Election of directors is among the most high-profile, and consequently frequently challenged, actions of a homeowners’ association (“HOA”). While generally all HOAs must at some point hold elections for directors, many boards and individual homeowners may not be aware of all the procedural requirements for elections. Failure to comply with the procedures set forth in your state statutes applicable to your HOA, or failure to comply with the specific provisions of your HOA’s governing documents, can lead to uncertainty and legal issues for the HOA if a member challenges the election. As elections are often a passionately contested topic for members, you want your HOA to conduct those elections in a manner that ensures the directors and members can trust the results will be upheld. This article will address just a few of the procedural requirements to take into consideration when holding an HOA election.
Notice Requirements
First, prior to holding a meeting to elect directors, the members must be notified pursuant to your state statute(s) and HOA’s governing documents. For example, the South Carolina Nonprofit Corporation Act (the “Act”) at S.C. Code § 33-31-705 sets forth various meeting notice requirements. Most HOA governing documents, and typically the bylaws, also set forth specific notice requirements. It may seem that the provisions of your HOA documents and your state statute(s) conflict, and that may be the case. However, there are also instances in which seemingly conflicting provisions may be interpreted harmoniously in light of the specific wording of the statute and or HOA document. Therefore, it is important to carefully review the notice requirements applicable to your HOA, and advisable to consult with legal counsel when in doubt.
Quorum Requirements
In order to actually hold the meeting and conduct the election, a quorum must be represented. Your HOA’s quorum requirements will typically be enumerated in your bylaws or covenants, but state statutes also apply. For example, pursuant to the Act at S.C. Code § 33-31-722(a), unless provided otherwise elsewhere in the Act, or unless the articles or bylaws of the HOA provide for a higher or lower quorum, ten percent of the votes entitled to be cast on a matter must be represented at a meeting of the members to constitute a quorum on that matter. However, it is likely that your HOA documents do provide for your own quorum requirement. For some HOAs, their quorum requirement can be difficult to reach, in which case it may take extra effort from the HOA to spread awareness of the election and encourage all members to participate.
Voting by Written or Electronic Ballot
As noted above, some HOAs may find it difficult to meet their quorum requirements and therefore find it difficult to hold an election. In this case, if your documents allow, you might consider conducting the election by written or electronic ballot. For nonprofit corporations in South Carolina, unless your articles or bylaws provide otherwise, any action that may be taken at an annual, regular, or special meeting may be taken without a meeting if the corporation delivers a written or electronic ballot to every member entitled to vote on the matter.[1] This can include elections for Directors. Pursuant to the Act, approval/election by this method is valid only when the number of votes cast equals or exceeds the regular quorum requirement, but some HOAs nevertheless find it easier to achieve quorum when members can conveniently vote by written or electronic ballot rather than attending a meeting. All that being said, whether your HOA can conduct elections in this manner is determined by the exact provisions of your governing documents. Moreover, if your HOA can conduct its elections by written or electronic ballot, it is important to be familiar with the requirements imposed by your state statute(s) or governing documents such as those imposed by the Act at S.C. Code 33-31-708(d). If holding an election by written or electronic ballot sounds like an appealing option for your HOA, you may want to consult with legal counsel to ensure your HOA is authorized to do so and to ensure that the procedure is conducted in a procedurally proper manner under the applicable statutes and governing documents.
Again, this article merely addresses just a few of the procedural requirements to take into consideration when holding an HOA election, but it is by no means intended to be an exhaustive list. Our attorneys at McCabe, Trotter & Beverly, P.C. are well-equipped and prepared to assist your HOA with its election and to answer any questions you may have. Please contact us at (803) 724-5000 for further information.
McCabe, Trotter & Beverly, P.C. blogs and other content are for educational and informational purposes only. This is not legal advice and does not create an attorney/client relationship between McCabe, Trotter & Beverly, P.C. and readers. Readers should consult an attorney to understand how this information relates to their personal situation and circumstances. You should not use McCabe, Trotter & Beverly, P.C. blogs or content as a substitute for legal advice from a licensed attorney.
[1] S.C. Code § 33-31-708.