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AT WHAT POINT IS AN HOA MEETING INVALID BECAUSE OF ERRORS?

What do you think happens when a California HOA screws something up in the election process after Civil Code Section 1363.03? That's a good question. Some assume that the election is void (automatically invalidated). Others believe it's no big deal, unless someone challenges the election .... and wins, either in court or because the Board thought the better of going forward with outstanding challenges.

Shiould everything just fall apart? Should everyone panic? My answer is no. What should happen when discrepancies have been discovered is that the complaining parties and the Board should decide what is best for each of them, under the circumstances. Sometimes they need legal advice, and sometimes not, depending on what happened, and how it affects the operations of the association.

The new law for HOAs related to elections says that HOAs "shall" adopt election rules, and specifies what those rules should include. It says that the Board shall select 1 or 3 inspectors of election and specifies who those persons can be. Civil Code Section 1363.03 says alot of things about what "shall" be done. It says that it applies to both incorporated and unincorporated associations. It says:

"(b) Notwithstanding any other law or provision of the governing documents, an election within a CID regarding assessments legally requiring a vote, election and removal of members of the association board of directors, amendments to the governing documents, or the grant of exclusive use of common area property pursuant to Section 1363.07 shall be held by secret ballot in accordance with the procedures set forth in this section.

What the heck does that mean? It means HOAs are supposed to set up procedures per CC 1363.03, and follow those procedures. But what if they don't? Does the statute say that any election that occurs in which the HOA does not do all of the things it is supposed to do is automatically void?@!?

No, it does not. And wouldn't it be a mess if it did say that, since probably more than 60-80% of the HOAs in California do not even know about it, and those that do, are getting mixed interpretations about what consitutes a legal election, because the statute is so "messy" and not a "one size fits all."

So what does that mean?

It means that anytime the Board makes a mistake, or things that occur that are not described in the law itself, a question arises as to whether the election can or should be re-done. It gets dicey because if a board gets complaints about the election, and it requires unraveling an election, and they did more things right than wrong, and the election was fair, a board could be equally charged with inappropriately unraveling an election. For example, There are many possible scenarios for making mistakes. And there are many allegations made that, until explained, sound really bad.

Here are some examples - sent by a reader, with some commentary.

1. All Incumbent Board members were not fairly represented on the ballot. Names and candidate statements were omitted.

What if this was because they did not get their statements in on time? What if they were left off on purpose, and nothing was done to point out the error? What if they were not qualified to serve so their names were omitted? Who can envision all the reasons this might happen, innocently or not so innocently.

2. Election ballots were handed out after the initial ballot mailing. We did not make quorum at the first meeting. The extra ballots were given to a candidate who is running for a board position. She handed out to friends in the condo development so they could vote. She said they lost or misplaced their original ballots.

What if an HOA can never get a quorum of members interested enough to vote, so the HOA can never have a legal meeting? What if this board member is determined to assure that the HoA has a legal meeting so he or she is willing to go out and get more owners to vote by giving them a packet? What if no one else cares? Or can do the same? Is this unprecedented behavior? Isn't this what people have done with proxies for years? Go out and encourage people to vote by giving them the tool to do so?

3. Our existing board is ready to make a motion to disqualify the election due to the above issues and go through the process again, with the above issues being handled correctly.Should we do that?

This person asked for "my thoughts". My thoughts are that with regard to any election where questions, concerns or challenges have arisen, get good legal advice about what to do, from someone who understands these HOA election laws, and follow it. That is a board's best protection, as board members receive some immunity for acting in good faith when a decision is needed and they do not have the expertise to determine what the right and legal thing to do is. "Good Faith" has several components, one of which is to rely on an expert when you do not have the special knowledge needed to make a decision.

And if there is a problem - here are the remedies (none of which indicates an election is automatically void if CC 1363.03 is not perfectly followed).

1363.09. REMEDIES. (Operative July 1, 2006.)

(a) A member of an association may bring a civil action for declaratory or equitable relief for a violation of this article by an association of which he or she is a member, including, but not limited to, injunctive relief, restitution, or a combination thereof, within one year of the date the cause of action accrues. Upon a finding that the election procedures of this article, or the adoption of and adherence to rules provided by Article 4 (commencing with Section 1357.100) of Chapter 2, were not followed, a court may void any results of the election.

(b) A member who prevails in a civil action to enforce his or her rights pursuant to this article shall be entitled to reasonable attorney's fees and court costs, and the court may impose a civil penalty of up to five hundred dollars ($500) for each violation, except that each identical violation shall be subject to only one penalty if the violation affects each member of the association equally. A prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation.

(c) A cause of action under Section 1363.03 with respect to access to association resources by a candidate or member advocating a point of view, the receipt of a ballot by a member, or the counting, tabulation, or reporting of, or access to, ballots for inspection and review after tabulation may be brought in small claims court if the amount of the demand does not exceed the jurisdiction of that court.

That's it! There is no automatic "void-you-haVe-to-do-it-all-over" in the law. However, that does not mean that many situations arise that result in unfair elections and in many of those cases, the Board maybe should vote to do the election over. A generic answer to any of these questions being asked without any investigation into what happened in the election process would be a disservice.

Full post as published by California Condo & HOA Law on August 19, 2008 (boomark / email).