 Aloha. Welcome to Condo Insider, our weekly show about association living, both condos and homeowner associations. I'm Richard Emory, your host today. Been doing us about three years now. And the topic today is to be proxies and voting. But before I do that, let me just say to you that we're about at the midway point for our legislature. By that I mean, the legislature is in session, and bills are introduced both in the House and in the Senate. And at some point in time, they have to be completed in one of those chambers, and then they cross over. That's where we are today, where bills have been introduced either in the House or Senate have either been deferred, amended, or have crossed over and passed out in some form or another. We began the year with this legislative session, I should say, with about 150 bills that affect associations. Now that's because our legislature is a biennial legislature, which means it's a two year period. So all the bills that weren't heard and nothing happened in 2021 were still technically on the agenda in 2022, although experience says that they weren't heard in 2021. They're not going to be heard in 2022. And that's exactly what happened so far. Anyway, well, we know that that's not going to happen because we're at the halfway point. So of the 150, they were kind of alive, which means all the new ones as well, is about 15 left across which means the other 135 have been deferred and have died for this, this legislative session, which means next year they have to be introduced from square one again, because the biennium ends at the end of this legislative session. There really isn't a lot to report about those bills or some interesting bills out there, some good, some bad, but in one of our other shows a little bit down the road, we'll be talking about the status of these, but most of them, if they didn't pass, we would never know the difference. But there's some good things out there and some things to improve it. So we'll do that. We'll deal with that in another show. What gets me started is this type of thing called proxies and voting. What got me on this subject was an article that was recently written and a star advertiser. And the title of it was proxy voting can distort homeowners associations election. I'm going to put it in front of me here because what it basically says is that, you know, because you have a law that says you can, you can't make the meeting in person, you as an individual can assign your proxies in one of four ways. And I'll get back to that in a minute. That that distorts the election results because, you know, you're not controlled by just those and attended for the meeting. And I think the big rub that they say is that under the state law and proxies, you by law are given four choices. One is the board of directors as a majority. So you can say I'm going to let the board of directors who are at the meeting. So if you have a nine member board and five members attend the meeting, three of the five could decide how to vote your unit's percentage of common interest. Two, what they call board majority or board equal equal means that there's five board members, they take your percentage of common interest and divide it by five. And that's voted by each person as a fraction at the meeting. And again, that's of directors that attendance at the meeting. The third is you can choose individual can be anybody you want can be a homeless person, but it can be anybody you want. And if that person doesn't show up, it's counted for establishing a quorum. And the fourth is what they call quorum only, you don't really want to have anyone vote for you. But in fact, you're authorizing them to have the meeting. So the percentage in attendance will make many of the decisions, although depending on what the situation is, example, many of the bylaws, you need 67% of the entire ownership, whether they're there or they're not there. So there's all sorts of rules, whether it applies or not applies. But the essence of that article was that it distorts the election. And they have put bills forward. And one of them died this year, basically eliminating what they call the board of director majority. And what the concept behind their thinking, not mine, is that people who run for the board, if the board doesn't think they're going to be a value to the association, may vote their proxies for the board of director majority, or someone other than that person happens all the time. And they're saying, Well, that keeps me from getting on the board because if the board didn't have the ability to vote those proxies, then I might have gone on the board. The problem with that thinking is, let's kind of put this in perspective. Where do proxies come from? Well, proxies come from basically the law for corporations. All of you who may own stock and an entity. Yet proxy solicitation is all the times that business meeting can be conducted by a corporation. And believe it or not, in those proxies, you can give it to the board of directors or an individual or something along that line. So it's no different than what you see in all the corporations across the state of Hawaii, and across the America for all that purpose, that you as an individual are smart enough to pick who you want to have your proxy. And maybe you're an absentee owner here in Hawaii, and you don't know who is running for the office, the background is, and what they stand for. You like the way your association is being done. And so you support the board of directors making decisions who they think is the best person to serve on the board. She's pretty basic to me, but for years now, I've seen every year a bill come forward, where they try to take away your rights as an individual of who you give your proxy to. It's just nonsense to say that because what they go on to say in this article is, let me read as one of their rationale. The state with much larger number, with much larger numbers of home interstations, such as Florida, California, Texas, prohibit the use of proxy voting because of the potential for election fraud. False. Florida, California, Texas all provide for proxy voting. That's just a bunch of BS, and a bunch of fake news to get everybody all excited, that we are different than anybody else in the country. Proxies are the most common way to have a meeting and allow people to be represented at that meeting. And so when they write that, it's just flat false. There's no truth to that whatsoever. Now, there is truth in all the statutes, including Hawaii, where, for example, if the board wanted to proffer a bylaw amendment, which was required by the owners, before they could do that, they would have to publish notice to the owners. So you couldn't use a proxy for voting for a bylaw amendment proffered by the board at the meeting, because in effect, the statute provides for that. The same is true in Florida, I believe it is, where you can't have a proxy used for something that wasn't published in advance notice to the owners. But to say you can't have proxies is not true. They have proxies all over Texas included. And the specific language in the statute, their statutes regarding proxies. So there are provisions even in Hawaii that proxies can't be abused. And that being said, let me say one thing, our condo statute says that at any meeting of the owners, remember it's a meeting of the owners, the stakeholders in that association, and owner can proffer a bylaw amendment, which means I could be an owner and I am an owner of condo meeting. I can go to the meeting and I can say in the new business, I'd like to amend the bylaws to do the following. I propose this language. And someone in the audience yells second. Now in that case, the amendment to the bylaws was not proffered by the board of directors. It was proffered by an owner. And it was properly seconded. And yes, the board can vote its proxies on that particular bylaw amendment. I see it all the time. Because you see, we have to understand as the purpose of a annual meeting or a special meeting of the owners is for the owners to conduct business as prescribed in their bylaws and within state law. So it gets down to the basic issue about whether or not you can, whether proxies make sense or not. As a short reminder, let's just remember some things about meetings in Hawaii. First of all, you're required to have an annual meeting. Some of you may have said, well, we didn't have an annual meeting for the COVID wrong, you had to have an annual meeting and there are ways to do it. And the governor's proclamation allowed for certain electronic means to do an annual meeting. So those who said, well, we're not going to have an annual meeting, you may have deferred it or delayed it or postponed it for a date in the future, by calling the meeting order and fix the date in the future. If you didn't have an annual meeting, you violated state law in the bylaws period, then COVID didn't give you an exception. It may have been a reason you couldn't get together in person, but then prevents you because of the governor's proclamation from having a meeting. And under the situation of all meetings, in the state of Hawaii, are governed by Robert's rules of order. And so there are protocol and procedures. And it's important you follow those protocols and procedures, because someone could argue the meeting was not conducted legally and theoretically try to get you to have another meeting and call that meeting improper. We follow a lawsuit even. And so it's important that you understand that there are reasons there are required notices you have to give to members or owners. There are requirements for the proxy and who you can give it to and when they have to be submitted. And so a proxy itself to be valid has to have minimal information on it. You know, people always ask me because the association usually through its managing agent, mails out the proxies at a point in time. And it's very legal looking. And it's a for all practical purposes as a limited power of attorney that you can vote for that owner at that meeting on that date at that time. And so it's limited to that purpose. And so proxies are very standardized. And then you have to have a quorum for the meeting 50.01% of the ownership. And you can have that without having 50.01% of the ownership and voting power there because we call a quorum only rule. And and then you then you conduct the meeting. So when you go to these meetings at the condominium, particularly, you're essentially trying to accomplish the order of business prescribed in your bylaws. In simple terms, beside reports, you typically have the election of directors, you have the approval of a resolution to file your state and federal income taxes. And then you may have to in some cases, not all approve the management company and or the auditor. And then you have new business where members, owners can make motions that are lawful within the bylaws. Example, when I teach this course on meetings, I use all the time as an owner goes to new business and says, I make a motion to cut the maintenance fees to half by 50%. Second, sure, everybody wants to pay less money. However, in every case, the chair then says, I'm ruling the motion out of order, because the bylaws prescribe the authority of the board. And this is the authority of the board. And therefore, this would be considered an amendment to the bylaws and therefore is out of order. You see to do any business at all, I mean, any kind of meeting, I've done some guidance and counseling on parliamentary issues. You have to have the authority to do what you're going to do under your bylaws or state law, or some document founding documents that charter whatever my big. So it doesn't mean you can do any thing you want. But it angers me in a way when you get these. And I don't know why the newspaper doesn't do any kind of research. But these people write these things and say, I'm going to tell you that we shouldn't allow board of directors majority proxies. They're basically saying they couldn't get elected. And so they're blaming on the board who may think that that person shouldn't be on the board. I've seen a lot of boards suffer because they have people who are don't have the right attempt to have a single agenda in mind. But on that note, before I come back, and you can see I'm angered about this to the great, we're gonna take a one minute break, and we'll come back in one minute, we'll talk some more about what another article called the homeowners plight. We'll be right back. On April 1, at 10 a.m. Hawaii time, think tech will be presenting a 90 minute webinar panel program called Burning Global Issues. This will be an examination of six continents by thought and community leaders living in or expert in those continents, discussing burning issues affecting each of them, how they relate to the prospects for functioning democracy, and what we can learn from all of that. The moderator for the program is Pamela Spratlin, a 30 year foreign service veteran who has served as US ambassador and consular official in a number of overseas posts. The panel is comprised of Carl Baker, senior advisor of Pacific Forum on China and Asia, Rupmati Khandekar, director of Global Relations Forum on India. Elsa Jark Hadean, a consultant with Project Expedite Justice on the Middle East. Ilbert Nuagira, an economist in Kampala, Uganda on East Africa. Carl Ackerman of the Social Studies faculty at Punahou School on Eastern Europe and Juan Telo, a business attorney in Bogota, Colombia on Latin America. The program is sponsored by Project Expedite Justice. We hope you will attend and that this program will help you better understand these important global issues. Please go to our website, thinktechhawaii.com and register. Mahalo. I'm back. We're at condo insider talking about proxies and voting. And I wanted to summarize what I was saying that this column in the star advertiser written by this person who professes to represent lots of people in condos says proxy voting can distort homeowner association elections. Let me just say proxy voting is common. It's a way to give not distort association elections to give every individual a right of representation with someone they trust. The proxy, the owner gives the proxy to the person they want to give it to. They don't have to give it to the board of directors. But in many cases, you have people who don't know, but they're satisfied, and they're going to trust the board to make the decision that they feel is in the best interest of the association. We should remember the board is no more than homeowners like everybody else. And to say it distorts the election, it's just simply not true. And this article seems to say that somehow the industry or the management company or the lawyers have some interest in the outcome of the election. Our only interest is to make sure you have an election and the votes are counted accurately. And people are heard and have representation. We have all these arguments all over the country today about voting rights, and proxies assures that every person has a way that they can be heard. And because the condo issues are a little different, that they can appoint someone when they're on the board, or anybody else, just to go to the meeting and make judgments on their behalf. And that's just, that's just how it is. And every year we go through the same argument that, well, I didn't get elected because the board of directors have proxies and they voted somebody else on. We know why they voted somebody else on because they picked the person they thought was in the best interest of the association. And that may not be the person who didn't get elected. So I think this is a bunch of nonsense. And I get tired of talking about it because it's very easy for people, they all have it right under the statute to include proxy solicitation notices every owner can do that in the annual meeting mail out, there's all bunch of things they can do. But at the end of the day, it's the majority gets elected. And, and I just believe strongly in representation by all owners, and that proxies are a very valuable process. And if you didn't have proxies, you just had the board running out and saying, well, we want you to get the proxy to John, the president, so that we can. So he will represent the board, even though he's representing was john, the john, the owner. It's not going to solve anything. It's a bunch of nonsense. But in the interest of excitement, my, my, my continued discussion, that this same group that just wrote another article for the Star Advertiser said, state must address homeowner association owners play arguing that the laws need to be changed to protect the homeless. You know, we have some of the most robust laws in the country here in Hawaii, because we're in Ireland, we have so many condominiums. I serve on the recently served on the National Task Force, for reserve study public policy, which was all of the reserve specialist across the country on this panel, talking about what happened in Florida and the collapse of that building and what we need to do to strengthen our reserve study laws, and make sure such a tragedy can happen in Hawaii. What came out of that was Hawaii has some most advanced leading reserve study laws in the country. Is there needs to improvement? Everything needs to improve. We need to be more in line with some national standards. One being our law requires if you pick the cash flow funding analysis, you have to look out 20 years while national standards is 30 years. It's not any harder to take the computer and click 30th of 20, but take about five seconds for every association to make that change and look at a little further and there's reasons why that makes sense. So yeah, we can do this thing we can do to improve it and House Bill 2272, currently alive in our Passover here to the crossover, I should say, is still alive. Requires associations to look out 30 years, not 20 years, because we want to be closer to national standards. And there's a lot of reasons not enough time to discuss why 30 years makes more sense 20. But let me read another sentence or paraphrase other sentence in here. And basically, as you may know, we have people who have licenses in Hawaii. You have real estate licenses, they're real estate broker, for example, an condominium managing agent has to have a real estate broker at the helm. It's a requirement under the statute. So we're licensed as such as a managing agent, because we have a real estate broker. But then you have other dealers have licenses, hair stylist have licenses, masseuses have licenses, car dealers have licenses. And in fact, Rico administers the lemon law obligation, Rico is not just for condominiums. It is for all the licensees throughout the state. But the article goes on to say that more than 50,000 requests for assistance from condo owners and interested parties. That's about the nonsense. Think about that 50,000 complaint. That's about 150 a day, maybe 200 a day work business days. I can tell you last year, we have several forms of mediation and dispute resolution to Hawaii law. Of the 2000 plus condo association, representing about 40% of the population, where there's a provision, if you want to dispute your board's actions, that you can go to this one of these dispute mechanisms. And they're published in the real estate commission's newsletter. For the year last year, we had about 75 for the year, I don't really estimate 300,000 units. So where does this 50,000 think about it? You know, there's only five investigators over Rico, and they have to do all the rest of that stuff, but they report to the advertiser that 50,000 requirements for assistance from condo owners. That's just a bunch of fake news again. And it's just a bunch of nonsense. The statistics don't support that. But they're trying to create the illusion that there's a bigger problem than there is. So that's just nonsense. They talk about reform is needed. And what they have done in past, not this year, they have suggested that we have some kind of new governmental authority. I reported on this a couple of years ago that one of the bills suggested that the state establish a new department to be headed by the bill's exact words were condo czar. I know I actually liked that because I always wanted to be a czar and I was gonna apply but only all kidding aside. So what they wanted to do is have some state agency, or some person maybe a junior lawyer, or somebody with minimal experience has the ability to overturn any board decision and has the ability to void bylaw declaration rules, make them move. So let me see if I understand this, you have an entity association typical here, a non profit association regulated by a real estate commission, called an AOL, A-O-U-L, whichever one. Some person, one person is going to be able to overturn the board's decisions and or declare your rules, your bylaws and declarations void. That not the dumbest thing you've ever heard. You know, associations are businesses when you buy in to the association, you're given advanced the rules. And you have a declaration was defined kind of the elements and the bylaws which tells you how to govern us and the rest of it. So this whole idea that we're under some kind of plight, because someone was sued and follow the rules and the board's enforcing the rules. They don't think it was fair. So they want to say the whole industry is down the toilet. It's just a bunch of nonsense. So my advice to all of you as we kind of wrap this show up is don't believe everything you read. Those two articles are a bunch of nonsense and the industry's probably going to reply to them. But there's nothing wrong with proxies. It's a way to give each person the right of representation. And it's their choice, nobody else's choice. And the association industry doesn't have 50,000 complaints a year. It has known dispute resolutions with 75 last year for the whole year. And so that's just a bunch of BS and and you got to understand that all the cyber rattling and excitement and exaggeration doesn't help the industry become better. And on that note, I want to thank you for listening to my lecture today. You can see I had a little women figure on it today, because I get tired of having to spend a lot of my personal time dealing with things just have no truth to them whatsoever. On that note, hope to see you again in the next condo insider show. And thank you for watching.