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Condo Living 301: Meetings and the Board of Directors

by | Jul 31, 2019 | Firm News |

Annual Meetings

Every condominium should have a requirement in the bylaws to hold an annual meeting. What can you expect to occur at a typical annual meeting? Who gets to vote? What is the Board of Directors? What do they do?

The trend is that the association bylaws (which govern how the association is run) and the condominium bylaws (which govern how the community is run) are combined into one document and recorded as exhibit “A” to the master deed. If there are separate association and condominium bylaws, the topics in this article will be found in the (unrecorded) association bylaws. I will simply refer to the “bylaws” from this point onwards as if they are combined into one document; however, if you cannot find the articles to which I refer, it is likely they are contained in a separate document called the association bylaws.

Annual Meetings

The Michigan Condominium Act does not require that an association have an annual meeting; however, most bylaws contain language that there must be one held. Some are even specific enough to state that they shall be held, for example, on “the third Tuesday of each month of May.” The association is typically required to send notice to every co-owner via mail at the last address of record[1] at least 10 days in advance of the meeting date. The association may provide additional things like a proxy, nominee information sheet, ballot, and/or an annual budget along with the notice of the meeting.

If you cannot attend the annual meeting, it is very important to fill out and return the proxy. This is essentially a permission slip for you to designate that someone else in attendance will be there on your behalf. Make sure the proxy is limited to that meeting date, designates a person who will actually attend (like a neighbor or board member), and clarifies whether you are giving the person permission to vote on your behalf, or just count towards attendance. You must sign the proxy in order for it to be valid (electronic signatures are acceptable under the Nonprofit Corporation Act[2]).

A nominee information sheet may be used to find out in advance who would like to run for the board of directors. The bylaws should state the qualifications to be on the board, which usually include being a member of the association[3], being in good standing[4], and (if the bylaws are well-drafted) only one member of a household may serve on the board of directors.[5]  Members of the association may only elect members to the board – they do not elect specific positions or offices. The number of directors should be an odd number to prevent tie voting. Only members in good standing as of the record date may vote at a meeting. If no record date is specifically stated, it is the close of business on the day following the day that notice is given.[6]  This means that delinquent co-owners cannot show up at a meeting with cash-in-hand and expect to vote unless the record date specifically states in the bylaws it is the start time of the meeting.

Most bylaws require that a designated voting representative be chosen and communicated to the association in advance, which is important when there are either multiple owners on title or the unit is owned by a corporation or entity like a trust. You will receive one vote per unit owned and per position available. The vote weight is determined by the percentage of value in the master deed. It can either be equal or proportionately adjusted by assigning each unit a percentage value. Typically, if the assessments are all paid equally amongst all members, the voting will also all be equal. Most bylaws prohibit cumulative voting. For example, if there are two open positions for a director, you cannot combine your votes to vote twice for the same person.[7]

Sophisticated bylaws will contain a staggering provision for the term of an officer.  This prevents an entire new board from being elected at once. Typically, terms will be for two years, with about half of the positions expiring each year in alternating fashion.

Board Meetings

Once a new board of directors is elected, the bylaws usually require that they hold their first board meeting within ten days and elect positions. The best way to accomplish this is for everyone to take turns introducing themselves and presenting their particular set of skills which may suit a specific position better. A majority of the board will be needed to approve each position.

Associations are not public corporations, because the public is not invited to be members; you can only be a member if you purchase a unit within the community. Therefore, board meetings are not subject to the Open Meetings Act.[8]  This means if you are not on the board, you are not entitled to be present at a board meeting. However, most boards will allow a co-owner with concerns to be present for a portion of the meeting. Non-board members are not entitled to hear discussions regarding delinquencies, bylaw violations, or legal matters. It is a good idea to structure the agenda of a meeting to note a closed portion of the meeting where such sensitive items are discussed. Following this structure will also be helpful if a co-owner requests to see meeting minutes or the board publishes them on a website, because redacting the closed portion will be much easier than going through the meeting minutes line-by-line to censor certain information.

Board Member Roles

Bylaws typically contain a “cheat sheet” description of the roles of officers of the association. If there is a three-member board, the roles will be a president, a vice president, a secretary, and a treasurer – meaning that one person will have to play two roles. The only restriction is that the president and vice president can’t be the same person. Boards with greater than 4 members may include positions such as “director-at-large” or be an assistant to the secretary or treasurer.

The president chairs the meetings. He or she will oversee the agenda and keep things orderly. The vice president is a back-up to the president in the event that the president is absent or not able to perform his or her duties. The secretary typically creates the meeting agenda, maintains the books and records of the association, and takes meeting minutes.[9]  It is very important that the secretary take attendance and record all votes and outcomes. A secretary may make a recording of the meeting, but is not required to do so. If recordings are used, the secretary must transcribe them if requested by a co-owner. The treasurer will keep the budget, the assessment income, and records and receipts of all expenses of the association. A management company may be used to perform any of the roles of the directors.

Most bylaws contain provisions that the board of directors serves without compensation[10]. We highly recommend this provision be added to documents if it is not already present, because many of the protections of the Nonprofit Corporation Act are stripped away if a director is compensated for his or her duties.

It is important to remember that most directors and officers serve without compensation on a volunteer basis. While the job can be rewarding at times, it is often taxing and under-appreciated. Very few people enjoy drawing a line between being a neighbor and enforcing the bylaws or collecting dues. Boards may elect to hire a management company to assist with the day-to-day business of the association. Management contracts can vary from simply collecting dues and handling violations, to creating and running websites, newsletters, budgets, entering into maintenance contracts with other vendors, and paying the administrative expenses. This may re-assign some of the duties of the board members, which is helpful to encourage volunteers.

Our experienced team is dedicated to helping condominium associations run smoothly, whether this includes determining voting or board member eligibility, noticing an annual meeting, attending board meetings, reviewing management contracts, or simply advising our clients of their rights and duties, we are here to help you with all aspects of association living. Please give us a call at (248) 349-6203 .

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[1] I want to take this opportunity to note the importance of making sure you, as a co-owner, provide the association with the correct mailing address. You cannot rely on the post office to notify the association if you move and provide a forwarding address. Often the mail is forwarded automatically without the association’s knowledge or mail is returned to the association with a yellow label that says “no forwarding address provided” or “moved / left no forwarding address” or “forwarding time expired.” It is your responsibility to update your contact details with the association.

[2] MCL 450.2421(5)(b).

[3] This is not always a requirement, meaning ANYONE can run for the board of directors.  Sometimes Bylaws allow an agent of a member to serve on the board, which can be anybody authorized by a member.

[4] Good standing with the association means to not be delinquent on dues nor be in violation of any bylaws. The former makes sense, because the Condo Act prohibits a person from voting if they are delinquent on assessments.

[5] This is especially important if there is a three-member board, as it would prohibit a husband and wife from running the association by majority vote.

[6] MCL 450.2412(1).

[7] So if there are only two people running for two open positions and you do not approve of one of them, you should exercise one vote for the individual you do approve.

[8] MCL 15.261 et seq.

[9] Minutes are a fancy term to refer to the notes of the meeting.

[10] There is an exception for compensating a board member for services provided outside the scope of his or her role, such as website creation/maintenance or landscaping, etc.