HOAs and Owner Involvement: An Oxymoron? (part 2 of 3)

guest blog by Deborah Goonan

Debunking the myth that owners can actually change their HOAs

CAI’s educational booklet makes the assumption that owners elect their Board. In reality, the Developer appoints the Board – or at least one or more members of the Board – for several years, or even decades during construction. When the developer still controls the Board and possesses weighted voting rights, isn’t owner participation essentially a moot point?

Have HOA proponents, and CAI in particular, ever considered that a homeowner, having had no opportunity to elect the Board or amend documents during many years of developer control, is unlikely to ever make a successful transition to widespread participation in voting? And by the time it is no longer developer-appointed, what if the Board is still controlled by a small minority of investors or developer affiliates, who hold the majority of voting rights? This situation is far more common than CAI industry professionals would lead us to believe.

Vote the bums out!

As for CAI’s oft-prescribed solution to dissatisfaction – electing a new Board – is it really that simple? Not really. Post-turnover election procedures are based upon written provisions of the governing documents, possibly subject to limited statutory guidelines. The fact is, HOA governing documents are not reviewed and approved for compliance with constitutional voting procedures. Therefore voting systems are generally built upon the following components:

–Inequitable allocation of voting rights (votes allocated by number of units owned or proportional share of ownership)

–Voting processes that often involve proxies and/or representative voting systems that disenfranchise residents

–Typically, tenants cannot vote

–Members can have their voting rights revoked as a result of an alleged violation or dispute, or for being delinquent on assessments. (If you were told you could not vote at the polls as a result of being delinquent on your property taxes, would you accept that?)

Although laws in some states address a few of these issues individually, no statute addresses all of them, most notably equitable allocation of voting rights. Some states mandate ballot election for Board members, but not for amending governing documents.

Quite often, loopholes allow existing HOAs to avoid compliance with applicable statutes, with the qualifying phrase “unless otherwise stated in the governing documents” inserted before election and voting provisions. And because there is no national standard, the relative fairness of elections and voting varies considerably from state to state and from one Association to another. Obviously, more realistic solutions are needed.

See Part 3: Exploring Solutions

Link to CAI’s publication, Community Association Living