Board Elections

Getting Counted, Being Heard

By Jonathan Barnes

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 Every co-op and condo community has a board of directors in charge of governing  the community’s finances, physical maintenance and other day-to-day business. Part of the  board’s responsibility also is to keep the community fiscally sound, though not all  boards do a good job of this task. Given all that, it's easy to see why it’s important for residents to choose their community’s board members carefully.  

 How it's Done

 Boards are generally elected by building residents, but the process by which  they are elected varies from building to building because the election itself  is usually mandated through the community’s bylaws. Residents elected to the board of directors bring a variety of skills  to the office, but not all directors are equally knowledgeable in the various  aspects of their job. The process of running elections for new board members is  one task that the board can bungle, sometimes with disastrous results.  

 Residents of a community who believe an election was conducted improperly can  challenge the results. The matter can wind up in court, costing the dissenting  residents and the community a lot of money in legal fees. In the process,  neighbor can be pitted against neighbor and hard feelings can unwittingly be  engendered—sometimes, over a seemingly simple misunderstanding of how to properly conduct a  community’s election.  

 Nobody wants to be viewed as a possible cheat by his or her neighbor because  election rules weren’t specific enough in governing a board’s election, or because board members themselves weren’t aware of how to correctly run the process. That’s why it’s essential to understand the correct procedures in an election so that it runs  smoothly and fairly. A properly-run election helps to avoid the appearance of  impropriety and lessens the risk that the election will be challenged.  

 Democracy at Work

 Most co-op buildings or communities have election rules detailed in their  bylaws. Many call for yearly elections of board members—usually during the annual resident or shareholder meeting.  

 Sometimes, the bylaws go so far as to specify the exact month when elections  will occur but such specificity is not required. Boards usually hold elections  in the spring, after the community’s financial statements are ready, says Robert Tierman, an attorney and a partner  with Litwin & Tierman PA in Manhattan. The annual meeting might happen anywhere from April  through June.  

 In most cases, the entire slate of board members is replaced—or at least voted upon. Each of the board members is usually elected to serve a  1-year term. Because of this process, in some communities inexperienced board  members often are behind the curve of knowledge required to run the community  efficiently, and as a result make amateur decisions on weighty matters.  

 That inefficiency is leading many boards to consider changing their bylaws to  have board members elected on a staggered or rotating term basis, so that there  is some continuity of experience on the board, said Ronald A. Sher, an attorney  and co-owner of the Manhattan law firm of Himmelfarb & Sher, which specializes in work relating to co-ops and condos.  

 “Some boards also are considering changing requirements of membership on the  board to require that the member must be a shareholder and a resident,” Sher says.  

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 The board and/or property manager are responsible for promoting an election to  building residents and for facilitating the election process. Generally, the  community’s bylaws require that a written notice of the election be sent to residents in  advance of the vote—usually at least 10 days and no more than 40 days prior to the election.  Residents should consult their community’s bylaws to see when notice of an election must be sent.  

 “The annual meeting is always presumed to include the election of a new board,” Sher says.  

 When a board of directors appears to be doing its job well and running the  community’s affairs smoothly, residents can become apathetic. In such cases, many  residents will not even attend the annual meeting when the vote for directors  typically occurs. In some community’s annual meetings, it can even be difficult to obtain a quorum—which is a majority of unit owners attending or casting their votes by proxy  through another voter. Failure to achieve a quorum will mean that no board  business can be conducted, including the election of board members.  

 It is not entirely uncommon for a board of directors at an annual meeting to  send out people to collect written proxy votes from residents living in the  building, so that the board can achieve a quorum and have an election. The  distribution, collection, verification and tallying of the proxy votes is a  matter that can be complicated, and sometimes is best left to a tabulation or  election coordinating company.  

 Usually, a paper proxy ballot is sent to voters in the building when notice of  the election is sent. The unit owner sometimes can fill out the proxy and send  it back to whomever is running election—the management company, attorney, or election coordinating company—or a designated agent for the voter, such as another unit owner. Sometimes,  residents appointed by the board as inspectors of elections will help with the  collection of proxy votes.  

 Dealing with proxies and with the other ballots cast can be tricky, especially  during a hotly contested election. For that reason and because of other rather  arcane details of elections, some boards choose to employ outside experts in  running their elections.  

 Getting Help

 Tabulation companies make what can sometimes be a difficult election process run  smoothly, so that results are rarely contested and if they are contested, they  will not be overturned in court. Hiring an outside professional such as a  lawyer or tabulation company to oversee the election helps to provide some  transparency in the process. And when residents approve of the way the election  was run, as they usually do when outside professionals oversee it, they seem to  accept election results more readily.  

 Experts suggest that boards employ outside professional help for hotly-contested  races where results might be disputed by some residents.  

 Transparency is important in the election process, says Al Pennisi, president of  the Federation of New York Housing Cooperatives & Condominiums (FNYHC) and an attorney with the Queens-based law firm of Pennisi,  Daniels & Norelli. His company helps run meetings for boards of directors of various  communities.  

 “At our meetings, we have a tally [of the vote] in front of unit owners so they  can watch the process. The shareholders want to see what’s going on and it gives transparency,” Pennisi says.  

 Not everyone employs that method of counting votes, partly because some  individual votes that are cast in an election could turn out to be invalid.  

 Linda Gibbs, of the century-old Honest Ballot Association election coordinating  company, says her company doesn’t count votes the night of the election because ballots must be verified before  being considered valid and counted in the vote. The ballots of residents who  come to the meeting and vote in person are easy to verify, since they sign in  with election inspectors or with the outside consultant, but proxy votes are  another matter.  

 The signature on the proxy ballot must match the proprietary lease, Gibbs says.  That’s why her company checks and compares signatures on leases with the signatures  on the proxy ballots.  

 Most often, votes for boards of directors are done by paper ballot at the annual  meeting. In some rare cases, votes are done by hand. The latter method is  discouraged by professionals familiar with best practices for community  elections, since having a paper trail of the vote is essential.  

 The paper on which, and wording by which the election is promoted and executed  by the board, also is important, Gibbs says. In court, a proxy vote written on  a napkin might well be acceptable, but the wording on ballots and other  election literature still should be clear to avoid any problems with the vote.  

 “We write the election paperwork in laymen’s terms, so people understand it and the process goes more smoothly,” Gibbs says. “Election companies can help with the wording of election literature, to create a  better line of communication in the vote.”  

 Gibbs advises boards to farm out their elections to impartial outside companies,  because companies such as hers don’t care who wins the election. “Elections should not be run in-house,” she says.  

 Counting Votes

 Often in building elections, employees of the management company count the  votes, with the oversight of inspectors of election, who are appointed by the  board of directors. Usually the voters’ ballots are sealed and either collected by inspectors or placed by voters in a  ballot box prior to the tally. Elections aren’t truly limited to just once a year, insofar as residents might initiate a  special election, if they feel it’s needed.  

 Residents who are not members of the board can call for a special election if  they are not happy with the performance of the board that is running the  building. These dissenters will ask for a recount of the votes, which could be  done by an outside consultant to ensure impartiality.  

 An attorney also can be an impartial observer of elections, Sher says. “I will monitor inspectors of elections in their tabulation process,” he says.  

 To remove one or more board members, some communities stipulate that such a move  can happen with a petition signed by a certain percentage of the shareholders—usually representing 25 percent of the interest in the building. In such a case,  the residents would submit the petition to the secretary of the corporation,  who would then distribute a written notice in advance about the meeting and the  special election.  

 “Most of the election fights go on when the developer or sponsor [of a community]  is holding onto the board longer than he should,” Tierman says.  

 If the board of directors refuses to hold new elections when residents are  demanding them, residents might have to go to court to get the new election,  Tierman says.  

 And remember that your vote is an important part of the board/ shareholder  experience. As former President Harry S. Truman, so sagely advised, “It's not the hand that signs the laws that holds the destiny of America. It's  the hand that casts the ballot.”   

 Jonathan Barnes is a freelance writer and a frequent contributor tothe Cooperator.

 

Comments

Raymond Chen

If the proxy is assigned to the management company, does this give the company the vote for Board of Directors. I understand that this is not allowed in Maryland.

Peter

Please, advice if employees of co-op are allowed to solicit for proxies from co-op shareholders on behalf of Board members during work hours as well as off hours.

ron

Good question peter. I'm in new york and our super is on the board. he also collects proxy votes. does anyone know if that is legal??

Jake

Our condo board has created a nominating committee to choose one candidate for each open board position. Anyone else who wants to run must have a petition signed by 17% of the homeowners. Is this legal? There is no mention of the nominating committee in the bylaws.

pete

Does a proxy vote have to be filled in by the voter or can it be sent in blank and be filled in by a person other than the voter.

Robert Altmann

Due to resignations of 2 board members we are having our Annual election for 5 spots on the Board. Three 3 year spot and two 2 year spots. Does the voter have to vote for 5 directors Can a ballot be voided because the a voter did not vote for 5 of the 8

an unknown user

Board in over 12 years. Two years no voting and no annual meeting. "We are doing good job, will stay." Board member died. Had 5 members. Viced President told me will not replace.

pants

what about the secrecy and security of the nominating petition itself - is that a document that is openly shared?

Richard

I am being nominated from the floor on the night of our board election. Due to personality conflicts, some residents are soliciting proxies and our by-laws state that no homeowner may have more than 4 proxies. Said homeowners are now dividing up their proxies. Can this be challenged after the vote?

Hadas Harpaz

What can unit owners do in a case that there was not any board meeting or board election for the last 4 years. The maximum time board member elected is 3 years, 2 years and one year.. Do they still considered Board members even though they were not reelected?

an unknown user

We have an unusual situation. A small building of 9 units and a board of 5. The Board has 9 votes with 6 votes of those 9 held by 3 members, As it stands, the board, particularly the 3 with the votes, has the votes to vote themselves in again which has happened and to vote in or out anyone that they want or don't want. This undemocratic method is maddening and has a terrible effect of the morale of the building for those under this despotic rule. Are there any precedents for a ratio of board members to shareholders? Unfortunately, the board has not fulfilled it's fiduciary responsibility and acts in their own agenda disregarding any arguments that may disagree with their methods (side agreements not needing shareholder approval) and frustratingly there is no recourse, as the legal fees incurred by the board (those 6 and/or 9 shares_ 3 and 5 shareholders repsectively) are paid for by the co-op (all 14 shares) and there is not a sufficient non board group (4 shareholders) to pay any legal action that could possibly upend them. Any legal precedents?


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