ex-president’s concerns are reasonable — it is always a challenge to draft a proxy that will allow owners to vote on multiple alternative options, and yet still achieve a majority for one option.

You’re not going to find a solution in any statute. Instead, you will have to employ some creative proxy drafting. For example, and considering that the “default” option is always to collect full reserves (as the Condo Act requires), the proxy could offer two choices — one to collect partial reserves, and one to waive reserves entirely. If either option gets a majority of those voting at the meeting, it wins. If not, the budget, including full reserves, would go into effect. Or, you could allow the following two options — either full reserves, or partial or no reserves, with the choice between the two to be at the discretion of the board. The association’s attorney should be able to work with you to draft a proxy that satisfies the law, generally, and also satisfies the association’s ultimate goals.

Q: I’ve been serving on a condo board for years. I do it in hopes of change, but I am the only one who seems to care. Support is diminishing; everyone sees the insurmountable problems. The board is a sham; they don’t meet with any frequency, call proper meetings or include the owners in their decision making. The president has served for eons (we don’t fall under the larger condo rules) and he runs the show. Board members and the management company rubber stamp whatever he wants. We’re not functioning under our bylaws or the Condo Act, much less the will of the owners. What can we do? Can we lodge a complaint with the state? — E.M.

A: The reality is that if your membership, the owners, care so little about how their community is operated that they can’t be bothered to vote for different directors or recall the current board, there is little the state can do to force the issue. The state investigates complaints relating to elections, financial fraud and failure to allow inspection of records. For anything else, disputes must be either arbitrated or litigated, depending on the nature of the dispute.

I realize that it can seem like an insurmountable task, but the only solution to the problem you describe is to motivate your community to take back control. You may need to visit every neighbor to make your case, and you can expect the entrenched president to do everything he can to stop you from changing the status quo. It takes motivation and a lot of hard work to effectuate change, but it happens — I see it in associations every day. It just takes a motivated group of like-minded people to put in the hard work necessary to change people’s minds.

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 condocolumn@gmail.com. Please include your hometown.



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