– by Bree Anne Stopera, MAGWV Condominium & HOA Lawyers, Michigan
In homeowners and condominium associations, the board of directors is typically responsible for overseeing the operations of the community. This includes maintaining common areas, enforcing rules, managing budgets, and making long-term decisions. The board holds significant authority and responsibility, so it is important that elections are conducted carefully and with integrity.
Board members are elected during the association’s annual meeting, through a process that must be conducted fairly, transparently, and in full compliance with the association’s governing documents. Ensuring proper election procedures before anyone assumes a leadership role is critical to upholding the legitimacy of the board, fostering community trust, encouraging member participation, and promoting effective governance. To ensure a successful election, community associations should keep the following five practices in mind:
1. Understand the Election Procedures
Clear, well-defined rules are the backbone of a fair and effective election. These rules, which are typically set out in the association’s governing documents, outline key procedural requirements, including how much notice must be given, how quorum is established, and who is eligible to vote. It’s essential to review these provisions in advance to ensure full compliance and avoid potential disputes. Pay close attention to timing requirements and the type of vote needed, whether by number of owners or by percentage of ownership.
In addition to the governing documents, state law also plays a role. In Michigan, the Nonprofit Corporation Act contains important provisions governing the logistics of meetings and elections, including notice requirements and voting procedures. Reviewing both the governing documents and applicable law in advance is essential to conducting elections that are transparent, defensible, and in full compliance.
2. Set the Date and Prepare the Notice
Often, an association’s bylaws will provide a specific date or timeframe for holding the annual meeting. Once the date and location are secured, the notice should be prepared. The Michigan Nonprofit Act states that written notice of an association meeting must be given to each member personally, by mail, or by electronic transmission, not less than 10 or more than 60 days before the meeting date. Specifically, MCL 450.2404 states as follows:
(1) Except as otherwise provided in this act, written notice of the time, place, if any, and purposes of a meeting of shareholders or members shall be given in any of the following manners:
(a) Personally, by mail, or by electronic transmission, not less than 10 or more than 60 days before the date of the meeting to each shareholder or member of record that is entitled to vote at the meeting.
(b) By including the notice, prominently displayed, in a newspaper or other periodical that is regularly published at least semiannually by or in behalf of the corporation and addressed and mailed, postage prepaid, to each member or shareholder entitled to vote at the meeting not less than 10 or more than 60 days before the meeting.
3. Establish and Communicate the Meeting Details
Transparency starts with timely and thorough communication. Make sure the election timeline is shared with the community well in advance, including nomination deadlines, the date and time of the election meeting and distribution of candidate and voting materials.
Many associations elect board members on a staggered basis to maintain continuity and institutional knowledge. For example, if there are five (5) board seats, perhaps only two or three are up for election each year. Let members know which seats are up for election and how they can participate in the process, for example, by submitting their own nomination, attending the meeting, or casting their vote for candidates.
4. Prepare and Distribute Proxies
Proxies often play an important role in helping achieve quorum. As a practical matter, they also allow members who cannot attend the meeting to still have their voices heard. Associations should consider including proxy forms with the election materials, along with clear instructions on how to complete and return them.
Care must be taken when adding requirements to the proxy form. In Michigan, the Nonprofit Corporation Act (MCL 450.2421) provides that a member entitled to vote may grant authority to another person to act as proxy by (1) delivering a writing by any reasonable means, including, but not limited to, facsimile signature, to the person (2) that authorizes that person to act for the member as proxy and (3) is executed by the member (or by an authorized officer, director, employee, or agent of the member). In short, the statute makes it relatively easy for members to participate in governance even if they cannot attend a meeting in person.
5. Verify Quorum Requirements
A common error is holding an election even though quorum hasn’t been established. Quorum refers to the minimum number of members who must be present, either in person or by proxy, in order for the meeting, and any votes taken at it, to be valid. The association’s bylaws typically specify the exact percentage of members needed to establish a quorum, which is often in the range of 25% to 35% of members in good standing (i.e., members who are current on their assessments and not otherwise restricted from voting).
Note that Michigan’s Nonprofit Act, at MCL 450.2415, provides as a default that quorum for a nonprofit corporation is a majority of the members entitled to cast a vote (i.e. in good standing) unless a greater or lesser quorum is provided in the association’s articles of incorporation or bylaws.
If quorum is not established, the association cannot legally conduct any official business (except to adjourn), including electing board members. Any actions taken without quorum would be invalid and could expose the association to legal challenges. Therefore, careful planning, including efforts to encourage attendance and solicit proxies in advance of the meeting, is essential to ensure that quorum requirements are satisfied.
6. Set Rules and Maintain Records
On the day of the election, all attendees should be required to sign in and verify their eligibility against the membership list. If utilizing paper ballots, eligible members should be provided with same. Following the vote, counting should immediately take place. We recommend neutral inspectors of election are appointed to oversee the process, manage ballot counting, and ensure impartiality.
Michigan law provides guidance on the selection of the inspectors of election – specifically, MCL 450.2431 states that, “[u]nless otherwise provided in the bylaws, the board, in advance of a shareholders’ or members’ meeting, may appoint 1 or more inspectors to act at the meeting or any adjournment thereof. If inspectors are not so appointed, the person presiding at a… members’ meeting may, and on request of a shareholder or member entitled to vote shall, appoint 1 or more inspectors.” In short, therefore, either the Board prior to the meeting or the chair at the meeting appoints the inspectors of election.
Whether using paper ballots or a secure electronic system, make sure all votes can be tracked and verified. Meeting minutes should capture all relevant discussions, actions, and outcomes, typically recorded by the board secretary. This documentation is essential in case disputes arise later. Follow this link to download a handy template for meeting minutes.
Conclusion: Strong Elections Build Strong Communities
Strong election practices build confidence among members and contribute directly to the association’s ability to operate effectively and harmoniously. It is essential that every eligible member has a fair opportunity to participate in the voting process and that all votes are counted accurately, transparently, and in accordance with the governing documents. Just as a well-laid foundation supports a sturdy home, a fair election process upholds the strength and harmony of a planned community.
Reprinted with permission from MAGWV – Condominium & HOA Lawyers, Michigan