Article Courtesy of The New
York Cooperator
By Lisa Iannucci
Published April 19, 2018
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Whether you live in a condo, co-op, or HOA, board
elections are a complicated process, especially when it comes to voting and
counting ballots. Yet electing (or re-electing) a board is probably one of
the most important exercises the residents of a co-op or condo building can
engage in on behalf of their community. After all, board members are the
ones who make the crucial decisions about how their building is run – from
maintenance schedules to major capital improvements.
Elections 101
Most board members are elected by their neighbors. For example, Mr. Smith
runs for a spot on the board – president, for example – and residents like
Mrs. Jones vote for him. However, the process often raises questions among
candidates and voting residents alike about what the proper procedures are,
when exactly residents must be notified of an upcoming election, and the use
of proxy ballots. While the process may seem complicated at times, it
doesn’t have to be. Let’s break it down.
First, the election of a board of directors or board of managers is
generally held at the annual meeting for the co-op corporation or
condominium. “Each community will need to follow their state statutes and
governing documents, such as the bylaws, as we have seen some documents even
call for a semi-annual election,” says Ruth Ingoldsby of Vote HOA Now, a
company based in Tigard, Oregon that provides online voting solutions for
HOAs. “Ultimately the board has a fiduciary duty to the association, which
includes doing what is necessary to have a fair election.”
The election process also differs from region to region and state to state.
Some buildings use paper ballots, while others have switched to online
voting. Choosing the voting and tabulation method depends on the building
community – as well as their bylaws. Resident preference factors in as well,
with more and more HOAs and buildings opting to convert to online voting
from more traditional paper ballots for reasons of sheer convenience. “So
many people that want to vote need to vote,” says Linda Gibbs, President of
the Floral Park, New York-based Honest Ballot, a company that handles
private elections with condos, co-ops, and associations all over the
country, “and yet some – like homebound residents, for example – don’t have
the opportunity. Nowadays, however, the elderly are using Skype or using
their phones [to cast votes and be heard].”
It’s interesting to note that no matter what the location, there is really
only one difference between the actual process of co-op and condo voting.
“The only difference is that it just depends on the shares,” says Gibbs. “A
condo does voting by percentage of interest, while a co-op would do voting
by shares or cumulative voting – but otherwise there’s no difference. Also,
it depends on whether the bylaws say they have to vote in-person or they can
to vote by proxy or by absentee ballot.”
Proxy Particulars
What is a proxy? There are two kinds of proxies actually – directed and
discretionary. “A directed proxy has [candidates’] names on it,” says Gibbs.
“A discretionary proxy has no names on it. A person brings it in, and we
give them a ballot. I like to send a proxy with the names of the people who
are running, but sometimes I don’t have the names because the nominations
are from the floor. Then, we just bring a blank ballot and put [the
candidates’] names on the night of the annual meeting.”
According to attorney Ronald A. Sher of Himmelfarb & Sher, LLP, in White
Plains, at the annual meeting the managing agent takes the role of election
inspector, signing in the shareholders, giving out the ballots, and doing a
tabulation to determine whether a quorum is present. “This quorum represents
50.1 percent of the shareholders in person or in proxy,” says Sher, “but
that’s not by unit, it’s by shares.”
The number of residents required to be present in order for an election to
happen can get a bit more complicated. “There are some co-ops that count a
quorum by units, and most co-ops will have voting per share on a prorated
share basis,” says Sher. “Voting can be somewhat involved if the difference
is between no cumulative voting or cumulative voting.”
For example, if your unit is allocated 100 shares, you can cast 100 votes
for each candidate running. “On the other hand,” Sher continues, “cumulative
voting is the right to aggregate the number of shares that you have, which
are multiplied by the number of candidates that are running. So, you have
100 shares and seven candidates, so it’s 700 votes for one person – or you
can separate them.”
The Business Corporation Law (BCL) requires that election inspectors be
sworn in and take an oath that they will perform their duty to fairly and
impartially tabulate the ballots, and to preserve and maintain the
confidentiality and privacy of the election process and results to the best
of their ability. “They’re generally prohibited from disclosing,
disseminating or publishing who voted for which candidate,” says Sher.
Once all of the votes are in, the ballots are collected and the inspection
will continue in another room, depending on how many units there are. “They
will tabulate and keep all the ballots, and will issue an inspector’s report
to certify their results, indicating which candidates received which number
of votes and who was the winner,” says Sher.
Keeping It Honest
Sadly, fraud and impropriety happen in the voting process. While issues have
cropped up in co-ops, condos, and HOAs across the country, Florida in
particular has dealt with more than its fair share of election-related
conflicts – so much so that in 2016, a grand jury was convened in Miami-Dade
County to investigate how the Florida Department of Business and
Professional Regulation (DBPR) had handled reports and complaints of board
election problems from Sunshine State condo owners. According to a February
2017 report by the Miami Herald, “The grand jury report makes it clear the
Florida Department of Business and Professional Regulation ‘is not effective
and doesn’t protect condominium owners from fraud and mismanagement.’”
The grand jury issued a series of recommendations for changes in state laws
to correct some of the principal issues: open access to condo association
records; conflicts of interests among members of association boards; fraud
in board elections; the powers of election monitors; and the
responsibilities of the DBPR to oversee and address charges of wrongdoing.
So regardless of where your building or association is located, how do you
keep your election honest?
“Sometimes people will attempt to submit fraudulent proxies, or make claims
that there was an erroneous tabulation or calculation of the ballots, or
that certain people should not have been permitted to vote because they
didn’t have the effective proxy,” says Sher. “But generally you can trust
your accountants, attorney, and managing agent to preserve the integrity of
that system.”
To help preserve that integrity, managing agents will sometimes bring in an
outside service to conduct the election and tabulate the ballots. “Does that
mean that [a professional election-running service] does it any better?”
asks Sher. “They are not conflicted and they are deemed to be disinterested,
but they take the same votes and perform the same duties.”
In cases where a tabulation company is hired to administer an election, the
board supplies the company with an up-to-date, accurate roster of who’s in
the building, and who’s eligible to cast a vote – the operative terms being
‘up-to-date’ and ‘accurate.’ “I don’t know [the residents],” says Gibbs. “So
the board’s lists have to be accurate and good. Then I send out the a
nomination mailing letting everybody know the election is upcoming, and
asking if they want to run. Then they send it back to me.”
Gibbs says that beyond furnishing the tabulation company with a current list
of residents, the board and the property manager really shouldn’t be
involved in the process. “When I do an election, I like to have the control,
because if anything goes wrong, it’s on me,” she says. “A lot of [boards]
want to do their own mailings, but how do I know they’re going to the right
apartments? If I have the mailing list, I send it everyone and we have a
receipt showing that that mail went out. That way, if there was any
protests, we can back it up.”
Once everyone has been alerted that an election is coming up, and aspiring
board members have gotten their names on the ballot, it’s time to let the
voting begin. “If there are paper ballots that have been mailed in, those
are carried to the annual meeting and often counted in the back of the room
while the meeting is taking place,” says Ingoldsby. “If the vote is
electronic, the ballots are tabulated by the system. More boards are
considering online voting, not just for the time and money saved, but also
to achieve quorum and to alleviate contentious elections by providing
third-party separation. With online voting, the tabulation is done by the
voting system, and votes cannot be altered – so there is no worry of
miscalculated or miscounted votes.”
If a building or association hasn’t secured the services of a tabulation
company, then either a voting committee, resident volunteers, or
representatives from the management company will usually be the ones to
tabulate and confirm the votes. In those cases, “It’s up to the people
involved to be honest,” says Ingoldsby.
I Object!
Anyone can contest the validity of an election within 120 days of that
election. If all seems well and nobody speaks up, “Thereafter it is deemed
valid,” says Sher. “People can ask for a recount, but it doesn’t mean that
they have the right to review the ballots. The recount can be done by the
inspectors of elections, but it doesn’t necessarily have to be. That’s up to
their discretion.”
In other words, with online systems, more people vote, so the results are
better—and the chances of fraud are vanishingly small.
In the final analysis, transparency is the watchword with building and HOA
elections. If a board is doing its diligence, it should take no umbrage with
letting its constituents in on every step of the process. And when
considering a new method of voting, be that electronic or otherwise, a board
is advised to seek recommendations from similar associations, to best
ascertain which third-party service or system is most secure for its needs.
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