Tag Archives: Voting Rights

Suspension of Voting Rights

Provisions of an association’s bylaws may contain provisions that purport to allow an association’s board of directors to suspend a member’s voting rights as a form of discipline (e.g., in response to the member’s assessment delinquency or violation of the governing documents).  However, due to the language of Civil Code Section 5105 (regarding the election rules that an association is legally required to adopt), associations are not able to deny a ballot to a member “for any reason other than not being a member at the time when ballots are distributed.” (Civ. Code § 5105(g)(1).)

 

“Record Date” for Elections & Voter List

Record Date
The term “record date” refers to the date established in the provisions of an association’s bylaws or, in the absence of such a provision, by the association’s board of directors for the purpose of determining which members are entitled to vote at a member meeting/election (e.g., to develop the “Voter List”.) Notwithstanding any other law, an HOA’s election rules must prohibit the denial of a ballot to an owner for any reason other than not being an owner at the time when ballots are distributed. (Civ. Code § 5105(g)(1).)  The time when ballots are distributed therefore serves as the record date regardless of any contrary provisions in the association’s governing documents.

Contents of Voter List
The voter list must include the name, voting power, and either the physical address of the voter’s separate interest, the parcel number, or both. The mailing address for the ballot must be listed on the voter list if it differs from the voter’s physical address or if only the voter’s parcel number is used. (Civ. Code § 5105(a)(7).)

Verification of Individual Information on Voter List
The association must permit members to verify the accuracy of their individual information on the voter list at least thirty (30) days before ballots are distributed. (Civ. Code § 5105(a)(7).)

Adjourned Meetings
The record date also applies in the case of an adjourned meeting (i.e., if the association failed to achieve quorum at the initial meeting), unless the board fixes a new record date for the adjourned meeting. (Corp. Code § 7611(b).)

Cumulative Voting

Cumulative voting pertains to director elections. It provides every member with a number of votes equal to the director seats which are up for election, and further allows each member to distribute those votes amongst the candidates as they so choose provided that the total number of votes cast by the member does not exceed the number of seats up for election. For example, if there are five (5) seats up for election, every member is given five (5) votes. A member may cast all five (5) of his/her votes for a particular candidate, or three (3) votes for one candidate and two (2) votes for another, or one (1) vote for each of the five candidates, etc. so long as the total number of votes cast by the member does not exceed the number of seats up for election.

If an association’s governing documents provide for cumulative voting, the association is required to allow cumulative voting utilizing the required secret balloting procedures. (Civ. Code § 5115(e).)

Director Recalls
Cumulative voting has significant implications on the number of votes required to remove (recall) directors from the board. (See “Removal & Recall of Directors.”)

Developer Control
Provisions that allow for cumulative voting are automatically included in the bylaws of newly built associations in order to bolster the strength of the new homebuyers while the association is under developer control. Those provisions are included to satisfy the requirements imposed upon developers under 10 CCR § 2792.19 which mandate the use of cumulative voting for all director elections in which more than two (2) director positions are open for election by the association’s membership. (10 CCR § 2792.19(b)(1).) For master planned communities, developers may use a certain “class” of voting membership that grants the developer the right to elect a majority of the directors for an extended period of time. (10 CCR § 2792.32(f); See also “Developer Voting Rights & Classes of Membership.”)

Once the developer is no longer involved in the association, the association’s membership may vote to amend the bylaws in order to remove provisions that call for cumulative voting. The authority to do so is explicitly provided for under Corporations Code Section 7615(a).

Developer Voting Rights & Classes of Membership

A member of an association is generally entitled to cast one (1) vote for each unit the member owns within the association. (See “One Vote Per Unit.”) However, the developer of the association (the builder of the common interest development (“CID”)) is permitted to establish different classes of voting memberships in the association’s governing documents. (10 CCR § 2792.18.) Developers do so in order to maintain control of the CID for as long as possible as units are sold to individual homebuyers while the CID is being built-out.

Class A Membership
Class A members are designated as owners of units and have one (1) vote for each unit/lot owned. (10 CCR § 2792.18(b)(1).)

Class B Membership
Class B membership is reserved to the developer, who is given up to three (3) votes for each unit/lot held by the developer. (10 CCR § 2792.18(b)(2).) Class B membership is tied to the developer’s ownership of separate interests (units) that are subject to assessments. (10 CCR § 2792.16(f)(2).) Pursuant to 10 CCR § 2792.32(c), Class B membership automatically converts to Class A membership when any of the following occur:

  • When 75% of the authorized residential interests transfer to homebuyers;
  • On the 5th anniversary of the most recent conveyance of a residential interest to a homebuyer. This deadline can be extended indefinitely as long as a residential unit is transferred once every 5 years; or
  • On the 25th anniversary of the first conveyance of a residential separate interest in a master planned community.

Class C Membership
Class C membership may only be used in master planned communities and extends only to votes for electing directors to the board. It allows the developer to preserve control of the board by giving the developer the right to elect a majority of the directors for an extended period of time. (10 CCR §2792.32(f).) Pursuant to 10 CCR § 2792.32(f)(1), these rights automatically terminate when any of the following occur:

  • 75% of the residential interests have been conveyed to homebuyers;
  • On the 5th anniversary of the first conveyance of a residential interest to a homebuyer; or
  • On the 25th anniversary of the first conveyance of a residential interest in a master planned community.

One Vote Per Unit

Virtually every set of association governing documents allow for only one (1) vote to be cast per “separate interest” (per unit) within the association, regardless of the number of persons on title to the unit. This is in accordance with the requirements contained within Title 10, Section 2792.18(a) of the California Code of Regulations.

Where ownership of a unit is vested in a number of persons (i.e., joint tenants, members of a partnership, etc.), whoever casts the secret ballot on behalf of that unit is presumed to be voting for all of his/her co-owners. (Corp. Code § 7612.) Once the secret ballot is received by the association’s inspector of elections, that ballot is irrevocable regardless if one of the co-owners desires for the ballot to be withdrawn or otherwise objects to the way in which the co-owner voted. (Civ. Code § 5120(a).)

Developer Voting Rights
The developer of the association (the builder of the common interest development) often establishes different classes of voting memberships in the association’s governing documents. Those classes allow for the developer to have up to three (3) votes per unit owned by the developer, subject to certain limitations. (10 CCR §§ 2792.18, 2792.32; See also “Developer Voting Rights & Classes of Membership.”)