Fall is around the corner. As the season turns, many HOAs will soon be turning their attention to their annual homeowner meeting. Over the years, I have attended many homeowner meetings, some smooth and professionally run, with others chaotic and contentious. The common denominator in many of the unsuccessful meetings has been a general lack of understanding as to statutory meeting requirements and an unfamiliarity with the HOA’s governing documents.
A little advanced planning can greatly increase the probability of success by ensuring that the meeting complies with applicable law as well as the community’s governing documents. This article outlines some relevant issues for the association’s Board of Directors to consider when preparing for the annual meeting.
Meeting Notices
In terms of homeowner meetings, the Colorado Common Interest Ownership Act (“CCIOA”) contains various notice requirements. Notices are required to state the time and place of the meeting and items on the agenda, including proposed amendments to the declaration and/or bylaws, budget changes, and any proposal to remove an officer or member of the Board of Directors.
As to providing notice, CCIOA requires associations to:
- Mail notice to all homeowners at least 10 days but not more than 50 days in advance of the meeting;
- Physically post notice in a conspicuous location, to the extent that such posting is feasible and practical; and
- Provide notice via electronic mail to all homeowners who have requested it and provided the association with a valid email address. Such electronic notice must be provided at least 24 hours prior to the meeting.
Associations are further encouraged to post meeting notices and agendas on the community website.
The Board should also review the Association’s bylaws as they may contain provisions requiring additional notice, such as notices to be sent 14 days in advance of the meeting instead of the standard 10 days. The goal of these robust requirements is to encourage homeowner attendance and participation in the meetings.
Proxies
A proxy is permission granted by one person to allow another to exercise voting privileges on behalf of the person giving the proxy. CCIOA provides homeowners with the right to appoint a proxy to exercise voting rights on their behalf at a meeting.
A proxy form must be dated and terminates eleven months after its date unless a shorter period is provided. Unless otherwise provided in the association’s declaration or bylaws, proxies may be appointed pursuant to the requirements of the Colorado Revised Nonprofit Corporation Act (“Nonprofit Act”). The Nonprofit Act allows flexibility in the appointment of proxies and provides that homeowners may appoint a proxy by:
- Signing an appointment form; or
- 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.
If your association has difficulty obtaining a quorum at your annual meeting, then proxies can be a powerful tool. To encourage participation, a proxy form should be included along with the meeting notice materials that are mailed to the homeowners.
Voting
The Board should make sure it understands the voting requirements and manner of voting to be used at the meeting. To be approved, some issues may require a vote of a percentage of the entire community, a percentage of a quorum, or a majority of a quorum. For example, an amendment to the association’s declaration may likely require approval from homeowners holding 67% of the total possible votes in the Association, while a vote to approve a proposed amendment to the bylaws may only require approval from a majority of homeowners present at the meeting (assuming quorum).
The Board should also be clear as to the use of secret ballots. 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 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 the meeting.
Once voting is complete, 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 the meeting by the person chairing the meeting. The volunteers cannot be board members or candidates for the board.
Conduct of Meeting Policy
All associations are required to have a policy regarding the conduct of meetings. The policy should speak to all of the issues mentioned in this article. The policy can serve as a roadmap for the Board when calling and conducting the meeting. The Board should review and familiarize itself with the association’s bylaws and conduct of meetings policy in advance of the meeting. If your association does not have a current conduct of meetings policy, then reach out to the association’s attorney and discuss having one prepared.
Homeowner Education
Pursuant to CCIOA, associations must provide education to homeowners concerning the general operations of the association and rights and responsibilities of homeowners, the association, and the Board of Directors. Such education must be provided on an annual basis.
The statute is very broad and allows the association’s Board to determine the manner of complying with these educational requirements. Having the association’s insurance agent attend the meeting to help homeowners understand the insurance obligations of the association and homeowners, especially in condominium communities, is a great topic. Other ideas include having the association’s attorney, reserve study professional, or community manager speak on matters regarding the association operations.
There is no requirement to spend funds on such education. Some Boards elect to have an officer or committee member provide information such as how the association’s budget is established or provide details of upcoming community improvement projects. No matter the method, the annual homeowner meeting provides an excellent venue for such education and related homeowner questions.
If your Association needs legal review of your governing documents, assistance preparing meeting notices, policies or proxy forms, or has questions regarding meeting compliance issues, please contact one of our attorneys at 303.432.9999 or [email protected].