Q&A: There are established safeguards that can help ensure a board election is fair
Question: We are about to have another board election at our homeowner association, and I am concerned about tales I hear about rigged elections at other associations.
The gist of these stories is that a corrupt manager colludes with complicit board members to control elections and dissuade newcomers from running. Apparently for this to work, independent election inspectors have to be in on it, with a primary aim of maintaining control of vendor contracts that allow for skimming and kickbacks.
Are these tall tales? Am I being paranoid, or is there any truth to this? And, in any case, how do we ensure a fair election?
Answer: Voting is the single most important function an owner can participate in. Elected boards will make decisions during their tenure that determine the cost for living in that development and affect the quality of life for all residents. Once elected, directors can also take actions without a vote of titleholders, including selection of the management company.
In fact, owners in California are statutorily forewarned that unless they serve as a director of the governing board, their control of the operation of the common areas and facilities is limited to their vote as an owner. (Business and Professions Code section 11018.1)
Your fear that elections can be tampered with is not off base. In a case that has been closely covered by the Las Vegas Review-Journal, a former construction company boss in 2015 was sentenced to more than a decade in prison for conspiracy, fraud and tax evasion, and ordered to pay some $13 million in restitution, as part of an outrageous scheme to take over multiple HOAs in the Las Vegas area.
The sophisticated plot involved election rigging — and even hiring straw buyers — to take over HOA boards to get lucrative work suing over construction defects and repairing them. Prosecutors charged more than 40 individuals in the scheme.
In an attempt to stave off those types of problems, the California common interest development act, in Civil Code sections 5100 to 5125, sets forth rules for homeowner association elections. The goal behind these laws is to level the playing field between owners and their association boards.
For example, there have been complaints that boards and their hired managers make use of the association’s owner contact information and association bank accounts to support campaigns against those nominated to run against them. There also have been concerns about managers selectively choosing the owners who will receive ballots, and pressuring third-party election inspectors to invalidate certain ballots. Obviously, none of those actions are lawful.
Indeed, one of the biggest problems with association elections is the difficulty in proving that every titleholder received a ballot or every ballot is counted, since not all owners necessarily participate in board elections. Boards rarely mail ballots via certified mail, which requires a signature on receipt but can be costly for a smaller association. And, because mailed ballots are not provided in duplicate form, allegations of ballot tampering are hard to prove.
The obvious solution to some of these issues is to ensure there is a recognized tracking method in place to confirm titleholders received ballots, while encouraging owners to maintain their own copies of all their completed ballots. Completed ballots that are mailed back should use a method of tracking or signature confirmation for receipt.
There also have been complaints that boards and managers select independent election inspectors — required under Civil Code section 5110 to run an election — who favor the current board and management. These third parties, who range from volunteer poll workers to for-profit companies, are supposed to oversee all aspects of the election, including counting all votes. If an inspector allows management or the board access to the ballot box, this can give an incumbent board an advantage, such as by soliciting votes from those owners who have not yet cast a ballot.
One way to reduce, but not necessarily eliminate, many of these concerns is to ensure that management is totally removed from the voting process since they have a vested interest in their contract renewal. It also is imperative to ensure that the third-party election inspector is unbiased and independent, which is not a given since Civil Code section 5110 allows homeowner association members to be chosen for the role as long as they meet other criteria.
Ultimately, each board is responsible for overseeing an election in good faith and ensuring the process is not compromised by either its own actions or management. But it also is up to titleholders to closely observe the election process to let the board and management know they will not tolerate any deviation from best practices.
In the end, election results can be challenged and individual titleholders can bring actions against the board and the association. But why subject the owners to this scenario when the prospect for having a fair election can be improved by following some simple and established safeguards?
Zachary Levine, a partner at Wolk & Levine, a business and intellectual property law firm, co-wrote this column. Vanitzian is an arbitrator and mediator. Send questions to Donie Vanitzian, JD, P.O. Box 10490, Marina del Rey, CA 90295 ornoexit@mindspring.com
