Reader Questions - Board Proxy, Earthquake Insurance, and Replacing President

Mr. Richardson,

I serve on my HOA board, and every year we meet to discuss the annual budget. I sit through this discussion without understanding much of anything. After suffering through this protracted and painful discussion, I follow the vote of another director who has expertise in budget matters and who I respect. Could I just give a voting proxy to this other director regarding the budget and stay home?

F.M., Irvine

Dear F.M.,

The budget process hopefully is started by your manager, who makes recommendations about the HOA’s future probable expenses, based on its recent history. If the board is trying to do it on its own, the process can be difficult and more burdensome than it should be. The board has a responsibility to understand the budget, and to understand how and why it changes over the previous year, but a good manager should make that a much simpler task.

California law does not recognize board proxies from one director to another regarding board votes. The law allows proxies from a member to another member (if your governing documents permit proxies), regarding votes of the entire membership. However, the law does not allow you to give your director vote to another director. It is OK to take into account another director’s input, but it still is your vote.

Best,
Kelly

Hello Mr. Richardson,

I read your column frequently and respect you for truthful and insightful answers. Is it legal for the management company for HOA to discontinue earthquake insurance?

Thank you,

B.M., Riverside

Dear B.M.,

Your management company should not be deciding this – this is a board decision. Unless the CC&Rs or Bylaws require earthquake insurance, a board has the discretion to decide whether the association will buy such insurance for the coming year. However, given how important the issue is to the overall budget and also to the risk of earthquake loss, the board should inform the homeowners as to why it is or is not obtaining this insurance. HOA lawyers are conservative and usually recommend having such insurance, but some boards decide to forego it when balancing the cost against the overall budget. Disclosing these factors to the members is a good idea.

Thanks,
Kelly

Dear Kelly,

I am on a small condo board. The president is very controlling and makes every decision. He totally controls the management company, and they do not respond to any complaints or requests to fix things unless they get his approval. He has been interviewing contractors without including me or the other board member. What can I and other homeowners do to remove him from the board? 

Sincerely,

B.T., La Jolla

Dear B.T.,

Your president is outside the normal role of HOA presidents. The president is one vote, and should not be the association’s “boss”– the normal authority is the board. The president may be outside corporate process and volunteer immunities. Sorry, but you and the other director are partly to blame, because officers serve at the pleasure of the board, and a majority can decide to change presidents in any open meeting, so long as reviewing or changing officers is on the agenda. Removing the president is not same as removing him from the board – that process is by membership vote.

Regards,
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®.