Epsten, APC

Should our association adopt formal parliamentary rules for conducting its membership meetings?

Yes, Civil Code section 5000(a) requires it for membership meetings, but not for board or committee meetings. The purpose of having such rules is (1) to provide order so meetings can proceed in a business like manner, and (2) to provide a fair opportunity for everyone to participate. In addition, Civil Code section 5105 requires associations to adopt written rules governing the association’s election and voting procedures.

Should we always have a written agenda for membership meetings, and what should it contain?

You should provide a written agenda to show the order in which the business of the meeting will be conducted. A typical agenda would include the following items:

(1) call to order and verification of a quorum by the Chair;

(2) introduction of the Chair, board members, inspectors of election, special guests, and speakers, if any;

(3) election of directors with the counting and tabulation of the secret ballots by the inspectors of election;

(4) presentation of reports by directors, officers, and committees;

(5) adoption of any resolutions regarding tax and accounting issues;

(6) member comments or member forum;

(7) unfinished business from the previous meeting, if any;

(8) new business (which must be business members have a right to vote on);

(9) announcement of election and other voting results;

(10) adjournment.

In developing a procedure for holding our membership meetings, where should we start?

Start by reviewing your bylaws. Most contain rules on giving notice of meetings, proxies, quorums, voting rights, and electing directors. In some cases, the Corporations Code and the Davis-Stirling Act have rules which supersede your bylaws and in other cases the rules in the law are to be followed when the bylaws are silent. Following the require­ments in these documents and the parliamentary rules your association adopts, should enable you to conduct your meetings successfully.

Should the notice of the membership meeting contain anything more than the date, time, and place of the meeting?

Yes. The notice should be in writing, and should identify all matters the Board plans to present to the members for a vote. For special meetings, only the business identified in the notice of a special meeting may be brought up at the special meeting for a vote. Always consult your bylaws, the Davis-Stirling Act (Civil Code section 4000 et seq.) and the Corporations Code to verify notice requirements.

Must all voting use secret ballots?

Civil Code section 5100 requires associations to utilize a secret balloting method defined by the statute for all votes concerning assessments legally requiring a vote, election and removal of members of the Association Board of Directors, amendments to the governing documents, or the grant of exclusive use of common area property pursuant to Section 4600. These types of votes must be cast on a totally anonymous ballot inserted into a sealed envelope which is then inserted into another envelope and returned to the inspectors of election. Ballots pursuant to Civil Code section 5115 must be mailed by first-class mail or delivered to the association members, together with the double envelopes for the members to return their ballot, at least 30 days prior to the deadline for voting. For most other types of votes, ballots are required only if the bylaws make them mandatory.

For more routine matters, other less formal methods are appropriate. These include a voice vote (all say “aye”), a show of hands, a roll call vote (owners names are read from the list of owners), and unanimous consent (if there are no objections, the matter is approved).

We have previously appointed inspectors during our membership meetings to count votes. When is the best time to do this, and how do they know what to do with an improperly marked ballot or proxy?

Inspectors of election have broad powers under Civil Code sections 5110 and 5120, and Corp. Code 7614, including the power to determine who can vote, whether proxies are valid, and how a particular vote is cast. In addition, inspectors of election are vested with the responsibility to receive and maintain the ballots submitted by the members. Because inspectors must designate the location where the ballots are to be returned and maintained (Civil Code section 5125), associations should appoint inspectors prior to mailing a ballot to the owners and well in advance of the meeting or pending vote.

Inspectors of election use the requirements of Civil Code section 5100 et seq., other laws, and the association’s governing documents in reaching a determination concerning an election. For example, an outer envelope containing a secret ballot must legibly indicate the required identifying information. If the inspectors receive a ballot envelope that does not, the inspectors must decide whether to accept the ballot. For this reason, it is advisable for the inspectors to consider possible balloting defects prior to receiving the ballots and determine how to treat such defects uniformly, such as: “If the voting member can still be reasonably ascertained, then, the ballot should be counted even though not all of the identifying information is legible.” All rulings or decisions of the inspectors should be in writing and kept with the voting records, including reasons for invalidating a proxy or ballot.

Some of our members actually go door to door soliciting proxies from other members. Can they do this?

A proxy is a written authorization signed by a member which gives another member the power to vote on behalf of that member. The proxy is not to be used in lieu of a ballot. An association may accept these proxies if permitted or required by the bylaws of the association and if the proxies meet the requirements of Civil Code section 5130, other laws, and the association’s governing documents. However, associations are not required to prepare or distribute proxies pursuant to Civil Code section 5130. For this reason, the member wishing to authorize a proxy must ensure the proxy complies with all requirements to be valid. The inspectors of election will verify the proxies received by the association.

How do owners bring matters before the membership for voting or approval?

First, the matter must be one the members are entitled to decide. Then, unless the matter is one which requires the use of a secret ballot pursuant to Civil Code section 5100 et seq., parliamentary procedures provide four basic motions by which a member may bring an issue before the meeting. The first is called a “main motion.” It brings new business before the members for discussion and a vote. For example, “I move we adopt the tax resolution to allocate any excess association funds left over at the end of this fiscal year to next year’s budget.” The second is a “subsidiary motion” which changes or amends the pending main motion. For example, “I move we amend the motion to return excess association funds to the members.” The third is an “incidental motion,” one involving a procedural issue that concerns another pending motion or item of business. For example, “Point of Order. Did the notice of this special meeting state that a tax resolution would be presented for a vote?” The fourth is a “privileged motion,” one not concerning a pending motion but so important that it may interrupt anything else without debate. For example, “I move we recess until the Chair’s microphone is repaired.”

The election of directors is usually the most important business at our meetings. Are there any special rules regarding elections?

Civil Code section 5115 requires votes on the election or removal of directors to be conducted using a secret mailed ballot system modeled after the procedures used by California counties for ensuring confidentiality of absentee voter ballots. Most other requirements are found in the bylaws, such as whether to allow nominations from the floor, provide for cumulative voting, allow for proxies, and the like. If cumulative voting applies, you should explain it to avoid member confusion when filling out ballots. Counting of ballots must be conducted by inspectors of election in public at a properly noticed meeting of the members, or open meeting of the directors as permitted in the bylaws. The results of the election are reported to the board by inspectors of election and then recorded in the minutes of next board meeting. The tabulated results must also be publicized to all members within 15 days of the election.

Our membership meetings are often disrupted by owners who disregard the rules and want to vent their anger at the board of directors. How can we stop this behavior?

Associations face this periodically. First, to help alleviate the problem, consider appointing a committee to develop written rules for member behavior. Second, require persons who are going to speak in the homeowners forum to complete a form stating what topic they will address and limit the time each member can speak. Third, develop a written policy for handling disruptive members so the Chair knows exactly what to do. This would include warnings, recesses, speaking to the person in private, and even monetary penalties for disrupting the association’s business. Fourth, consider appointing a sergeant-at-arms if you have a member who has a special talent for dealing with unruly individuals. Fifth, the Chair can always threaten to or actually adjourn with the hope of bringing peer pressure on the disruptive member. Sixth and finally, being courteous, respectful, and professional can often be disarming, and a good method for enlisting the support of other members to assist in dealing with the disruptive individual.

What are the requirements at present for a community to be 55+?

For “stick built” housing (traditional, non-mobilehome housing) the community must satisfy both state and federal law on senior housing. Federal law requires three things: (1) that at least 80% of the occupied units be occupied by at least one person 55 years of age or older; (2) that the community publish and adhere to policies and procedures designed to effectuate the intent to provide housing for seniors; and, (3) that the community verify the ages of its occupants in accordance with regulations published by the Department of Housing and Urban Development (HUD). State law requires the community satisfy both a design element and a resident profile. The design element specifies the community must have a certain minimum number of units (depending on where the community is located), and that the development has been developed for, or substantially rehabilitated or renovated for senior use. The resident profile requires that residents be either seniors (55 or older), “qualified permanent residents,” permitted health care providers, or persons who were lawfully in residence on January 1, 1985. These requirements are slightly milder for communities located in Riverside County, and mobilehome communities of any description, wherever located in California, need only satisfy federal law.

Our 55+ community CC&Rs say residents must be “45 or older” and that persons under 18 may only visit for a limited period of time. Are these documents satisfactory?

These documents are not satisfactory. The CC&Rs must be amended to specify that all residents must be either 55, or qualified permanent residents, permitted health care providers, or those lawfully in residence on January 1, 1985. Sometimes it is extremely difficult to obtain the votes necessary to procure this type of amendment; HUD regulations indicate that the government, in investigating claims of familial status discrimination, will take into account any unsuccessful attempts to amend the governing documents, but some type of attempt must have been made. If the community simply enforces the existing documents to the extent permitted by state law, it would not satisfy federal law. The documents must be changed. Sometimes older communities have the habit of referring to themselves as “adult” communities. This practice must be discouraged, because federal regulations indicate that an “adult” community is not a senior community. It is appropriate to refer to the community as “senior,” “55+,” or “housing for older persons,” for example, but it is not appropriate to identify the community as “adult” in either the governing documents or signage.

One of our residents refuses to provide age verification. We are fairly sure she is over 55, but she won’t provide us with a copy of any document and she won’t sign anything attesting to her age. What can we do?

Federal regulations currently require age verification every two years. Residents should be required to provide copies of some proof of age, such as a driver’s license, birth certificate, passport, immigration documents, and so on. If a resident refuses to provide such proof, a member of the household over the age of 18 may certify on behalf of the resident who refuses, or in the alternative, another member of the community who has knowledge of the age of the resident may provide the proof. If none of these alternatives is possible, the association may have to resort to fining the resident in order to secure the proof.

Once the proof is obtained, the association need not force the applicant to produce the same proof thereafter (although incoming residents must provide proof). The evidence of residents’ ages may be kept in confidence, and is required to be produced only when HUD or a qualified fair housing organization undertakes an investigation of alleged discrimination.

Recently, a family with children under 18 moved into our senior community. We approached them and told them about our CC&Rs and they moved out. Their attorney told us we had violated their civil rights and that they could have sued. What can we do to protect ourselves in the future?

The most important protection is to assure that the community does indeed qualify for the senior housing exemptions provided in state and federal law. If so, the community would be insulated from liability for age or familial status discrimination. However, even if the community actually is entitled to enforce its age restrictions, that is no guarantee that the association and its board will not be sued in a misguided attempt to prove the association was wrong. In a case such as this, the best protection is full and adequate insurance coverage. You should check your “directors and officers liability” insurance policy to make sure it will provide a defense if the association and/or its directors are accused of age/familial status discrimination. Also, the federal law provides a “good faith” defense for individuals who seek to enforce a senior community’s age restrictions. In order to qualify for the defense, the association’s board needs to execute a statement under oath that the community qualifies for the defense, and the individual directors must be aware that the board has done so.

A family with children wants to move into our senior community. They claim that senior communities must “set aside” the 20% of the units which do not need to be occupied by seniors under federal law, for families with children. Are they right?

They are not right. First, the 20% is a “safe harbor”: under federal law, a senior community can have up to 20% of its units occupied by non-seniors and still not lose the federal exemption. But, to set aside 20% of the units for non-seniors would not demonstrate the intent to provide housing for seniors. Thus, according to federal regulations, the 20% may not be set aside for family housing. Furthermore, if the housing in question is also subject to state law (as is all senior housing except for mobilehomes), then 100% of its residents must satisfy the resident profile contained in the senior exemption.

One of our senior residents has a disabled child who is not yet 55. Our CC&Rs require non-senior residents to be 45 or a spouse or cohabitant of a senior, or to provide primary economic or physical support to a senior resident. This child doesn’t satisfy any of these requirements. Is the child entitled to stay?

The short answer is “yes.” Your CC&Rs reflect California law prior to 2001. In that year, the law was changed to provide that the disabled child or grandchild of a senior or other qualified permanent resident, who needs to reside with the senior or qualified permanent resident because of the disabling condition, illness or injury, is also a qualified permanent resident. If the disabling condition or illness ends, the senior community may force the removal of the child or grandchild on six months’ notice (provided the child/grandchild has not become 45 or otherwise qualified as a permanent resident in the interim).

We used to be senior, but we sort of abandoned our senior status when the laws changed. However, we believe we are still about 80% senior occupied. Can we convert back to senior?

This is a very difficult question. The 1999 federal regulations specifically permitted associations to discriminate until May 2000, to obtain the correct percentage of 55+ occupied homes; until May, 2000 that date, communities desiring to be senior could require that incoming residents be senior households. If by that date, however, the community had not achieved the requisite 80%, the community was required thereafter to abandon its attempts to become senior.

Recently, however, in Balvage et al. v. Ryderwood Improvement and Service Association, Inc., a federal court held that a Washington state residential community that had continuously operated as a retirement community for persons age 55 or older could qualify for federal 55+ status by establishing that it currently satisfies the exemption’s three statutory and regulatory criteria at the time of the alleged violation. The problem for California 55+ communities is that there are additional requirements, and that may limit the right of such communities to convert (or reconvert.) If you are considering the possibility of a transition to senior status, contact your attorney, since the circumstances permitting transition are specific to the location and history of the community.