(originally published in July of 1997)
In our representation of homeowner associations,the following is a common scenario: It is the annual meeting of the Harmony Homeowners Association. Present are the 11 members of the Board of Directors, the management representative, the Association’s legal counsel, CPA, landscape maintenance contractor, and building consultant. Out of the 100 owners within the Association, only 20 have either submitted proxies or are present. The Association’s Bylaws state that a majority of the voting power constitutes a quorum. Thirty minutes after the designated meeting time, the exasperated Board president announces that the annual membership meeting will have to be reconvened because the Association failed to obtain a quorum.
It seems that more and more, associations are unable to go forward with the annual meeting on the original date, due to the inability to obtain a quorum. Not only is reconvening the annual meeting inconvenient, it often means associations will incur additional expense in having to mail notices, pay for management and other consultants to be present, and even to rent the meeting facility.
If you find that your association is often plagued by the inability to obtain a quorum on the original date, instead of resolving yourselves to the fact that you will always have to say “reconvene”, consider the following factors and suggestions before scheduling your next annual meeting:
Time and Place: Often, the solution may lie in re-evaluating the time and location of your annual meeting. For instance, if your association is mainly comprised of working people, consider holding the meeting at a time that allows people to get home from work, change, and perhaps have dinner or a drink before the meeting (e.g. after 6:30 P.M.). If your association has a central meeting place, such as a recreation center or club house, have the meeting at that location as it is more convenient than having to get in a car and drive to a distant location. Even if you do not have a recreation center, consider meeting somewhere else on-site, such as a pool or tennis court. If you do have to meet off-site, try to pick a location closest to the association, such as a nearby school or park.
Incentives: Consider offering some special incentives such as raffling off one month’s assessments or another donated prize. Make it clear that this incentive is available to owners who mail in their proxies as well as those that are present so owners will be encouraged to mail their proxies. On the same note, make sure you educate your owners, via the meeting notice and/or newsletter that even if they plan to attend the meeting, they should send in their proxy. This way, if they do not attend the meeting, their proxy will be counted towards the quorum requirement. Remind the owners that even if the owners do attend the meeting, they can always revoke their proxy and vote on the ballot.
Promote a Sense of Community: In order to encourage members to attend the meeting, turn the meeting into a social event and offer time to mingle either before or after the meeting. Consider serving food or perhaps having a potluck before the meeting. Try to schedule a guest speaker on a topic of interest to your community such as a representative from the fire department to talk about fire safety issues or someone from a nearby park to discuss special park services and events.
Amend Bylaws and/or Proxy Procedures: Typically, association bylaws specify that a majority of the members constitutes a quorum. However, earlier this year, California Corporations Code Section 7512 was amended to provide that one-third of the voting power present in person or by proxy constitutes a quorum, unless the bylaws specify a different amount. Associations may consider amending their bylaws to reduce the quorum requirement for membership meetings to one-third. Also, the owners can sign a proxy that will be valid for up to three years for quorum purposes only. Both of these actions should be undertaken only with the assistance of legal counsel.
If, despite these measures, your association still is unable to meet its quorum requirement at the first meeting, remember that most bylaws do have a reduced quorum requirement (usually twenty five percent) for the reconvened meeting.
As frustrating as it is, the fact remains that associations may employ all of these tactics and still not achieve a quorum. However, if Associations continue to diligently work towards the goal of never havingto say “reconvene” again, those efforts should pay off in the long run.