 Aloha. Welcome to Kondo Insider. This is a challenging week for all of us with the coronavirus and I thought it would be really exciting to have Steve Glanstein, professional registered parliamentarian, come and talk about the topic that I'm getting, texts and phone calls are from everybody. Some we've noticed, some we haven't noticed. What can we do with the virus? We certainly want to recognize that safety is the most important thing for all of our owners and staff and people who are involved in the annual meeting. So, welcome Steve. Hi Richard. Glad to be here. Thank you for having me. Well, you just wanted to remind them what your qualifications are briefly. Okay, briefly I've been in this practice for about 35 years, over 1800 meetings. I'm nationally certified as a professional registered parliamentarian by the National Association of Parliamentarians, which has been around since about 1930. I go to a lot of condominium community association meetings, a few churches and occasionally even a dog club. And I'm acting as a parliamentarian or a professional presiding officer, depending upon what the association's needs are. Well, this COVID-19 is a very serious problem. You know, we're getting orders from the mayor, the governor, about the size of meetings and congregating in more than 10 people. And certainly annual meetings we typically for a normal size association have more than 10 people. What do we do if you have an annual meeting and we have noticed the owners of the date of the annual meeting. And so we have it scheduled already. We're collecting proxies. What are our choices to deal with this when governments basically saying shut down all large groups. And number two, we certainly want to be cognizant of the safety factor for our owners and management company staff and the rest of the people who could be impacted by going to a meeting where there maybe is someone who's infected. Well, it's important to realize that the annual meeting is a meeting of the association of owners. It's not a board meeting. So there's considerations where the board has minimal authority to just cancel the meeting. Now, if the board or the president had authority to schedule it and the notice has not gone out, then they have some options of basically changing it. If the notice has gone out, the options are reduced. If the notice has gone out more than the statutory or the bylaw required number of days, then they can put out an amended notice for a different time or date. They've got to be very wary of their documents, check with their counsel and make sure that the annual meeting is scheduled within the appropriate time. Some associations have a requirement of the annual meeting on the second Tuesday in March. So it's awfully hard to comply with that. Others have the requirement of the first 90 days and still others have no requirement as to the date of the annual meeting, which makes it more convenient if they've sent an early notice out and they still have time to cancel it or amend it. Okay, let's back up on this and take out the bits and pieces. So I have an association of documents say that they will hold the annual meeting by July 1 of the year, middle of the year. And they haven't sent out a notice yet because typically they go out about 60 to 75 days in advance is when you start to gear up with the notices list of proxies and all the other requirements under the statute. So they have a meeting scheduled not later than July 1. Haven't said the notice out. What are their options? Well, the board can just get together as a board and adopt them a motion to send to reschedule the annual meeting as long as it's prior to July 1. If they wish to go after July 1, that's very different. Let's just say they do July 1 saying, well, watch what goes on in the marketplace and see what happened. And the problem still exists come middle of May, June when you'd be sending out the notices that let's just say unfortunately the virus has become more problematic. What are their choices? Well, for condominium community associations, it's a 14 day minimum notice requirement. Their bylaws may have a larger notice requirement, and they have to comply with whatever the more conservative approach is. So if they've exceeded that, if they basically sent out a notice that is not is not too late to amend or cancel, then they could change it. But if their meeting is scheduled for the last legitimate day that they could have the annual meeting, then they really have limited options. They can either go to that meeting and continue it or go to that meeting and call to order to adjourn it. So let's look at those two scenarios. So they are using my date July 1. So they scheduled a meeting for June 30, and they have a quorum based on the proxies that were submitted. And at that moment in time, they realize they don't want to get everybody together because they might infect people. They have a choice of a, calling the meeting to order and adjourn to a fixed time and date in the future. Is that one option? Yes, that's one option. They call the June 30 meeting to order. They only need two owners to be present at that. They would call it to order, ask for unanimous consent to continue it to a specific time, date or place, and then adjourn the meeting. Now they can qualify that time, date or place if allowed by their bylaws, and they have to always comply as much as they can with the documents. So that's the simpler way to do it. Call it to order, continue it to a well-set specific time, date and place. Possibly if not available, or the virus still exists, the emergency still exists as scheduled further by the board of directors. So that's option one. Option two would be to call the meeting to order and maybe do some very limited business. And I think you gave an example before we started this show of an association you just went through this with. And then adjourn it and say you've had the annual meeting. Yes, for example, Monday we had a quorum walking in. We had the president and one other shareholder owner there. And we had management there. Just a couple of people. The president called it to order. He had me chair it. And because they had a quorum, they adopted the tax resolution. In this case, they just adjourned the meeting because the president had promised that they'll do a special meeting over the summer to do the election. And they got the tax resolution done. Now what if you, you know, some bylaws require an auditor to be approved. And as you know, the auditor not only does the audit, the tax returns every year. They do the surprise cash verification during the year and the longer you wait before you appoint the auditor the less time they have to do that. What's the impact if you adjourn the meeting and you haven't approved your management company contract and or your auditor. Well, you're always able to turn around and improve those in a special meeting that would not be precluded unless your bylaws precluded it. However, if you didn't in the statute where condominium associations are required to have an audit every year regardless. If they need to they could ratify it a year later. I would urge them to make sure they get the tax resolution adopted in the year because there have been some some ramifications from not adopting that. So it's important to get that. But as far as the audit and the management contract approval, those in my experience, those can also be done in a special meeting. So let's just say you're called a special meeting for that purpose because you have a directed proxy where the person in the proxy itself is saying I support or approve the auditor and our management company contract or could that not be done? Yes, that could be done. I know that I had on my show condo insider a year or two ago, Rodney Harano, a very well known CPA who does association tax returns and audits. And he was very clear when I asked him the question about what happens if you don't approve your IRS tax rollover provision, which is so common throughout the USA, not just in Hawaii. He was very clear that you expose the association to the rollover being denied by the IRS if it wasn't approved at a meeting. So it's something that needs to be thought through if you're going to adjourn this meeting or you're going to have this meeting adjourned for a fixed time in the future. It's probably a good idea if you have the quorum to go ahead and take a minute and do the tax rollover resolution. My thought is that if you have a quorum, it takes about a minute to do the abbreviated version of the tax rollover resolution. It's a small price to pay to get that done and out of the way and to worry about whether this meeting gets continued. Somehow the annual meeting gets continued and it doesn't get called to order three months from now, it's over, which means they basically would not have had the tax resolution done. For example, last night my colleague called the meeting to order, they had a quorum, they adopted the tax resolution, and then they continued the meeting. So if something happens a few months from now, that tax resolution was still adopted at a properly called meeting at which a quorum was present. It was interesting about the tax resolution that I've seen confusion on this and I'm not a CPA, so I will quote what was said on the show, and that is when you adopt the tax resolution, you're actually adopting it for next year, not the current year. You can't retroactively adopt it, it's supposed to be for the following year the tax resolution, not the current year. That's correct or not, and I've never seen anyone challenge with us the current year in a prior year, so I don't really know. I was thinking also that in the scheme of this, I was in Kauai in 1992 when Hurricane Aniki hit, and I lived in a 56 unit condominium on the North Shore, of which about 50 owners lived on the mainland, and their bylaws had very specific requirements to have the meeting in the first quarter, that is by March 31. So in 1992, September 11th when Hurricane Aniki hit, we all know it was a category five hurricane that basically decimated all the travel and living conditions and hotels on the island. And so in this particular case, the board made a decision to quote violate the bylaws and notify all the owners that they will hold a meeting as soon as it was practical to have people in attendance, because there was no travel and there were travel restrictions, and ended up holding the meeting in July, if I remember correctly, because of the technical problems. Now granted, in my opinion, that's a parliamentary mistake in the sense you didn't follow your bylaws, but I'm not sure the risk is that rate of doing the right thing for safety, so long as you promptly address the issue through a special meeting or another meeting as soon as possible. Thoughts on my comments? Yes. Well, they did what they could. They did what they had to. Clearly it wasn't litigated or taken up to courts from what you and I have discussed. But from our perspective, we try to keep our clients on the rules and to find a way to make the rules work for them to the extent possible. That's why having two people show up has worked out well. Even in Kauai after Aniki, I was flying a corporate jet a few days later and delivering things. So people were really trying to get things done, but when you can't even have the meeting, you don't have your annual. If your bylaws allow for special meetings, there's nothing that precludes you from scheduling a special meeting to do essentially what you needed to do at the annual. We're sorry we couldn't have it this year, but we certainly accomplished all the necessary business. So where's the damage? There is none. One of the thoughts we had circling back was, so you have the annual meeting, you approve the IRS rollover resolution, and you adjourn the meeting. You didn't adjourn it to a fixed time in the future. You just adjourned it. How does that impact the director elections and those directors who theoretically had terms that expired at the annual meeting? Well, that was my Monday meeting. Essentially, there's a non-parliamentary term called stuck. They're still stuck. They're still on the board. They usually continue until their successes are elected. Just all of the hundred or so meetings we do this year, you see where the bylaws provide. Directors serve for X number of years and until their successes are elected. So they still remain on the board. And I would assume that because they have a contract with the management company, I've seen them, they all roll over on a month-to-month basis. The management contract is still in, if that's true, that they have a rollover provision of month-to-month as the management contract is still in place until addressed by the owners at a future meeting, correct? Yes. And the auditor, could the board appoint an auditor subject to the owner's approval? Yeah, it's very rare now for the owners to have specific language in the bylaws that provide for electing the auditor. You usually see language where they'll say the association appoints, but the association usually acts through the board. So it's very rare for the association to appoint the auditor now. Okay, well we're going to take a one minute break and you take a deep breath from all these hard questions, I'm asking them. We'll be right back with Kondo Insider. Welcome back to Kondo Insider with Steve Vanstein talking about annual meetings and the issues of the coronavirus and should you have them, not have them. What are your obligations under your governing documents and the law? What are the risks? And I do want to mention to you that I'm going to ask them to flash on the screen a YouTube link at the bottom of the screen. You'll see a YouTube link. I attended an hour audio webinar yesterday with four prominent attorneys, often the mainland, talking about other risks associations have, irrespective of the annual meeting and meeting issue. And what that, if you put the link back up again and keep it on for a little bit, write that down. And what they talked about is, what if you have a virus in your condo? Do you have an obligation to tell the other owners? Do you have the ability to make your own rules saying we're taking the common areas like the pool and saying no more use of the pool? Do you have the ability, for example, to notice all the owners that you know that somebody is self-quarantine in their own apartment? They just got back from a trip and maybe disparage the owner allegedly by putting out memos that beware of the owner in 117. He just came back from Spain and has self-isolated himself. What are the defamation risks? There's a whole lot of unknown territory on this matter. And again, I will ask them to put the link back up. If you want to listen to our long, interesting audio on a whole lot of other problems not related to meetings, I suggest you go to that YouTube as specified. And we'll put it out one more time before we close the show. And listen to our long audio. It was quite fascinating to be honest with you because of the fact that there's things I never thought about in how you could put your association in liability if you go over the line on some of the things you might think you're doing correctly that aren't authorized in your bylaws. And I would say one of the summary points on that was that what are your bylaws? What is the obligations of the board under the Declaration of Bylaws? Does it provide for a health and welfare issue or not? Or is it just maintenance of the building issue? All these weave their way into your obligation in overstepping your authority or doing things you think are right could expose yourself to a lot of liability. And there's magic words we say probably 50,000 times in this show is before you do these things always check with your lawyer because you don't want to expose your association to risk and other problems because you think you're doing the right thing and there's a whole lot of other issues. Again, think about listening to audio. So Steve, you mentioned to me during the break that you just had a meeting where they actually held the meeting in a large hotel conference room. Tell us about that meeting. Sure. They had chairs that were separated by six feet apart and this group usually has nice food. They had zero food. They had water only in bottled water. They had hand sanitizer at the entrance. Even up at the head table, we were separated by six feet. We didn't touch. People didn't touch and we ran the meeting very efficiently. We had the check-in was done. People kept their distance and essentially we didn't do an election, but I did tell them as soon as I was chairing this was going to be run very quickly. We're going to do this abbreviated version to get just the tax resolution done and continue it. And that's exactly what I did. The meeting took three minutes and we were done. Let's just say we get a lot of small 8, 10, 12, 15 kind of minimums that probably they could do their election and all that in three minutes as well. Let's talk about a couple of other things. Normally an annual meeting will have an owner's form. Should they still have an owner's form or believe that? No. We told them starting from the top when the meeting is called to order, you remove what is not absolutely necessary for the conduct of the meeting. So for example, acknowledging that there is a quorum present, that's it. You don't need the exact numbers, just acknowledge it's present. When you come to the president's report, have it in writing. It was available upon check-in or sent to all owners. If you're a nonprofit corporation, you do have a requirement with respect to reporting on the financial status of the last year. We get that done. If I'm going to conduct an election, I would do it very quickly. In this case, in the last few cases, we have not conducted an election. So the tax resolution, I eliminate all of the introductory phrases about how it may or may not be taxable. I go right to the resolution and I go right into continuing the meeting. And as soon as the meeting is adjourned, we ask people to please leave and give some space between each other and we thank them for attending. How about allowing owners to participate and listen to the meeting on the phone? Can that be done? Yeah, they can listen, but they're not considered present unless you've got some provision in your bylaws or some governing documents that allows it. So we can have that, but when you're talking about health and safety, you're not looking to have a long annual meeting. You're looking to have it as short as possible. I think people have to recognize one of the issues is that there are people there who don't want to be there. You have a management company and their staff with their biggest in their contract. You have to have an annual meeting to do the check-in and the procedures. You have other people, which may be your resident manager or site manager who are employees of the association who aren't members but have an obligation because they're employed to attend and maybe give a report, which probably should be suspended for having this meeting done in the shortest period of time. So you want to get in and out, have social distancing, shorten your script, get down to your business and do the minimum amount possible. If it's a larger meeting, as Steve suggested, I think, adjourn the meeting with a fixed date and time in the future for the election. And if you're a smaller association, you might be able to do it in a matter of a couple of minutes and you don't want to just get through it. Just look for ways to have the meeting as short as possible. Any more thoughts? Yes, I have a meeting next week with probably going to be about 100 senior citizens there. So there's a certain amount of risk and they've been advising them to send in a proxy and try and don't attend the meeting if they don't have to. So I don't know how many people are going to be there next year, but I do anticipate the meeting will probably go for nine minutes and we'll get it adjourned. There's no refreshments are going to be served. Essentially, the reports, the mandated reports are pretty much just a President or Treasury's report. All the other reports, they can be in writing or they can be emailed and mailed to people, but you just want to make sure that you minimize the physical contact that people have. If they want to do a town hall meeting, let them do it with telephone conference call. It's much safer, but for the traditional annual meeting where you have to get certain things done, we are really encouraging our clients, especially the ones who wish to conduct business and get it done, to do it as expeditiously as possible, and make sure you tell people, listen, we'd rather you not come to the meeting, but if you want to, yes, it's going to be a meeting because we have to have it, but you can certainly send a proxy in to somebody you trust and have them vote for you. What if you don't have a quorum and you're supposed to have the meeting? Well, we have a couple options, as I indicated before. You can call the meeting to order and just adjourn it. However, again, you got tax resolution and other issues that will still remain. You can call it to order, get the tax resolution done, maybe the President's report acknowledged, and adjourn it, or you can continue it to another daytime place. If they don't have a quorum, you couldn't approve the tax resolution. Right, that is correct. If you don't have a quorum, you're not going to be able to approve the tax resolution. So, let's just digress to a second to a board meeting. You know, boards are usually five to nine people. I happen to belong to a non-profit board, and we just had a board meeting yesterday, and we did it telephonically. Is that an option for condos to conduct business? Well, as I indicated before, it really depends on the governing documents, whether they allow it. For board meetings, you're referring to board meetings? Yes. Richard, yes. They have lots of options that way in the condominium area and in the non-profit corporation area. So, they can do telephonic meetings. However, they do have an issue associated with owners showing up at a board meeting. My board meeting yesterday afternoon was canceled because they typically have 20 to 30 owners showing up with a five-member board, or a seven-member board, and they did not want to take the risk or expose others to the risk, and they decided not to have the board meeting. Those are much easier to cancel. Yeah, but I think, theoretically, in today's technology, again, there is no hundred percent. Everybody is the same. You have gigantic associations and small ones. If you wanted to have a board meeting or needed to have a board meeting, you could do it telephonically. If you notice the owner is on a dial-in number, you know, there's ways to dial in. If you had to go to executive session, you can delete the people who aren't entitled to be there. So, I think every board should just look at their options because there are technology ways to hold board meetings by telephone or conference call and still comply with their statutes, but it requires a little more work than a normal meeting. Yeah, I agree, Richard. I agree. For board meetings, yes. And there's a lot more board meetings held per year than annual meetings, as you might imagine. So, to the extent that the board members can avoid contact or allow owner participation to comply with statute through the telephone, that's fine. If an owner wishes to show up, they need to have a venue, but then the owner has got to know that they're showing up at their own risk. Now, in the case of any limit, if there's legal limits on the number of people who are there, then we'll have to address that with their counsel when that comes up. Do you have any final thoughts before I get my final pitch? Just a final thought, you have to have some sort of annual meeting. Work with your counsel, work with property manager, minimize the risk to people, and get it procedurally right. I would hope that there's not many challenges, but be safe. We're going to be seeing almost 2,000 people in two months, so there's a certain amount of risk to those of us who are parliamentarians. But we do wish you to be safe, folks, and we'll get you through this meeting session procedurally as correct as we can. And from my perspective as a former property manager, safety is the number one concern. The world isn't perfect, and yes, Steve gave us very valuable advice on how to handle these things. But in the end, there's a moving target. If something suddenly happens and you need to make a decision, always rely on the safety of the people number one, and the rest of it will sort itself out. I want to ask them to flash on the screen again my YouTube, and this is again another very valuable resource on other problems your association could experience through the coronavirus epidemic. And you need to know, so when you make decisions, you're not putting your association into any kind of liability. So to those of you really interested, write down the YouTube link. And I found it quite fascinating myself because there were many things that I hadn't thought about with regard to this. And on that note, I want to thank everybody for watching Condo Insider. We want you all to be safe and follow our government officials' directives and take care of your family. And we hope you find this show interesting today. A special thanks to Steve Glancy for being here on Last Minute Notice. We thought this was very timely to share with everybody. I'm Richard Emery, your host, and we will talk to you again through Condo Insider next Thursday at 3 o'clock. Aloha.