One of the oft-heard concerns of our HOA and condominium clients during the Covid-19 crisis is whether annual or special meetings of the membership may proceed. Boards and members are justifiably worried about violating mass-gathering restrictions, and more importantly, about exposing themselves and their families to Covid-19 health risks. The foundational principle of HOA and condominium governance is that an informed membership or board makes better decisions after a robust discussion of the pros and cons of issues. While less favored, the North Carolina Nonprofit Corporations Act allows members of nonprofit corporations to vote by written ballot in lieu of holding an actual meeting. All members must be provided with a ballot, there must be a fixed deadline by which the ballots must be returned. Provided that the requisite voting threshold is met (e.g., quorum requirements), votes taken by ballot in lieu of a meeting have the same effect as a vote taken at an in-person meeting.
The catch is that a nonprofit corporation cannot mix the two forms of voting: we do not want people attending a meeting in person to have the benefit of hearing the pros and cons while non-attendees cast votes without the benefit of hearing all sides of the issue. Therefore, a membership vote could be held in-person, or by the submission of written ballots without a meeting, but not a combination of the two.
Recognizing that COVID-governance-paralysis would result, Governor Roy Cooper, issued Executive Order 136 on April 24th, which encouraged and authorized HOAs and condominiums to hold membership meetings and board meetings by “remote communication” and “remote balloting.” The Order authorized boards to allow (despite any contrary instruction in their governing documents or within the General Statutes) membership meetings to proceed through telephonic or technology-based means, such as Zoom, Go-To-Meeting or Skype. Further, members who are participating remotely may submit electronic ballots to cast their votes on matters discussed at the meeting. Governance-paralysis avoided. The problem was that Executive Order 136, by its terms, expired on June 24th. Governance-paralysis resurfaces. On July 2, 2020, Governor Cooper signed Executive Order 149, which renewed Executive Order 136 for another 60 days. Governance-paralysis – well, you get the picture.
One subplot we may see is whether this hybrid voting structure will outlast the coronavirus crisis, which would require the legislature to make changes to the Nonprofit Corporation Act, and that might not be a bad thing. One of the rising and concerning trends we’ve seen is waning interest among members to participate in their HOA and condominium governance. Sparsely attended membership meetings have become the norm in many communities. It is also common that a handful of those who do attend – usually attending because of a controversial issue – take the opportunity to hurl insults at boards and their attendee-neighbors, interrupting other speakers and generally disrupting the meeting. I’ve seen firsthand members whose efforts to speak are torpedoed by that one member who wants to dominate the floor and refuses to stay silent after having already spoken multiple times. Even more alarming are the members who refuse to say anything for fear of being ostracized by the handful of insult-throwing agitators. Features on many of the technology-based platforms allow administrators to “mute” people who speak out of turn, and if used properly, we might just see a return to civil discourse since the opportunity to interrupt and insult can be taken away at the press of a button. Time will tell whether these Covid-19 innovations will have a longer-lasting impact.
ABOUT BEN KARB
In his HOA and condominium practice, Ben regularly advises HOAs and condominium associations across a broad spectrum of issues, including the interpretation of covenants, contractual matters, and collection of assessments. He routinely attends membership meetings and assists communities with the ever-difficult process of amending their governing documents. He has formed numerous HOAs and condominium associations, and regularly drafts and amends Declarations and corporate documents for his clients.
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