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A Proxy Primer

handshakeThe vast majority of community associations routinely use proxies in some way at their annual membership meetings.  Given that, it’s not surprising that many of the questions I receive from community association Board members and property managers during annual meeting season involve proxies.  In order to assist those of our Board member and property manager readers who are in the midst of annual meeting preparation, this blog post will address some of the most common misconceptions and questions concerning proxies and their use. 

One of the most important things to understand about proxies is that they do not serve the same purpose as ballots.   While ballots are voting instruments used to cast a vote, a proxy is a form of power of attorney by which a person who will not be present at a corporation’s meeting (the “proxy-giver”) assigns his or her right to vote at the meeting to another person who will be present at the meeting (the “proxy-holder”).  At the annual meeting, the proxy-holder exchanges any proxies he/she holds for a ballot- one ballot per proxy.   Unless the proxy document contains language telling the proxy-holder how to cast a vote on behalf of the proxy-giver on a particular matter(s), the proxy-holder has the right to vote on behalf of the proxy-giver in his or her discretion on all matters that may arise at the annual meeting.  If the proxy document instructs the proxy-holder to vote in a particular way, then the proxy-holder must cast the vote he/she holds on behalf of the proxy-giver as instructed by the proxy-giver.

moneydownthedrainThe general rule in community association collections is that any payment on a delinquent account is a good thing, even if the payment is for less than the full amount owed.  However, depositing a payment of less than the full amount owed can be dangerous if the owner includes language on the check or other negotiable instrument, or accompanying letter, indicating that the owner intends the payment to be payment in full.  The danger stems from the legal principle of accord and satisfaction.  

Under the doctrine of accord and satisfaction, if a genuine dispute exists between a debtor and a creditor over the amount due, and the debtor pays the creditor less than the amount actually due upon the condition, either express or implied, that the payment is in full satisfaction of the creditor’s claim, and the creditor accepts and retains the money, then the law deems that the debtor has paid the creditor in full.  Thus, the creditor cannot seek additional payment from the debtor. 

The national Community Associations Institute (CAI) has been following an issue in Congress that could potentially impact community associations across the country. Specifically, last month, U.S. Rep. Adam Kinzinger (R-IL) introduced H.R. 4969, legislation that would invalidate community association rules and architectural standards that govern the installation and use of amateur radio towers and antennas. If H.R. 4969 becomes law, homeowners who want to install a radio tower or antenna for amateur radio use would not have to go through the architectural review process or follow existing community guidelines. CAI has initiated a campaign to preserve the rights of America’s community associations with regard to amateur radio towers and antennas.  For those of you interested in this issue, please find a message from national CAI below.  If you wish to help prevent H.R. 4969 from becoming law, you can contact your member of the U.S. House of Representatives today to ask them:

changeaheadA community association can change its name, so long as it complies with all requirements of Georgia law, and, if applicable, its governing documents.  If your association is interested in changing its name, you’ll want to consult with your association attorney to discuss any individual requirements imposed by your association’s documents.  However, the general process of changing a community association’s name is as follows: 

1. Determine Authority.  The process starts with determining whether an owner vote is required.  Unless the association’s governing documents require a membership vote, the board of directors may change the corporate name without member action.

electriccarwithatlantaAre associations required to provide electric vehicle charging stations?

No.  There is no law in Georgia which requires condominium associations to provide public electric vehicle charging stations.  However, associations may wish to provide common charging stations as an amenity.

Must associations allow owners to install electric vehicle charging stations?

No.  Georgia law does not currently require condominium associations to permit the installation of private electric vehicle charging stations.  However, the law may soon change.  With the increase in electric vehicle ownership, the law is evolving as states address the new technology.  For example, California recently enacted a law which makes any language in governing documents that effectively prohibits or restricts the installation or use of electric vehicle charging stations void and unenforceable. However, California associations can still impose reasonable restrictions that do not significantly increase the cost or performance of the charging stations.

tulipinrainIt is safe to say that Spring has finally sprung here in Atlanta.  While Atlantans are enjoying the many benefits of Spring, including warm temperatures, festivals and a bevy of blooms, I’m sure that we can all agree that Spring does have a few downsides.  Pollen is one of them.  And, for many community associations, the beginning of “violation season” is another.  What I am referring to when I say “violation season” is the unfortunate fact that as temperatures rise and vegetation comes back to life, the gardening and lawn maintenance efforts of some owners will not keep pace with the growth of their yards’ plant life.  The governing documents of most community associations require that owners maintain their property in a neat and attractive manner, and overgrown lawns, weeds and unkempt landscaping beds will constitute a violation of this requirement.  Luckily, most owners eventually catch up and cure the violation, either on their own initiation or with a friendly reminder. 

signleaseOver the holidays, my husband and I took our first, much-anticipated trip to Paris, France.  Rather than stay in a hotel, we decided to rent a “flat” through a website called “Airbnb” so that we could fully experience the Parisian lifestyle.  For those of you that don’t know, Airbnb is a website that connects “hosts”, or property owners in various cities throughout the world, to travelers looking for lodging in those cities.  Using Airbnb as a conduit, the travelers then rent a home, or even individual rooms in a home, directly from the property’s owner.  The rental period can range from anywhere from a day to months.  

While my husband and I greatly enjoyed our little Parisian flat, I couldn’t help wondering what the other property owners we passed in the building lobby thought about our host’s Airbnb visitors.   Certainly, if I lived in that lovely Parisian building, I might be wary of having a constant stream of various strangers from all over the world staying right next door to me. 

timingCommunity associations must be careful to preserve construction defect claims.  All too often, our firm is approached by associations to handle construction defect litigation at the eleventh hour, or worse, when the time has already passed to bring an action.  Because of the significant costs typically associated with repairing construction defects, community associations must be proactive in their pursuit of construction defect claims.

Georgia has a relatively short window of time to assert construction defect claims, including negligent construction claims.  Thus, it is important for associations to investigate potential defects and then take immediate action based on the findings.  For example, if an owner reports significant cracks in a common element wall, the association should arrange for an engineer to inspect the property and then discuss the results with legal counsel.

willworkforfreeTraditionally, service on the Board of Directors for a community association has been carried out on a completely volunteer basis, with the Board members’ only reward being the sense of fulfillment they receive from knowing that they are providing a valuable service to their community.  But increasingly, some community associations are finding that this altruistic reward is not enough to keep the open spots on their Boards filled.  For such associations, the question of whether it is permissible to offer compensation to Board members for their service may understandably arise.

There is no law in Georgia that prohibits a member of a Board of Directors of a non-profit corporation to be compensated for his or her service.  That said, the By-laws of most community associations do prohibit the Directors from receiving any form of compensation for their service or only permit it if it is approved by a majority of all of the members.  Notably, for the purposes of By-laws provisions governing Board member compensation, the term “compensation” means not only a cash payment for service, but any form of compensation at all, including a waiver of assessments.

contractterminationIn some ways, good termination provisions in community association vendor contracts resemble pre-nuptial agreements in marriages.   When in the first flush of infatuation with a new vendor’s promises of excellent landscaping or pool services, the Board, like a new bride or groom, understandably does not want to think about what will happen if the vendor’s services don’t live up to expectations.   Unfortunately, though, however rosy a relationship with a particular vendor may start out, there’s a good chance that at some point, there will come a time when one party wants out of the contract.  And when that time comes, a good termination provision, like a pre-nuptial agreement, can alleviate much of the strife that might otherwise result from the split.