CUMULATIVE VOTING IN AN HOA – GOOD OR BAD?

At the Goleta program, an attendee asked me about cumulative voting. The Board is working on an update documents project and the directors are split on whether they should continue to allow cumulative voting or not. The director asked me to do a blog on the topic, so here goes.

In most HOA bylaws or CC&Rs that are original documents, cumulative voting is allowed. Cumulative voting means the owners, when voting in the election for Board Members, can take the votes allotted to them, which # is based on the number of vacant board positions, and place them all on one candidate, split them, among the candidates, or use 1 for each candidate the owner wishes to vote for. For example, if there are 3 board seats up for grabs, and owner would have 3 votes in the election. They could put 1 each for A,B, AND C candidates. Or they could put 2 votes on one of the candidates, and 1 on another, or they could put 2 on A, B, OR C.

The reason original governing documents have cumulative voting is because the Developer puts it in. The California Real Estate Bureau requires that it be in the documents that come through the Bureau for approval, I believe. This is so the Developer can retain control and keep people on the board as long as the Developer has an interest in the Association. It usually allows any group to get at least one candidate elected if they have one candidate they favor because all members of that group including the Developer can stack the deck for one candidate. And since a Developer generally has 3 votes to each owner’s 1 in the early life of an HOA it often allows the Developer to keep a majority of directors of their choosing on the board.

Likewise when there is a contingent of the community that is in the minority for any reason, on association issues or anything else that distinguishes them, it allows the group, usually, to get at least one candidate elected.

This is why it would be favored.

Now let’s examine why it might not be favored.

I can tell you that from an attorney’s perspective, cumulative voting can complicate elections because most boards don’t even understand it. If they cannot understand it how can they explain it to owners? And, before 2006 when the elections law changed, HOAs that had contested elections and cumulative voting often got into a mess at a close election in the counting process because of the cumulative aspects. Ballots would come in with notes and incorrect numbers of votes allocated and check marks because of numbers in the blanks by the candidates and counters would be befuddled. Divergent groups would get into proxy wars (another topic) and by going door to door could control the elections by figuring out how to allocate the votes. It got messy in a hotly contested election.

And at that time the law was somewhat confusing because boards often counted proxies as ballots and the Corporations Code says that when voting by mail cumulative voting cannot be used. (Again, I assume, because it is just too confusing for the average person to understand when looking at a ballot and trying to decide what it all means.)

After the HOA law elections changed in 2006, HOAs were required to distribute a 3 part secret ballot for all major elections, which specifically include board elections and recall elections, amendment of governing documents (that require member approval, not including rules), assessments that exceed the legal limit a board can impose, and transfer of membership.This means a ballot that an owner will be considering at home, not at a meeting where cumulative voting can be explained and questions about it can be answered. When the law took effect, there were divergent views as to whether a board had to offer cumulative voting when the governing documents provided for it. Then there was clean up law and the question was resolved by changes in the law. In my view, if the bylaws or CC&Rs for an HOA allow for cumulative voting, the Board has to put out a ballot in a board election that allows for it, and should give a brief explanation as to how votes can be applied.

From an attorney’s perspective, this is difficult for most boards. Thus, when we work on bylaws or full update projects, we commonly recommend eliminating cumulative voting.

From a minority group’s perspective – not relating to ethnic or other visuals you would commonly think of when hearing the word “minority”, it is the only way to get their candidate on the board. In this category are concerned owner’s groups who disagree with the board and want to get candidates elected who share like views with the group.

So, when the question comes up in a situation where I am asked for my recommendation, because of the confusion that I have seen reign, especially among my clients over the last 30 years, I recommend eliminating cumulative voting. That is consistent with the idea that the Corporations Code recognizes that when voting is done by mail, cumulative voting should not be allowed.

So there you have it.

 

 

 

 

  • Share/Bookmark

Sorry, comments are closed for this post.