The days of the wild west are gone with respect to association compliance with both the law and individual governing documents. The legislature is now heavily involved in governance of communities and the courts are leaning towards a stricter construction when applying the law. Associations seemingly no longer have the ability to argue substantial compliance with respect to association actions. Close enough is no longer enough. This applies more than ever with respect to owner meetings. Associations must strive for full compliance understanding that owners are checking the boxes as well and holding associations accountable for these procedural requirements. Consequently, the steps for a successful and legally binding owner meeting are described below.
Types of Owner Meetings.
Annual Meetings. Regardless of what may be stated in the association documents, all associations subject to the Colorado Common Interest Ownership Act (“CCIOA”) (both pre and post CCIOA associations) are required to hold an annual meeting. Please recall pre-CCIOA communities are communities created prior to July 1, 1992 and post-CCIOA communities are communities created after to July 1, 1992.
Budget Meetings. As with annual meetings, regardless of what may be stated in the association documents, all associations subject to the Colorado Common Interest Ownership Act (both pre and post CCIOA associations) are required to hold a budget ratification meeting prior to enacting a new budget.
Special Owner Meetings. Colorado law requires that a special meeting be held if called by the
president of the board, a majority of the executive board, or by unit owners having twenty percent or any lower percentage specified in the bylaws of the votes in the association (assuming the proper process and signature have been attained).
Meeting Notice Required for all Owner Meetings (both pre and post CCIOA associations).
Physical Posting. Colorado law requires that the association physically post the notice of any owner meeting in a conspicuous place if at all feasible and practicable.
Email Notice. In addition to physical posting, associations are encouraged to give notice of any owner meeting by posting the notice on its website or sending out an email to all unit owners. The association must also provide email notice to any owner if requested by said owner if such owner provides the association with an email address. The notification email must be sent as soon as possible and at least twenty-four hours before the meeting.
Notice Via US Mail. Notice must be provided via prepaid US mail or hand delivery at least ten days but not more than fifty day prior to the meeting. Please note, a declaration may provide for a stricter requirement but cannot expand the requirement. For example, a declaration may note that the notice timeframe is 14-60 days. 14 days would be permissible but 60 would not.
Required Meeting Notice Information. Notice of member meetings must include the time and place of the meeting, the items on the agenda which should include: (1) the general nature of any proposed amendment to the declaration or bylaws, (2) any budget changes, (3) any proposal to remove an officer or member of the board, and any other relevant information or items to be voted on by the membership.
Who gets Notice and a Vote.
Member List. Unless otherwise provided in the bylaws, Colorado law requires the preparation of a member list after a record date for notice of a meeting is fixed. The list must contain the names of all members, their respective addresses, and the number of votes each is entitled to cast. Every association should adopt a member list prior to notice of a meeting. Please note, all owners are entitled to notice even if such owners are not eligible to vote.
Record Date. “Record date” means the date on which a nonprofit corporation determines the identity of its current members. The determination is typically made prior to the close of business on the date set as the record date unless a different time is decided by the board. Please note, the bylaws may specifically speak to the record date. If the bylaws speak to the record date the association should comply with the same. If the association does not set a record date any member as of the close of business on the business day preceding the day on which notice is given shall be entitled to notice.
Eligibility to Vote. In conjunction with the member list and record date, every association should determine voter eligibility. Some association documents prohibit delinquent owners from voting. Other association documents may use discretionary language with respect to voter eligibility. Every association should check its individual documents for voter eligibility. This language could be found in the declaration, articles, or bylaws. Voter eligibility should be included on the member list as of the date of adoption. If an association’s documents provide for discretion with respect to voting when an owner is in default or violation, the association should adopt a resolution at the same time the member list is created and clarify whether such owners are entitled to vote. Finally, it is highly recommended that voting rights for any owner who clears the violation or pays in full prior to the meeting be reinstated.
Quorum and Proxy Requirements at a Meeting.
What is Quorum. A quorum is the minimum number of members who must be present in person or by proxy in order to legally conduct business. Quorum requirements for member meetings may also differ depending on the purpose of the meeting, e.g. annual meetings (noted in the association documents) versus budget meetings (do not have a quorum requirement).
Quorum Requirements. Quorum requirement is generally found in the association’s governing document and, most likely, in the association bylaws. However, in the absence of any provision which speaks to quorum the following would apply: (1) post-CCIOA communities with less than 1,000 units have a quorum requirement of 20%; post-CCIOA communities with more than 1,000 units have a quorum requirement of 10%; and (3) pre-CCIOA communities have a quorum requirement of 25%.
What if a Member Leaves During a Meeting? Once a member is counted for purposes of establishing a quorum, that member is considered present for the remainder of the meeting.
Failure to Establish a Quorum. Without a quorum the only business that may legally be transacted is adjournment.
Proxies. Colorado law permits a member to appoint a proxy unless otherwise provided in the Bylaws. Please note, most governing documents allow for the use of proxies. Therefore, the use of proxies should not be prohibited by the association unless the association documents specifically prohibit the use. Finally, there is no limit on the number of proxies a person may hold and the association may not seek to limit the same.
As long as the association follows the above referenced steps with respect to owner meetings any challenges or allegations of impropriety may be overcome. If you need additional assistance with owner meeting compliance please do not hesitate to contact an Altitude Community Law attorney at 303-432-9999 or [email protected] for more information. Contacting an attorney prior to moving forward with an owner meeting will eliminate any surprises or missteps and ensure the association is in full compliance with the law and its governing documents.