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Correct use of proxies
essential to associations by Laura V. Kwiatkowski
Q:
Can you clarify when it is appropriate for members
of a community association to use proxies
and exactly how they work?
A: Your
question is an important one. The lack of understanding within community
associations concerning
the proper use of proxies and their legal requirements often results in their
misuse.
First, understand
that a proxy is the authority given by one person having the right to do an act
(i.e. to vote) to another (the proxy holder) to undertake the designated act for
that person.
However,
community association board members may not give their director proxy to another
board member to be used as a vote at a board meeting. This would be construed
as a board member's abdication of his/her fiduciary duties as established by the
California Corporations Code.
But
any member of the association may give his/her proxy to another person for purposes
of voting at any meeting of members, unless this right is limited by the association's
Articles of Incorporation or Bylaws.
For
example, assuming there is no limitation in your Association's governing documents,
members could use proxies at the annual meeting of the membership where members
are elected to serve on the association's board of directors or any special meeting
of the membership called for an authorized purpose.
There are
several key points to remember about the legal requirements pertaining to valid
proxies. For starters, a proxy must be signed by the "member" to be valid. Remember
in most associations, a "member" is generally defined as the record title owner
to the unit or lot.
However,
the proxy holder does not need to be a member of the association unless your association's
governing documents contain this requirement.
A
proxy holder is under a fiduciary duty, as an agent of the member, to obey the
directions given by the member, as the grantor of the proxy. For example, in
most community associations, the proxy form offers the member several options:
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To have
the named proxy holder appear on his or her behalf for quorum purposes only but
to abstain from voting on all issues,
-
To have
the proxy holder vote on the issues as specifically directed by the member or,
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To have
the proxy holder vote as he or she deems fit. Thus, the proxy holder would have
to vote as directed by the member.
Another
important legal requirement is set forth in the California Corporations Code.
If proxies are distributed to 10 or more members in a corporation (association)
consisting of 100 or more members, it must afford the member an opportunity to
specify approval or disapproval on each matter or group of matters to be decided.
Thus, on
each issue to be voted upon, the proxy form must offer the option to vote in favor,
against or abstain on that issue.
Proxies
are considered valid for 11 months from the date it is signed, unless language
contained within the proxy itself states otherwise. The maximum term of any proxy
is three years from the date of execution.
Further,
a proxy can be revoked or withdrawn by certain acts, such as if the member who
previously granted the proxy attends the meeting and votes in person, the proxy
is then revoked. Also, a proxy can also be revoked if the member delivers a written
document to the association stating that his or her proxy is revoked.
Lastly,
a proxy is revoked by a subsequently dated proxy signed by the same person.
As you can
see, there are certain legal requirements which must be satisfied to have a valid
proxy.
Invalid
proxies cannot be used to cast votes at a meeting. Further, any action taken
at a meeting of the members using invalid proxies may render the decision of the
membership void, depending on the number of invalid proxies cast and the requisite
number of votes needed to pass the proposed action.
If you have
questions concerning the procedure for using proxies at your association or even
the validity of proxies, you should contact your community association's legal
counsel to avoid any future challenges to the vote taken.
Laura V. Kwiatkowski
is a member of the Community Associations Institute (CAI) and is a San
Diego attorney. Readers can visit the CAI website at www.cai-sd.org and
can get their condominium or homeowners association questions answered by calling
the Community Associations Institute at (619) 299-1376 or e-mail
at q&a@cai-sd.org or sending
questions to: Condominiums, Homes, San Diego Union-Tribune, P.O.
Box 120191, San Diego 92112-0191.
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