For those unfamiliar with the basics of conducting annual meetings, there are some key terms to know:
A Quorum is the minimum number of owners who must be at a meeting before business can be transacted. State law sets the minimum percentage of owners that must attend in person or by Proxy (more on that later). It’s relatively low (20%), but many associations still have a tough time getting to it. It’s a common problem.
Meetings that don’t have a quorum must be adjourned and rescheduled at a later date. This costs the Association money and creates more work. And, achieving a quorum at a second meeting – if it wasn’t possible the first time – is even harder.
So, why bother to try again? Because the board is legally obligated to conduct an annual meeting. It’s an important part of conducting association business. During the annual meeting, new board members are elected, and (depending on the association’s fiscal year) the coming year’s budget is presented to the homeowners for approval. No quorum – no election, no budget. This means the current directors will have to continue serving until an election can be conducted.
The good news: owners can be “at” a meeting and across the country at the same time by signing a Proxy (there’s that word again). Using a proxy is how you assign your vote, in writing, to another homeowner. Proxies count toward the quorum, so they are very important to all associations.
A proxy is often confused with a Ballot, but they are not the same thing. A Proxy simply gives another party the right to cast a voting ballot at the annual meeting on your behalf. You can designate how you would like the proxy-holder to vote or let them vote as they choose. If you are attending the meeting you do not need to complete a proxy and you will receive a ballot at the meeting.
Because proxies are so important to achieving a quorum, you may experience board members knocking on your door, calling on the phone, or even stopping you in the common areas asking you to sign a proxy form. The board and management work hard to achieve a quorum. Without it, the association cannot conduct business, and that directly affects homeowners with the potential for higher costs and a less efficient and effective board.