Q: We are having board elections soon. A proxy form has been distributed to HOA members by the HOAs management company, with the name of the current HOA president named as the proxy, but there is also a blank space for the member to appoint someone else to serve as proxy. Some owners think that its not proper or legal for the current president, who is running for a second term, to be named as the default proxy on the proxy appointment form. Is this legal and proper?
It is perfectly legal and very common for both publicly owned and nonprofit corporations to send out proxy forms in the format you describe.
If members who cannot attend the meeting do not want to appoint the president (or whoever is named as the default proxy) to cast their vote on their behalf, all they have to do is fill in the name of someone who they trust to cast their vote. There is also nothing to prevent members from using or distributing their own proxy forms. North Carolina law is very liberal on what qualifies as a valid proxy appointment.
The law says the appointment of a proxy can be accomplished through an electronic record with an electronic signature that can be printed (for example, by email). The law even allows a member to appoint a proxy with a telephone call, as long as the HOA is comfortable that the communication is genuine and was either made by the member, or properly authorized by the member.
Q: Seven years after the first home was sold, the developer (now bankrupt) of our 38-home subdivision is turning over HOA control to the residents. Are there any guidelines that our new board should follow?
HOA transition, or turnover as it is sometimes called, can be intimidating for a newly elected and inexperienced HOA board, especially when transition involves a developer that is insolvent or has simply abandoned the community.
The Community Associations Institute, or CAI (www.caionline.org), has a treasure-trove of information for community leaders, managers, and homeowners. It has a publication titled Transition: Best Practices that can be downloaded free: www.cairf.org/research/bptransition.pdf.
In addition to the issues discussed in this publication, there are other issues you need to be aware of if your developer is insolvent or bankrupt.
For example, you will need check the title to the common areas to make sure there are no unpaid mortgages, judgment liens or property taxes. You will also need to have the financial records thoroughly reviewed. I suggest you consult with an experienced, accredited HOA management company and a lawyer familiar with HOA law if you are unsure of how to proceed.