Use of Ballots and Proxies under CCIOA and the Nonprofit Act

Confusion commonly exists within community associations regarding the use of proxies and ballots.  Such confusion is understandable given the technical nature of the laws governing the use of proxies and ballots in Colorado.  However, if used properly, proxies and ballots may be used not only to encourage and increase individual participation in the association’s affairs, but to also enable the association to more effectively conduct business. This article discusses the use of ballots and proxies under the Colorado Common Interest Ownership Act (“CCIOA”) and the Colorado Revised Nonprofit Corporation Act (“CRNCA”).

Proxies

What is a Proxy?

A proxy is permission granted by one person to allow another to exercise voting privileges on behalf of the person giving the proxy. Technically, “proxy” means the person appointed, not the document/form appointing the person. In practice however, “proxy” is used to refer both to the person and the document. Proxies can be “general” or “directed.” General proxies simply appoint an individual to vote on an owner’s behalf and authorize such individual to vote as he/she deems appropriate on all issues. A directed proxy specifies and directs the proxy holder how he/she must vote on each issue.

CCIOA provides that homeowners are allowed to appoint a proxy and therefore an association cannot deny a homeowner’s right to use a proxy. A proxy is not valid if the proxy is obtained through fraud or misrepresentation. A proxy must be dated and terminates eleven months after its date unless a different period is provided. Pursuant to the CRNCA, a proxy can be revoked by the person appointing the proxy by: (i) attending the meeting and voting in person; or (ii) signing and delivering a written revocation of the appointment to the association; or (iii) appointing a subsequent and different proxy. The association is entitled to reject a proxy appointment if the association’s secretary, acting in good faith, has reasonable basis for doubt about the validity of the signature on the proxy. Any action of the association based upon the acceptance or rejection of a proxy appointment or proxy revocation is valid unless and until a court determines otherwise.

With respect to the use of proxies by directors, the CRNCA provides that in the context of director meetings, for purposes of establishing a quorum and for voting, a proxy may only be used if: the use of proxies for director meetings is specifically authorized in the association’s bylaws; and the director has granted a signed written proxy to another director who is present at the director meeting; and the proxy is directed thereby providing instruction regarding how to vote on specific items.  If the association’s bylaws are silent on the issue of the use of proxies by directors then proxies cannot be used at director meetings. In addition, if the proxy form does not indicate how the vote is to be cast on each specific matter (for or against) then the proxy cannot be used for purposes of voting on that specific issue.

Unless otherwise provided in the declaration, bylaws, or rules of the association, proxies may be appointed pursuant to the requirements of CRNCA, which allows for great latitude in the appointment of proxies and provides that an individual may appoint a proxy by:  signing an appointment form; transmitting or authorizing the transmission of a telegram, teletype, or other electronic transmission providing a written statement of the appointment which shall include or be transmitted with written evidence from which it can be determined that the individual transmitted or authorized the transmission of the appointment. This is most commonly done in the form of an email appointment.

A ballot is the record of a homeowner’s vote. It is typically the physical piece of paper completed by owners indicating their vote on the action items to be considered at the meeting, such as the election of directors or proposed amendment to the association’s governing documents. If voting is taking place at a meeting, the ballot will be cast by the homeowner or by the homeowner’s proxy if the homeowner is unable to attend the meeting and they have appointed a proxy. It is also important to understand that the proxy itself is NOT a ballot, but permission for the proxy holder to cast the ballot.

The CRNCA provides that unless otherwise provided in the association’s bylaws, any action that can be taken at a meeting of the members may be taken without a meeting through the use of a written ballot that is mailed to all members. Written ballots can be useful in allowing members to vote on items such as proposed amendments to the association’s governing documents which require significant membership participation in the vote. For example, an amendment to an association’s declaration of covenants may require the approval of 67% of all homeowners. It is uncommon for 67% of the total members of the association to attend a meeting and in such circumstances a mail ballot may increase participation in the vote. The CRNCA requires that mail ballots and solicitations for votes by written ballot: state each proposed action; provide an opportunity to vote for or against each proposed action; indicate the number of responses needed to meet the quorum requirements; state the percentage of approval necessary to approve each matter (other than the election of directors); state the time by which a ballot must be returned; and to be accompanied by written information sufficient to permit each person casting a ballot to reach an informed decision on the matter.  Approval of an action by written ballot is valid when the number of votes cast by ballot equals or exceeds the association’s quorum requirements and the number of approvals equals or exceeds the number of votes that would have been required to approve the action at a meeting of the members.

Secret ballots are ballots that do not contain identifying information, such as the name or unit number of the individual casting the ballot. At all homeowner meetings, the association should be prepared to use secret ballots to vote on any action item because CCIOA requires the use of secret ballots in the following circumstances:  When the association’s bylaws require the use of secret ballots;  when voting in contested board elections (i.e., there are more candidates than positions); at the discretion of the board; and upon the request of 20% of the homeowners present at a homeowner meeting.

Finally, CCIOA provides that ballots are to be counted by a neutral third party or by a committee of volunteers. Such volunteers shall be homeowners who are selected or appointed at an open meeting by the person chairing the meeting. The volunteers shall not be board members or candidates for the board.

If you have questions or would like to discuss the use of proxies and ballots in more detail, please contact a Altitude Community Law attorney at 303.432.9999.