NOTE: Amendments to the Nonprofit Corporation Act in 2008 regarding electronic noticing and voting have made this article outdated and in places inaccurate.
Article ©2002 By Steve Sowell
Votes and elections can be trying times for board members, managers, and community members alike. Understanding the correct form to use at the correct time can eliminate at least some of the election confusion. By taking advantage of some of the computer technology available, associations can reduce both the hassle and the paperwork of conducting elections.
The first step is learning the nomenclature. Most community association documents require a new owner, upon purchasing his lot or unit, to designate a voter representative before the owner can cast a vote. The purpose of such a designation is to identify to the association who to look for at an election and to protect the association from disputes between unit owners as to who is eligible to cast a vote. The new owner will want to make this designation as soon as possible so that his vote can be counted.
Unless the community association documents specify otherwise, there is no prescribed procedure or form for making the designation, other than the designation be in writing. It should merely identify the unit in some fashion, state the name of the representative, and be signed by at least one and preferably all of the owners of record of the unit. Most community association documents provide that a designation, once made, is good until changed by a new designation. Once the designation is made, the voter representative is qualified to vote.
The designated voter representative can attend a meeting in person and cast his vote at the meeting. But what if the voter representative cannot attend the meeting? In that case, the voter representative should fill out a proxy or an absentee ballot. A proxy is a document which designates someone else to cast a vote on behalf of the designated voter representative on any issue that may come before the meeting. An absentee ballot (also called a written vote by some community association documents) is a vote for (or against) a particular person or issue which is known in advance of the meeting to be decided at the meeting.
A proxy is broader than an absentee ballot. The proxy holder can vote on any issue which comes before the meeting, in any fashion the proxy holder wishes. The proxy holder can even decide to abstain from voting on one or more issues. The proxy gives the proxy holder a great deal of flexibility in deciding what to do at a meeting. The proxy holder has an opportunity to hear the discussion on the issue before casting his vote. The proxy counts toward the quorum requirements for the meeting and counts toward the percentage necessary to pass the vote if the documents provide that the vote may be passed by a majority of only those present.
A proxy may be given to an individual (who need not be a member of the association unless the community association documents expressly so provide) or to the board of directors. If a proxy is given to the board of directors, the vote of the majority of the board of directors determines the vote of the proxy.
Unless otherwise specified in the proxy or in the association's governing documents, a proxy is good for three years from the date it is signed. The authority of the proxy holder is not revoked by the death or incompetence of the designated voter representative unless, before the proxy is exercised, the association receives written notice of the death or incompetency. Unless irrevocable (and what can make a proxy irrevocable is beyond the scope of this article), a proxy may be revoked at any time at the pleasure of the designated voter representative.
There is no particular form for a proxy. To be valid, it must state the name of the proxy holder, indicate that the proxy holder is granted the proxy, and be signed by the designated voter representative. It may state the date on which the proxy is to expire if the proxy is to be of a shorter or longer duration than the statutory three years.
An absentee ballot or written vote is much more narrow. It actually casts the designated voter representative's vote on a particular issue or issues. For instance, if it is known in advance of the meeting that the association will be voting on proposed amendments to one of its governing documents, then the designated voter may, by casting an absentee ballot, vote in favor of or against the amendment.
Absentee ballots are limited to the specific issue or vote identified in the ballot. If a new matter should come before the meeting, the absentee ballot is ineffective to vote on the new matter. The absentee ballot counts toward the quorum requirements for the meeting only for the vote cast by the ballot. If there are not enough proxies or designated voter representatives actually present at a meeting on which a new issue comes up, the absentee ballot cannot be counted toward a quorum on that issue.
An absentee ballot should be good for as long as the particular election or issue is in front of the association. For instance, if a meeting is adjourned because either there are not enough persons present to constitute a quorum or the issue is tabled, the written ballot should be valid at the adjourned meeting.
The community association should draft the absentee ballot at the time the meeting notice goes out, so that the form will be on hand when members ask for it. The exact form of the absentee ballot will be dictated by the type of matter being voted on at the meeting, but at a minimum it should allow for voting both for and against a particular proposal (such as an amendment) or provide for write-in votes in addition to the sleight of candidates if an election is contemplated. It should be signed by the designated voter representative and should be dated. Like proxies, a written vote is revocable at the pleasure of the designated voter representative.
The Articles of Incorporation for some community associations provide, as allowed by law, that any action that may be taken at a meeting of the association may be accomplished without a meeting if a consent in writing setting forth the action to be taken is signed by members having not less than the minimum number of votes necessary to authorize the action at a meeting at which all members entitled to vote were present and voted. In other words, absentee ballots (or more properly in this context, written votes) may be used without a meeting. All that is necessary is that the association receive back from the members enough written votes to constitute the majority necessary to pass the issue if all members had voted. This can be somewhat deceptive; an example may help.
For example, assume a community association proposes an amendment to its bylaws, the bylaws provides for amendment by a simply majority of members present and voting at a meeting at which a quorum is present, the quorum requirement is 20%, and the association has 100 members. If an actual meeting were called to consider the amendment, the measure could pass by the approval of as few as 11 members of the association: if 20 members are present, the association has a quorum. Of those 20 members present, 11 constitute a simple majority.
On the other hand, if the same community association tries to pass the amendment by written vote without a meeting, the law requires that the amendment be approved by the requisite majority as if all members were present and voted. In this instance, the amendment would require the return of 51 ballots to be passed, because 51 members constitute a simple majority of the total of 100 members.
Having digested all of the above, how does this apply in today's digital, electronic world? Can members provide proxies and written votes electronically? Can an association conduct its elections by electronic means? The answer to this question is a qualified "yes."
The Uniform Electronic Transactions Act became the law in Michigan on October 16, 2000. The act provides for completion of most transactions by electronic signatures and maintenance of electronic records. A transaction is an action or set of actions occurring between 2 or more persons relating to the conduct of business, commercial, or governmental affairs. An electronic record is a record created, generated, sent, communicated, received, or stored by electronic means. An electronic signature is an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.
The act applies to transactions between parties, each of which has agreed to conduct transactions by electronic means. Whether the parties have so agreed is determined from the circumstances surrounding the transaction, including the parties' conduct. If a law requires there to be a writing as a part of the transaction, the act says the requirement is satisfied if an electronic record capable of retention by the recipient is made at the time of the receipt. If a law requires a signature, the act says an electronic signature satisfies the law.
Applying the law to the community association voting context, a member could conceivably give a proxy or written vote by an e-mail letter to the association, as long as the contents of the e-mail otherwise met the requirements of the association documents regarding proxies and written votes and the e-mail contained an electronic signature. Voting in a community association election probably constitutes an "action occurring between two persons (the member and the association) relating to the conduct of" the business of the community association. The e-mail satisfies the writing requirement for proxies. The author of the e-mail can provide a date in the body of the e-mail, and can sign the e-mail by any number of attachments or encryptions. The act of sending the e-mail is conduct indicating the member agrees to the transaction; acceptance and use of the proxy is conduct by the association agreeing to the transaction. If the association did not wish to agree to the e-mail proxy or written vote, the association should probably reply to the member advising them that the association does not agree to conduct the transaction (accepting the proxy) by electronic means.
The author has learned of at least one web site which is geared specifically to community association voting. For a fee, iBallot.com allows an association to set up a web page constituting a ballot and obtain user ID's and passwords for its member list. The association then distributes the ID's and passwords to its members, who go to the web site, view the ballot, and then vote. iBallot then tabulates the votes and provides the results to the association. Ballots can be downloaded or printed for archival purposes.
There are other sites which provide similar though less secure services (allopinion.com, voteserve.com), and an enterprising association could even set up its own web server with ballots using the forms feature of off-the-shelf site building software. Setting up the ballot is conduct by the association indicating its agreement to transact by electronic means. The member's use of the web site is conduct indicating his agreement to complete the transaction by electronic means.
Such an election conducted entirely by web site would be action taken without a meeting as outlined above and the voting requirements would have to be based upon the total of all members. If the election were properly noticed and configured such that members could either vote at the web site or attend the meeting in person, then the votes garnered from the web site may be usable as absentee ballots.
The qualification for using web-based services such as iBallot.com for conducting association elections is that some older community associations require that an actual meeting be held in order to conduct a vote. These associations would have to amend their documents in order to conduct an entirely web-based "action without a meeting" vote. However, since a vote at a web site could be considered as a "transaction," a properly configured and noticed election which allowed voting either at the web site or in person may be acceptable even at these associations.