Annual Meeting Adjournment

[Guest RobertJ]

I'm looking for help with regards to the proper way to postpone and adjourn a Homeowners Assocation (HOA) Annual Meeting. 

 

My HOA holds an annual meeting in March to elect HOA Board Members.  This year a special assessment vote was put to the homeowners with regard to purchasing earthquake insurance on the same ballot as the Board Member election.  The quorum for Board Member election is 50% of the Homeowners at the first Annual meeting scheduled for March 5 which was not met.  The March 5 meeting was adjourned to April 2 at which time the quorum requirement for Board Member election drops to 25%.  My expectation is that there will be ballots from about 30% of the Homeowners on April 2.

 

However, the earthquake special assessment vote requires a 50% vote; the quorum requirement for that vote doesn't drop to 25%.  Some homeowners may want to postpone the officer election for another month to try to get the 50% quorum for the earthquake insurance vote. 

 

My understanding of how this should be done is as follows:

If it's determined that there are envelopes containing ballots from at least 25% of the homeowners on April 2, the Annual Meeting is called to order as a quorum has been established for election of Board Members.

 

A motion to Fix the Time to Which to Adjourn is made for adjournment to May 7 (see RONR, p. 185, lines 6-27).

 

If that motion carries, a motion to Postpone the counting of votes for Board Member election to the May 7 adjourned meeting is made (see RONR, p. 94, lines 4-12).

 

If that motion passes, a motion to adjourn the meeting is made. 

 

With regard to adjourning an Annual meeting, the HOA ByLaws state:

 

Any membership meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the Members otherwise entitled to vote and present in person or by proxy, but in the absence of a quorum, no other business

may be transacted at any such meeting.  An adjournment for lack of a quorum at the original meeting shall be to a time not less than five (5) days nor more than thirty (30) days from the time for which the original meeting was called.

 

With regard to adjourning the April 2 meeting to May 7, I'm thinking that's not in violation of the bylaws since the April 2 meeting is not the original meeting which was adjourned for lack of a quorum.

 

Thank you for reading about and considering my issue.

 

 

[Thomas Ralph]

Since RONR does not allow absentees to vote, you are going to need to read your HOA's bylaws to determine how to address this issue.

[Dan Honemann]

As best I can determine from what you have posted, you appear to have this right.

 

It also appears that, if a quorum is present on April 2, you could go ahead with the election of directors and then, if desired, adjourn to meet again on May 7 for purposes of the earthquake insurance vote. I suppose, however, that members have some reason for wanting to postpone the election as well.

[Guest Edgar]

However, the earthquake special assessment vote requires a 50% vote; the quorum requirement for that vote doesn't drop to 25%. 

 

Are you sure about this? Don't confuse the quorum requirement with the voting requirement. it's quite possible that, at the second meeting, the quorum requirement drops to 25% while the voting requirement remains at 50%. It would be unusual (I think), though not impossible, to require a unique quorum for a particular type of motion. Just some food for thought.

[Guest Guest]

Thank you all for your responses.  As specified in the HOA's ByLaws, "Any membership meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the Members otherwise entitled to vote and present in person or by proxy".  So the Homeowners present at the April 2 meeting can adjourn the meeting to May 7.

 

With regard to quorum requirements, the HOA ByLaws state "at least fifty-one percent (51%) of the total votes of all Members of the Association".  If that requirement isn't met, the adjourned meeting quorum requirement is "at least twenty-five percent (25%) of the voting power of the Association".  So the first meeting quorum requirement is .51 x 332 = 169.32 or 170 votes.  The adjourned meeting quorum requirement is .25 x 332 = 83. 

 

So Edgar, you may be right with regard to the quorum requirement for the special assessment for earthquake insurance that it drops to 25% as well.  However, the point of delaying the vote for earthquake insurance is to get enough votes to actually make a decision.  Also, the Board Member election vote and the earthquake insurance vote are on the same ballot.  So I don't think we can actually count the votes for Board Member election without also counting the votes for the special assessment.  Once we open the envelopes I don't think we can not count both votes.

 

The HOA's CC&R's with regard to obtaining earthquake insurance state "the Association shall obtain and maintain earthquake insurance covering the entire Project upon a vote and approval of a majority of all Owners within the Project".  Since there are 332 homeowners, that would require 167 yes votes.  However, I think that California Civil Code may take precedence over the HOA's ByLaws with regard to a special assessment vote.

 

However, California Civil Code 1366( which states the following may take precedence over the HOA ByLaws:

 

Notwithstanding more restrictive limitations placed on the board by the governing documents, the board of directors may not … impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year without the approval of owners, constituting a quorum, casting a majority of the votes at a meeting or election of the association conducted in accordance with Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code and Section 7613 of the Corporations Code. For the purposes of this section, quorum means more than 50 percent of the owners of an association.

 

So I read this that the quorum requirement per the Civil Code for special assessment votes is 50% (taking precedence over the HOA ByLaws which state 25% for an adjourned meeting), and the voting requirement is a majority of the Homeowners who vote for the special assessment (taking precedence over the HOA ByLaws which state "a Majority of all owners within the Project".

 

So if 170 people vote in the special assessment vote and there are 86 yes votes, then the special assessment vote would pass.  So since we only have 30% of the Homeowners who voted we may want to delay both votes to try to get 50% of the votes.

[Josh Martin]

So I read this that the quorum requirement per the Civil Code for special assessment votes is 50% (taking precedence over the HOA ByLaws which state 25% for an adjourned meeting), and the voting requirement is a majority of the Homeowners who vote for the special assessment (taking precedence over the HOA ByLaws which state "a Majority of all owners within the Project".

 

So if 170 people vote in the special assessment vote and there are 86 yes votes, then the special assessment vote would pass.  So since we only have 30% of the Homeowners who voted we may want to delay both votes to try to get 50% of the votes.

 

It's well beyond the scope of this forum to interpret the California Civil Code, but is is certainly correct that procedural rules in applicable law take precedence over the  bylaws. Additionally, I agree that the motion will need to wait until an adjourned meeting whether this is because the assembly does not meet the quorum requirement or because the assembly cannot possibly meet the voting requirement.

 

As noted, the society is not required to also postpone the elections to the adjourned meeting, although it may certainly do so if it wishes.

[Guest RobertJ]

Josh, Thanks for your reply.  Yes, I understand that it is beyond the scope of this forum to interpret Civil Code.  The assembly will probably vote to adjourn the meeting to April 30 since there are not enough votes to establish quorum for the earthquake insurance vote.  The adjourned meeting must be adjourned again within 5 to 30 days per the HOA's bylaws.  So this way if the "BIG ONE" hits it can be said that we did all we could to get a vote to decide whether to get the insurance or not.  And we just had a 5.1 quake nearby by last Friday 3/28.  There were structures within 10 miles of the HOA that have been condemned due to earthquake damage.

[Guest Nancy N.]

.  This year a special assessment vote was put ... on the same ballot as the Board Member election.  ...

With regard to adjourning an Annual meeting, the HOA ByLaws state:

 

"... An adjournment for lack of a quorum at the original meeting shall be to a time not less than five (5) days nor more than thirty (30) days from the time for which the original meeting was called."

 

With regard to adjourning the April 2 meeting to May 7, I'm thinking that's not in violation of the bylaws since the April 2 meeting is not the original meeting which was adjourned for lack of a quorum..

 

Someone please clarify for me:

1.  Why is it not a problem that May 7 is not within 30 days of April 2 (nor, obviously, is it within 30 days of "the original meeting" in March?)

 

2.  Would it not alleviate some of the difficulties if you print the proposal about earthquake insurance and the ballots for the elections on separate sheets of paper?

[Josh Martin]

1.  Why is it not a problem that May 7 is not within 30 days of April 2 (nor, obviously, is it within 30 days of "the original meeting" in March?)

 

We are told that the rule provides "An adjournment for lack of a quorum at the original meeting shall be to a time not less than five (5) days nor more than thirty (30) days from the time for which the original meeting was called." The rule does not appear to place any limitations regarding setting up an adjourned meeting for an adjourned meeting, nor does it appear to place any limitations on setting up an adjourned meeting for any reason other than the lack of quorum. It is certainly up to the organization to interpret its own bylaws (and the OP should see RONR, 11th ed., pgs. 588-591 for some Principles of Interpretation), and I could certainly see a reasonable interpretation that this would be a problem.

 

2.  Would it not alleviate some of the difficulties if you print the proposal about earthquake insurance and the ballots for the elections on separate sheets of paper?

 

As I understand it, the ballots have already been printed and many members have already voted (presumably under absentee voting rules in the association's bylaws), so it seems to be a bit late for that.

 

EDIT: Edited to remove imprudent observations about bylaws I haven't read for a society I know next to nothing about.

[Guest RobertJ]

Thank you Nancy and Josh for your replies. 

 

The HOA Bylaw with regard to meeting adjournment:

Any membership meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the Members otherwise entitled to vote and present in person or by proxy, but in the absence of a quorum, no other business

may be transacted at any such meeting.  An adjournment for lack of a quorum at the original meeting shall be to a time not less than five (5) days nor more than thirty (30) days from the time for which the original meeting was called.

 

The first meeting on March 5 did not attain a 50% quorum requirement. It was adjourned to April 2 (28 days later).  The adjourned meeting on April 2 may be adjourned to another date.  There seems to be an ambiguity in the bylaw with regard to the term "original meeting".  Would "original meeting" refer in this case to the March 5 and the April 2 meeting?  The March 5 meeting was the first meeting and could reasonably be construed as the "original meeting" which is actually how I first interpreted the bylaw and thought that the 5 to 30 day requirement might not apply to adjournment of the April 2 meeting.  However, on second thought I interpret "original meeting" to refer to any meeting that is being adjourned to another date which would refer to the March 5 and April 2 and any subsequent  meetings that might be adjourned again.  I think that is a more reasonable interpretation of the term "original meeting".

 

Of course, I'd like to interpret it the other way so that we could adjourn the April 2 meeting to May 7 because May 7 would be the next scheduled Board meeting.  That way we wouldn't have to reschedule the May 7 Board meeting to coincide with the adjourned Annual Meeting on April 30 if we wanted to hold both meetings on the same day.  Perhaps it would be possible to interpret the Bylaw that way.  I did review RONR, 11th ed., pp 588-591 with regard to principles of interpretation of bylaws. 

 

With regard to the ballots, the vote is already in progress.  Actually the Board Member election vote and earthquake insurance vote are on separate sheets of paper.  Our election rules require the ballot to be put into an envelope and that envelope to be put into another envelope.  The outer envelope has the name, address, account number and signature of the homeowner.  Each homeowner is mailed only one of both of those envelopes.  So it's theoretically possible for someone to use a different set of envelopes for each ballot but unlikely because they were only mailed one of both of those envelopes.  So most homeowners would be putting both ballots in the inner envelope and the inner envelope in the outer envelope.

 

[Josh Martin]

The first meeting on March 5 did not attain a 50% quorum requirement. It was adjourned to April 2 (28 days later).  The adjourned meeting on April 2 may be adjourned to another date.  There seems to be an ambiguity in the bylaw with regard to the term "original meeting".  Would "original meeting" refer in this case to the March 5 and the April 2 meeting?  The March 5 meeting was the first meeting and could reasonably be construed as the "original meeting" which is actually how I first interpreted the bylaw and thought that the 5 to 30 day requirement might not apply to adjournment of the April 2 meeting.  However, on second thought I interpret "original meeting" to refer to any meeting that is being adjourned to another date which would refer to the March 5 and April 2 and any subsequent  meetings that might be adjourned again.  I think that is a more reasonable interpretation of the term "original meeting".

 

Of course, I'd like to interpret it the other way so that we could adjourn the April 2 meeting to May 7 because May 7 would be the next scheduled Board meeting.  That way we wouldn't have to reschedule the May 7 Board meeting to coincide with the adjourned Annual Meeting on April 30 if we wanted to hold both meetings on the same day.  Perhaps it would be possible to interpret the Bylaw that way.  I did review RONR, 11th ed., pp 588-591 with regard to principles of interpretation of bylaws. 

 

It is beyond the scope of RONR and this forum to interpret the rules in your society's bylaws. It's up to your organization to interpret its own bylaws. In addition to the questions you have raised, I'd consider whether the rule in your bylaws is meant to apply in a case such as this, since it appears that your organization will have a quorum so far as the organization's bylaws are concerned, but it might not have a quorum for the specific issue of earthquake insurance due to the provision in applicable law.

[Guest RobertJ]

Josh, Thank you for your response and concise summation of the issue.  I understand that interpreting my HOA's bylaws is beyond the scope of this forum.  We'll probably adjourn our meeting again tomorrow.  The candidates for the Board Member election are the six current Board members and one candidate who is not a Board Member who says that he didn't request his name to be put on the ballot.  So the Board Member election can wait.

[Dan Honemann]

If the April 2 meeting is adjourned to meet again at a future date, it obviously must be to a date which falls within any boundaries prescribed by the bylaws (or by applicable law, if any, which would then take precedence).

 

If there is any doubt at all about what these boundaries may be, I strongly suggest that you err on the side of caution.

[Gary Novosielski]

We are told that the rule provides "An adjournment for lack of a quorum at the original meeting shall be to a time not less than five (5) days nor more than thirty (30) days from the time for which the original meeting was called." The rule does not appear to place any limitations regarding setting up an adjourned meeting for an adjourned meeting,

 

Really?  You don't think that the rule applies to further adjournments?  I'm going to guess that the one who "told" you that was not your lawyer.

[Josh Martin]

Really?  You don't think that the rule applies to further adjournments?  I'm going to guess that the one who "told" you that was not your lawyer.

 

As I note, we are told that "An adjournment for lack of a quorum at the original meeting shall be to a time not less than five (5) days nor more than thirty (30) days from the time for which the original meeting was called." This is simply a direct quote from the original post and is, as I understand it, a direct quote from the society's bylaws.

 

The sentence immediately following that is my own observation, which I probably should have left out.

[Guest RobertJ]

Nobody told me that the rule doesn't apply to future adjournments.  I came up with the idea all on my own after reading it.  After further consideration, I came to the opinion that it would apply to future adjournments.  However, I think that there's enough ambiguity there that it could be interpreted either way although a "reasonable person" would probably interpret it that it does apply to future adjournments.

[Gary c Tesser]

... there's enough ambiguity there that it could be interpreted either way although a "reasonable person" would probably interpret it that it does apply to future adjournments.

 

That slack is always nice.

[Guest RobertJ]

Well, we adjourned our April 2 Annual Homeowners Meeting to April 30 at which time we plan to count the votes for our Board Member election and Earthquake insurance special assessment.  If we don't get a quorum (50%) for the special assessment but do for the Board Member election (25%), I'm thinking that we should take a homeowner vote of those homeowners present at the April 30 meeting to go ahead and count both votes even though a quorum may not have been attained for the special assessment vote.

 

FYI - Here's a link to a simulation of a large earthquake on the Puente Hills Fault.  There was a 5.1 earthquake on this fault last Friday 3/28/14. This fault runs from about 10 miles southwest of downtown Los Angeles up through downtown LA.

http://www.youtube.com/watch?v=8kfbhVHBq1A