Reader Questions - Associations Suffer From Quorum Failure

Mr. Richardson,

I have been on our HOA board for eleven years, we have an election every year but we never receive enough ballots from owners to meet quorum. We have to go door to door after the election asking owners to sign ballots. Are we required to do this or could we just accept and act on the ballots that are returned.

Thanks,

J.B., Irvine

Dear J.B.,

Quorum is normally stated in the bylaws, and is the minimum amount of participation required for a vote to be legally considered a membership decision. If the bylaws are silent on the issue of quorum, Corporations Code 7512(a) provides a minimum quorum of one third of the voting power (the number of members legally entitled to vote).

Without attaining quorum, the votes of the members who did vote are wasted – even if the votes cast are unanimous, the quorum must be met for a decision of the association to have legally occurred.

The community may consider reducing the bylaws quorum requirement, which itself takes a membership vote. If the community is unable to achieve a quorum even on that issue, there is the possibility of seeking court assistance under the Corporations Code for an order either reducing the quorum on the vote or adopting the vote taken as sufficient.

Thanks for your question,
Kelly

Kelly,

My HOA recently held board elections. Once again, they did not meet a quorum of 50 percent, and thus the current board retains its seats. Is this common practice? I can’t imagine a city council election being declared invalid because they did not get 51-percent of eligible voters to show up.

Also, because our community is still mid-construction, the developer has three of the five seats on the Board. Our community has surpassed 60-percent build-out but the developer has chosen to keep its three seats. Our worry is that we will continue to not meet quorum and even after construction is complete, the developer will retain power.

Thank you,

K.P., Menifee

Dear K.P.,

Under Corporations Code 7220(b), unless the governing documents state otherwise, a director continues to hold office until the term expires and a replacement has been elected,. This is a good idea, as associations should not be paralyzed by a lack of board governance just because terms have expired. However, it does mean that one consequence of chronically low voter turnout is that the board fills vacancies as members resign. Eventually such boards will consist entirely of appointees and nobody elected.

As far as the developer retaining control over the association, this is a common occurrence. Developers are concerned about two things – their ability to market the remaining inventory without interference, and protection from defect suits. However, their risk is that its directors are not protected by the volunteer immunity other directors enjoy, and any decision they make for the association might be scrutinized as a possible conflict of interest. Staying on the board actually can put a developer at increased risk of such a claim.

The best answer and approach is to mobilize the community, turning out enough votes to have a board consisting of homeowners. Easier said than done, but it sounds as though that is exactly what the community needs.

Best to your community,
Kelly

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.