Proxy Votes & Quorums for HOAs Explained

A Guide to the HOA Voting Process and Proxy Voting

The condo association voting process tends to be complicated for condo owners, board members, and property managers alike. This can cause apathy of the required parties for establishing quorum, and can stifle decisions for carrying out business necessities for the condo association.

In this article we will answer the following questions about the HOA Voting Process:

• What is the condo association voting process?
• What is a quorum?
• What are proxy votes, and why do they exist to establish quorum?
• What does the Massachusetts law state regarding proxy voting for HOAs?

Who is This Guide For?

This guide is designed to educate unit owners, HOA board members, and property managers about the HOA voting process, as well as outline best practices for establishing and managing a voting process for their HOA's bylaws. In the first half of this blog, we will explain the condo association voting process, and then we will go on to explain the challenges of reaching quorum, state laws on proxy voting, and our recommendations for your HOA that may face challenges for meeting a quorum.

What Is The Condo Association Voting Process?

All condominiums are required to be members of an association with an election process comprised of the condo unit owners, property managers, and board members. According to the New England Condominium article Getting Out The Vote,

As a guideline, these rules should address the qualifications of candidates; nominating procedures; campaign procedures; qualifications for voting; the voting time period; the authenticity, validity and effect of proxies; and the methods of selecting election inspectors to handle the ballots. 

What Is A Quorum?

A quorum is the minimum number of association members necessary to legally conduct the business of your HOA. Most, but not all, groups define a quorum as a simple majority of the members. However, the specific defintion for your HOA should be defined in your HOA's by-laws. Without a quorum, a vote cannot be taken, and the status-quo can't be changed.

What Are Proxy Votes, and Why They Exist To Establish Quorum?

The proxy vote is when a voter or unit owner designates another person to cast their vote, using a signed letter or form. “The proxy could be given to a fellow unit-owner or to a clerk for the board,” he states. The voter may indicate his or her choice of candidate or issue with a “directed” proxy – or leave the choice up to the person designated as proxy.

What does the Massachusetts law state regarding proxy voting for HOAs?

Low attendance at voting meetings is one of the main challenges that leads to harder chances of establishing quorum, which needs to be met according to the MA state by-laws for the HOAs to conduct business. Massachusetts state attorney Frank Flynn of the Boston law firm of Downing & Flynn stated in Getting Out The Vote that the election process is not something that is legislated by the state of Massachusetts. Instead, “elections are set forth in the condo docs (rules and regulations)” and that “serving on a condo board is voluntary…” causing the challenge of attendance.

Proxy Voting: For Better or For Worse?

Proxy voting can alleviate voter apathy and can be a valid solution to getting enough voters to show up at the annual meeting since most governing docs require a quorum of over 50 percent of beneficial interest be present at the meeting. If enough proxy votes are collected, the proxies may equal enough for a quorum and allow the annual meeting to proceed.

The disadvantage of proxy voting is that it is not a valid form of voting in all US states. For example, Illinois is a state that legislates proxy voting (or "secret-ballots") is a violation. The board and property management company must collect most of the proxies from the residents, and the board members vote for themselves. This system seems to prevent others from serving on the board.

Our Recommendations on Proxy Voting

Buildings should consider amending their by-laws' requirement for size of quorum, depending on the number of units in the association. If the building has 50 units or less, the typical 50.0001 - 51% should work sufficiently. If it gets higher than that rate, it becomes difficult to reach quorum at most annual HOA meetings.

For properties over 50 units, HOAs should consider decreasing the threshold for quorum. For example, if a property has 55 units, amending the Master Deed to drop the quorum to 37% can results in an increase of action items being improved.

Using Proxy ballots allows for voting on agenda items. HOAs should mail out Proxy Ballots instead of the usual proxy form for voting. These ballots are drafted to assign your proxy to vote on behalf of you for pre-approved agenda items. However, motions from the floor (followed by Second, Discussion, and Vote) could be possibly voted by Proxy Ballot if the ballot was drafted "to include, but not limited to..." This is all assuming that you have reached quorum.

For absentee ballot/mail voting, condo docs need to be referenced very specifically for how and where quorum needs to be established. If it states "at a meeting" in person, mail in/absentee cannot be used. This is when the proxy ballot can come into play. If the condo docs are not specific, and quorum is not met at a meeting, the HOA could explore the idea of following it up with a mail-in vote.

Electronic voting is not illegal in Massachusetts, but the Trust has to again be referenced specifically. New condominiums or associations looking for under-quorum reprieve may want to amend their Trust to allow for them. There is not much judicial precedence for challenging electronic voting known. Being that is a new form of voting, HOAs should tread carefully on this.

In conclusion, HOAs should always retain an attorney to clarify what is required by your property governing documents.

Your Thoughts on Proxy Voting

Do you believe that altering the threshold in your HOA's by-laws can allow for proxy voting could be advantageous for your HOA? How hard would it be for voting on amending your HOA by-laws for establishing quorum for your property?

Give us your feedback! We would love to discuss more about Proxy Votes & Quorums for HOAs with you in the comments.

Condo Insurance Explained

Condo Owners: Raise Your Hand If You’re Insured (and Know What It Means)

When Premier Property Solutions takes over the management of a new property, we often find that many condos and apartments in Boston are dramatically under-insured because they think their mater condo association policy will cover a claim inside a specific unit. In this blog post we will walk you through the common types of policies for Condo Associations, and let you know what you can do to protect your property.

We must take the approach that your home may be under-insured to learn about the loopholes, leaps and dives of insurance claims that could be costly in the dollar range of millions per damages to your home. This also includes understanding how renovations could cause higher premiums have to understand the insurance-to-value appraisal process, and that renovations call for the reappraisal process from the insurance company. Our company was recently quoted in The Boston Courant regarding the level of coverage, and understanding the boundary of coverage for homeowners that live within a condo association’s master policy. It is essential to not assume that they have a "studs out" policy readily provided to them upon purchase of the home.

Types of Insurance Policies for Condo Associations

We have all heard of "studs in" or "studs out" coverage.  This refers to the boundary of coverage in some insurance policies.  If the master policy is "studs out," it means it covers everything from the studs out to the exterior for each unit.

Studs-In / All-In

If it is a "studs in" policy or "all-in"* policy, the unit’s ceiling, walls, floors, installed fixtures, appliances and cabinets would all be covered under the building policy, in addition to the building’s common areas hallways, roofs, energy equipment  etc.

"All-in"vs."All-in-per-Condo Docs"

Special conditions apply to insurance policies when making improvements and betterments (a/k/a upgrades to the unit). The differences are as follows:

All-in	This means the master policy will insure any improvements to the building made by unit-owners. Even though the unit-owner might have spent large sums of money to modernize the kitchen and bath, the improvements would be covered on the master policy. The unit owner doesn't need to insure the improvements on a homeowner’s policy. The insurance companies that offer "all-in" coverage usually do so with an endorsement. See the sample policy forms on our website.
All-in per Condo Docs	The insurance policy refers to the insurance section of the condominium documents to interpret what is covered on the master policy. If you see "all-in per condo documents" it means we have interpreted the master policy condominium document and feel it will adequately cover all improvements made by unit-owners.
Per Condo Docs	The insurance policy refers to the insurance section of the condominium documents to interpret what is covered on the master policy. If you see "per condo documents" it means we have interpreted the master policy condominium document and feel there is either no coverage for improvements made by unit-owners or the condominium documents are too ambiguous.
Original Spec's	Coverage only includes property in "units" and private storage areas which were initially installed in accordance with your condominium's original plans and specifications. If you have original specification coverage it means improvements or betterments are not covered on your master policy.

Who Determines The Type of Policy?

The Associations By-Laws generally dictate whether or not the condo association’s coverage should be studs in or studs out.  The By-Laws determine IN or OUT coverage, but the agent determines which level of all-in/all-in-per-docs/per doc/original they are using.

What’s Covered By the Policy?

As a general rule, H-06 policies a/k/a Home Owners Insurance Policies should include coverage for:

• Personal Belongings - clothing, furniture, computers etc., everything you would take with you when you move
• Loss of Use -  protection if the resident is unable to live in the unit as a result of an insurable loss ex. fire, flood
• In Home Liability - should someone get hurt while in the unit
• Master Policy Deductible

Make Sure You’re Covered!

As residents of New England, we all know that as winter approaches, Mother Nature can be as unpredictable as a last week’s eight-alarm blaze that left an estimated $2 million in damages to a commercial property down the street from our Boston property management offices on Summer Street.

When we see catastrophes like this, we all too often say "that could never happen to me", but the possibilities are endless! Ranging from fires, floods, tornadoes, or the increasingly frequent ice storms that have pounded New England in recent years, insurance premiums and claims for property damage have been increasing for 5 years.

For more information about Master deeds, please see the following article from Endlar insurance: