 Well, happy new year. We begin the year with another Kondo Insider show. It's hard to believe we've been doing this about two years now, trying to help boards and owners understand association living and the opportunities, rights and obligations. Some of you probably know we have seasons. We have the spring and the fall and the summer and the winter. But in the Kondo world, we have annual meeting season at the time when all the associations, all 1,750 of them, if they're on a calendar year basis, probably hold their annual meeting of all their owners in the first quarter of the year. So let me ask a good friend of mine, Steve Glanstein, professional registered parliamentarian, to come down and let's kind of review going into the annual meeting season what it's all about. Welcome to the show against Steve. Thank you very much and happy new year. It's always good to you. Yes. Just briefly again remind us what a professional registered parliamentarian is. Yeah, sure. I'm nationally certified as a professional registered parliamentarian. There's a national association of parliamentarians, about 4,000 members and they credential parliamentarians and we're experts on Robert's Rules of Water newly revised and then some other parliamentary authorities. So it goes beyond Robert's rules. You're training with regard to parliamentary authority. Yes, it does. Yet the credentialing is focused on Robert's Rules of Water newly revised. I know the answer. I know this is a dumb question but are there a need for parliamentarians in annual meetings? How many annual meetings do you do a year? Well, I do about 32 of them in the month of March. So I'm a little busy. Sometimes there are three in a day. Two in the morning on the neighbor island and then one in the evening on Kauai or even on Oahu at the other end. And so it's pretty busy. We're dealing with about 100 meetings a year, 110 per year. And why do boards hire parliamentarians to help with the annual meeting? What's the benefit? What's the need or what causes it? Well, the practice is built over the last 30 years and what has happened is they've recognized the value of having a parliamentarian to make sure the meeting stays on track, follows proper procedure and maximizes the chance of surviving any sort of challenge after the meeting is adjourned. Yeah, my personal experience as a side note is you get board members or the president or the chair of the meeting who's an owner like everybody else. Then you have owners and all of them become what they believe experts in Robert's rules and they get into these arguments and fights over what they can make a motion on or do or not do under the governing documents and Robert's rules. We're having an independent person there who really has no stake in this provides a degree of calming among the homeowners and the board or the chair of the meeting as rulings are made respective to the conduct of the meeting. Yeah, it makes a big difference and having an expert is different than somebody who's just looked at the book to figure out what they want for one particular issue. We started out with one guy waving this red book around like it was the Bible. And then I asked him if it was the sayings of Chairman Mao because it was a little red book turned out it's this thing called Roberts. So I started reading and studying it got into it and then began correcting him and telling him what page number to look things up. So I got involved with it the reading of it is very different than the practice. It can be very boring it was the latest edition was written by lawyers so it tends to drag on with long sentences however the practice of it is fascinating to be able to handle a group of people and help them make shared decision-making processes function well. Well I know the answer to this question how often do we hold an annual meeting and the answer is probably annually. Annually. That's a good education point for everybody but if so kind of take us through the process they're going to have an annual meeting is required by their bylaws or their governing documents. What are the steps they go through as far as notices and and proxies. What steps do they go through in preparation for the annual meeting. Sure if you're talking about annual meetings of condominium associations community associations synthesis condominium related. Okay they go through various steps they do various notice posting to let everybody know that there's going to be a proxy solicitation that way if owners wish to have their name on the proxy as an option they wish to have their statement put out at association expense they have that option they go through that process then they send out the official notice at least 21 days later and that notice will have the sample proxy form as well as any other materials like meeting rules or candidate statements for the annual meeting. And we know the answer but share with everybody what a proxy is. A proxy is a power of attorney basically saying you Richard Emory are going to be able to vote for me as if I was there. I'm the owner and I'm giving you a proxy to vote for me just as if I was there and I can put limitations on it I can even let you transfer that proxy to somebody else if you wish so that's what a proxy basically does. That's a power of attorney from an owner to someone and to the state law I believe there's four boxes if the association is showing the proxy there are four mandatory boxes that have to be on that proxy. Correct. And they are well for condominium community association which we're talking. Well focus on condos for today's show. We're talking about four options on the association proxy one of them is to give that proxy to the board to be decided by a majority of those directors who are present at the meeting. The second one is to give them to the board and have them the the requirement to split it up so it's almost like we're splitting the money up between board members so if I give this proxy to what's called the board equal and there's five board members there they divide the voting power up by five and give one fifth of that to each of the five directors there at the meeting that's the second option. The third is the simpler one I'm giving this proxy to Richard and I put his name on a line and put his last name too and that's the third option. The fourth one says I want the meeting to go but I don't want this proxy to be used in any voting capacity that's called quorum only. Then that's another one that's the fourth checkbox. Now some owners they they've made multiple checkboxes they haven't checked them off last year we got the statue chain so if you do two three four checkboxes it's kind of confusing or none the proxy can only be used for quorum only that was last year's clarification but those are the four basic ones we call them board majority board equal individual quorum only. So I'm the president of the association and I'm on the board I wouldn't preclude an owner from saying I know Richard personally I'm giving Richard Emory the proxy as a person or an owner or just as a person even though I'm a board member I could still designate any person as my proxy holder even though maybe you're serving on the board. Right that's the right of that's the right of any owner there's very limited restrictions that would stop you from being able to give a proxy to a board president or even someone who's not an owner maybe wanted to give it to your attorney or a son-in-law or something like that you'd still do that here. What happens if that person doesn't show up? Well depending on the language of the proxy it may vary if the if the proxy doesn't handle that that eventuality you don't show up the proxy holder doesn't show up it becomes basically a useless piece of paper. Now some associations have put wording in there to say if nobody shows up it's going to be used for quorum only but it's got to be spelled out. So in theory it could be for quorum only if the proxy spells out that neither one shows up it's it's for that purpose. Yeah in theory it could be. What happened to the the proxy was given to Richard Emory or Steve Glancy I mean because now you're checking in there's two people who have the proxy I'm going to guess more times than not they sorted out among themselves but how does that work? They sorted that they usually sorted out among themselves if you cannot determine who to give the proxy to then it becomes invalid so they usually figure it out among themselves to make it right. If they know about in advance the best thing for issues like that is to get legal help to make sure that you're on solid grounds as to what the interpretation is. Well let's take another short break. You give me your proxy and I all of a sudden find out I have to go to a business trip I'm not going to be there. Can I take that proxy and write a letter and say I assigned the proxy given to me to Fred? Yeah that's called a power substitution and if your proxy provides for that for example I give Richard Emory a proxy with full power substitution. What that's doing is that's allowing you if you can't be there or even if you are there you want to substitute someone else's name just write a letter and sign it and give it to them. Are there any time restrictions of that could an owner or person come to a meeting and say here's my signed power of substitution Richard can't be there are there any like mandatory times that that power of substitution has to be submitted before it's valid? The substitution itself doesn't have a mandatory requirement it's this it's the proxy itself that does the proxy has to be two days prior to business days prior 4 30 p.m. Is there any reason why a management company or a secretary of an association could make a waiver of the two-day requirement? I never saw one in the statute it doesn't say if Steve wants to waive it at 4 31 it's okay no that statute is very clear that it's 4 30 p.m. second business day and I don't see there where there's any particular waiver of that. Yeah I'd be interested to see someday I doubt that all lawsuits would ever occur on that if there was one it was really at 4 31 and and it was turned down and and they'd get into the argument of the accuracy of the clock. Yeah yeah well you know that has a historical reason because somebody showed up with 250 to 300 proxies at four o'clock in the afternoon they couldn't count them on the same day so there was there was some real reasons today with computers it could be that that reason doesn't exist the way it used to so but right now it's a pretty hard limit. So let's just assume we've gone through the proper notice you know we've we've said we're going to hold a meeting if you want to give us information to be go it's a single eight and a half by 11 sheet of papers and owner soliciting proxies you can include it subsequent to that you get an official notice with the proxy attached and you've got to submit it with certain required information name date unit number the basic stuff with respect to the proxy and so now we get to the annual meeting and there's what we call an agenda or order of business where does the order of business come from? Okay that usually comes from the bylaws if it's not in the bylaws we go to Robert's rules but you usually find it under annual meetings in the bylaws of most associations and that order of business starts out basically after you call the meeting to order you basically provide a proof of notice you've let people know there's a quorum then you've got reports that are done you've got election inspectors followed by an election then there's unfinished business if they have any very rare that they do and then new business and then they adjourn the meeting that's the order of business. So what does the owner's forum fit into that? I developed the owner's forum about 30 years ago 31 years ago because the annual meeting is a business meeting and since it's a business meeting there's no debate without emotion it's very structured this is what we do we do tax resolution we do election we get the minutes done we adjourn and what happened was the experience that I had with people wanted to express various positions tell the board what they wanted to do the upcoming year so it was like a pot that's being boiled and you're not letting the top off and then both ultimately explode so what we did is we created an owner's forum after the adjournment of the annual meeting respecting that those owners who've come may want to bring the issues up for the new board and we usually have about 10 or 15 minutes there and and focus them on what do you want the new board to do we can't fix the past but we sure can get a list for the new board that's done before after the annual meeting so it's not a part of the official business it's usually done after the annual meeting excuse me but it's sometimes they do it sometimes they do it over drinks the night before the annual meeting that really does depend upon the culture of the group you know I've seen it certain occasions where boards have decided to hold an owner's forum before they call the meeting to order well they'll call it the order and they'll say something to the effect there's no objection we're going to take a 15 minute recess to have a short owner form it would have some major legal issue or some major issue before the owners vote they want to get information out into their hand and they may come back after being with a bigger annual forum but I've seen an occasion that a forum is done before but more times it's done after but we can say that's normally done outside the meeting so normally it's not part of the minutes yeah that's what that's that's very true and when when there are big legal issues what we need to have the attorney address the group under reports of officers what we'll do is we'll see if there's any objection to having the attorney address the group regarding this particular legal issue if no one objects then the attorney can actually make a report okay well we're right in the middle of the annual meeting uh none of the owners have gotten angry yet so we're going to take a short break and we'll be back in one minute this crazy thing going on today I was just walking by and all these DJs and producers are set up all around the city I just walked by and I said what's happening guys they told me they were making music so we do it well I'm welcome back to condo insider we're with Steve Glanstein talking about the normal procedures for annual meetings in condominium associations I remind everybody we're talking this in a broad brush general way you need to always look at your governing documents to see what they actually say because more times than not we're right on point for probably 90 percent of the condos but in this world there's always exceptions to everything we've ever seen but we've already talked about we call the meeting to order we've got a quorum more than 50.01 percent of the entire membership and we're going to conduct the meeting we have proxies and we're now going to talk about what we can do in annual meetings so I'm an owner and I'm there and I'm ready I'm saying I make a motion that the board of directors reduce the maintenance fees by 50 percent what do you tell the chair to do? My advice to the chair after looking at the documents is to rule the motion out of order generally because it violates the bylaws which specifically provide that the board of directors is responsible for determining the budget the maintenance fees of the organization when you have a bylaw that says hey board this is your job to do any motion that interferes with that bylaw is ruled out of order yeah because it's the bylaw specifies I can amend it to the bylaws right exactly I mean they could propose an amendment to the bylaws to say that the owners can decide what the maintenance fees are but you know that would have to be an amendment to the bylaws and they'd have to check for compliance with state law things like that how about I'm going to call it an advisory motion and we're in new business let's say I make a motion that the board consider establishing a committee to review our budget maintenance fees and look at reducing them if possible okay well I would advise you if you wanted the motion to be a proper one it's a requesting that the board consider the following because when you make that motion you if you do it in the form of a request it's very clear that it's not violating the the bylaws when it comes to the to the strict analysis that this is the board's job if so the motion requesting that the board consider reducing the maintenance fees due to the recent court settlement you know would in my opinion be in order with many associations and that that can happen sometimes it goes in unanimously so it's important as we do the framework of an annual meeting to understand this is a meeting that's being conducted pursuant to the government documents and it's not the wild wild west owners have limited authority what they can do and not do it an annual meeting they just can't come in and say cut the maintenance fees they'll fire the resident manager you know right so there's a lot of restriction so what is the normal business legally conducted at an annual meeting the normal business for most annual meetings is basically the reports come out by the president they may or may not have an auditor's report they point tellers they do an election they do the tax resolution they adjourn and then they go home and in some cases some governing documents just to be accurate provide that the members of the owners also either approve the auditor or approve the management company as a part of the normal script as well yeah we've we've tried to get some of that change but when it comes to the auditor depending upon the wording of the documents the owners might actually approve the order which is kind of humorous because the owners are not going to interview for three or four different auditors they usually end up approving whatever the board has selected so it becomes an one of those after the facts if there's no objection the board selection of the auditor will be approved since there's no objection it is approved and there's some other rules have seen situations where the by the governing documents the bylaws require that the management company's contract be approved at every meeting by majority of the owners which is 50.01% of all the owners so you could have a meeting where 51% were attendants and the one guy who got the dog lease violation who doesn't like the manager becoming votes no and so you only have 49% in voting power there and where in theory the bylaws say you have to have a majority of all the owners approve the management contract yeah this clause has really done nothing to help associations and at least in my opinion it basically puts it in there and they still have to have a management company so even though they might have voted down the management contract I've seen it where every five years they voted down just because somebody's angry because as you said a dog lease violation the board goes and does a study they come back as a result of the study to determine that they're very happy where they are and they go to the next year's meeting and they approve the contract and then three years later they end up voting it down and for 17 years they've had the same management company but they're on a five-year program where it gets voted down every five years yeah I think it's saying the unintended consequences that exist by some of these things so let's go to the election so most boards have what I call staggered elections if you have a five-member board for example three are voted one year two are voted the following year but people always wonder about straight voting or regular voting versus cumulative voting what is the difference and where did that come from well you got to kind of back up a little bit because the voting is cast based upon what power what voting strengths you've got in the bylaws or declaration rather so it could be a percentage common interest or it could be by lot depending upon what type of organization it is with cumulative voting versus regular voting if I've got four or say three slots open for election cumulative voting would allow me to vote three times times my voting powers for that one for one person or two for one person one for another it allows me to distribute my votes such that I can I can get a minority representative on the board now cumulative voting goes back to the 1800s in Chicago for the election of alderman they they got rid of it a few years back but but it has been used in in united states history before again as many positions that are open that's how many times you can vote now with what what's called straight voting if I've got three positions open I can't vote twice for one person I can only vote up to once for each person so the straight voting it's a little bit easier to calculate the cumulative voting it's a little bit more difficult because the numbers get harder and but it does allow for some minority representation from your experience what's your view of cumulative voting I think it creates a an issue in generally because then the person elected has allegiance to the minority that elected them and I think they've got to recognize your allegiance once you get on that board is to the entire association not to the vocal minority that elected you but it is one on the other hand it's one opportunity for a small group to get one person on the board some of the things I've seen over my years the industry is that after the meeting and the gavel's falling someone has says maybe right that we didn't add up correctly who won and so there's this discrepancy that once the meeting has adjourned you announced the results of pred one that afterwards when they have a chance to take a second look at it they found a bob one what happens well they're taking a look at it in an unofficial context once the hammer has fallen the meeting is over generally those results are final however if they discover something they can actually order a recount within within 90 within three months or quarterly time interval and that's happened at least twice so how do they do that they have to have another meeting they call another meeting and organize it and and they vote with the owners to do a recount what is kind of the process it's a two-step process first of all you have to call the meeting go through the whole process of calling the meeting doing doing posting if you're going to solicit proxies etc and then the motion has to come up at that special meeting to authorize the recount so the association is physically authorizing the recount by through the adoption of this motion once they do that if they approve it then they recount if they disapprove it then they don't recount and the meeting basically is over and the original count sands yes now i know this i know the answer i want to just make sure everybody understands it so at the recount you're not having new voting and you're just recounting the original ballots you're not allowing for additional people to show up and and vote correct that's correct it's you're just recounting what has been turned in at that annual meeting see one of the things i i see happen sadly is you'll have owners and they'll have a debate on who they want and the politics that go along with it and you'll have a person or a board member that has a whole bunch of proxies and then they take the opportunity to adjourn to vote and that person forgets to vote and all of a sudden they expected they were going to win the election but they found out afterwards they didn't win the election because this person forgot to vote his 20 proxies what can you do about that if anything well if the meeting's adjourned it's too late if the there's three times when that happens for example let's say we've closed the voting people are counting that's the first time and someone says oh the board one case the board actually they forgot to vote and nobody would have gotten elected in this case so what we did is we acknowledged it to the owners and asked if there's any objection to opening the polls and they laughed a lot about it open the polls the board's votes went in crisis averted that's the first time the second time is after you've announced the results at that point in order for them to reopen that at the meeting now it takes a unanimous vote and if you don't get unanimous it doesn't reopen the third time is if after the meeting's adjourned that's too late we can't fix that it's over so it's important to vote yes that's as simple as it gets it's important to vote yeah but I hate to say that I've seen that more than once people get excited at all of the frills you take the adjournment they start talking to their neighbor and their friend and and they forget they had these personally issued proxies and they forget to vote them and and all of a sudden they're unhappy with the results because I know in one particular case they wanted to reopen the voting during the meeting but obviously the other side didn't vote for it so they didn't have unanimous so that was it it was done it was done there was nothing you can do about it and other than so made a mistake right and and I've had them violate the rules we're the morning after the guy said it should have been there and then the board decided to just put them on they're notwithstanding the legal advice to the contrary they're just lucky they weren't sued so I've had I've had them actually violate the procedural rules fortunately they are not my clients okay we're down to the end of the show I have two quick questions so I have to be quick answers number one my question is owners always want to see the proxies of of the people who are at the meeting and when when do owners have the right to see the election tally in the proxies well after the meeting up to 30 days after the meeting they can see it so they can't see it before the meeting so they can't go in and demand to see other owners proxies until after the meeting correct and my second and last comment before we end the show for this week is to say what recommendations you have to owners and boards about annual meetings that's a that's a good one remember that the annual meeting is to get business done if you have issues that are important and critical for association governance get them to the board early don't wait until the annual meeting well I want to thank you for being on our show today it's always I learned something every time I've been doing this industry practice for 25 plus years and I always learned something new about parliamentary procedure and would recommend to our owners that have big associations or a lot of business at the annual meeting considering hiring a professional registered parliamentarian besides Steve there's others in town that make it much better to protect your association the results of the meeting are defendable and protected and so at the end of the show again happy new year and thank you for watching condo insider and tune in next Thursday at three o'clock for another exciting 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