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With spring come the annual meetings of many condominiums and co-ops. Increasingly, well-run buildings are having difficulty reaching a quorum to hold these annual meetings. This difficulty arises because these meetings usually cannot be held unless condo owners representing more than 50% of a building’s common interests show up. Owners have the option of attending either in person or by proxy, but many buildings still cannot achieve the quorum requisite to hold the meeting. As a result, no annual meeting takes place, a new meeting is not scheduled until the next year, and the existing board serves for another year.
Getting the quorum necessary to hold the meeting is often more of a disaster than not having the meeting at all. Many condo lawyers agree that annual condo meetings usually fall at extreme ends of the spectrum; they are either mind-numbingly boring or so raucous and contentious that they are counterproductive. Typically, the most contention arises when an aesthetic change to the building is proposed or there is a controversial election.
Why all the discord and rancor at annual condo meetings? Most condo lawyers point to proxy voting as the culprit. A proxy means an owner gives someone else the right to vote in his/her stead. A general proxy means the holder can vote any way he/she chooses. A directed proxy, on the other hand, means the owner dictates how the vote is cast. Proxy voting is not without problems. Because condo owners’ are so often solicited by other seeking their proxy, it’s not uncommon for them to give proxies to multiple people just to be rid of them. If proxies are questioned during an election, they are usually only investigated if they will influence the outcome of an election. Generally, the disputed proxies are set aside, and the owners are contacted to determine which vote they want to count.
Another problem that sometimes comes up at the annual meetings of co-ops is when the co-op has cumulative instead of straight voting. With straight voting, each owner has a certain number of votes he/she can cast for each open seat. For instance, if a shareholder has 100 shares, and there are ten seats up for election, he/she can cast up to 100 shares for each of the ten seats. With cumulative voting, however, the shareholder can cast a number of votes equal to his/her number of shares multiplied by the number of seats up for election. For the previous example, cumulative voting would enable that shareholder to cast up to 1,000 votes, which can be distributed among the ten open seats in any way the shareholder sees fit. The problem with such a method is that shareholders sometimes cast more votes than they have, or vote for more directors than they are allowed.
