(Originally published in CIC Midwest 2017 Summer Edition. To visit their site, click here.)
Time for an annual meeting? All homeowner associations (HOA’s) are required to have an annual meeting each year. In addition to any other specific requirements which may be within an association’s declaration, the Minnesota Common Interest Ownership Act (the “Act”) requires that certain business must be conducted at each annual meeting. The statute requires there to be an election of directors and an annual report made which covers financials, capital expenditures, statements of insurance coverage and whether there is any litigation involving the association. In addition, annual meetings also tend to be the time when owners want to have their voices heard, members of the board of directors want to explain what has been going on over the year and tempers can flare about issues ranging from disagreements about what type of flowers were planted to complaints about special assessments for major projects. Let’s face it, an HOA annual meeting can become chaotic!
I have heard horror stories of annual meetings lasting eight hours and physical altercations breaking out. I have witnessed vile and vulgar behavior resulting in police presence and arrests. I attended one annual meeting a few years back where three men started throwing punches at each other. People are emotional about where they live and financial matters which affect them. However, annual meetings are not meant to be a “free for all” and there are HOA meeting procedures and processes that should be followed to ensure the business that needs to be conducted at the annual meeting is accomplished in an orderly and professional manner. This article will provide expert tips on how to run an HOA annual meeting smoothly (with no arrests).
1. Be organized.
When the annual meeting is approaching, put some thought and effort into what the best HOA meeting format will be to distribute notices/proxies, document attendance, and reach quorum. Make sure that your ballots are clear and understandable. The board of directors is authorized to determine the form of the proxies and ballots to be used at the meeting. Depending on how large the association is, or whether the voting is equal or percentage based, the actual act of voting and counting ballots can be very time-consuming and confusing. If there are multiple issues or options to be voted on, a poorly-worded ballot can cause confusion and inaccurate voting. For a complicated vote, consider using a test ballot (that does not count) with several owners to find out if any revisions will help make it easier to understand. Also, designating an official proxy form which clearly states the manner in which it may be used and counted will avoid issues on the day of the meeting. The board makes the rules concerning proxies, ballots and procedures for the meetings. Spending some time strategizing ideal HOA meeting procedures before the meeting starts will save time at the meeting and allow the meeting to be run in a more efficient manner.
2. Set the tone of the meeting upfront.
Section 515B.3-108 of the Act allows the board of directors to set the HOA meeting procedures and governing conduct. Prior to the meeting, the board of directors should discuss who will run the meeting and what processes they will use.
Typically, the president will take the reins. However, there is nothing wrong with having a property manager run the meeting, or in the event you know the meeting will be highly adversarial and contentious, the board of directors can have the association’s attorney run the meeting.
At the meeting, address everyone in attendance and lay the groundwork for how the meeting will be run. Your HOA meeting format should include an explanation that the purpose of the meeting is to address the items contained on the agenda, that there are a lot of items to cover, and it is expected that everyone will act in a professional and courteous manner. Formality is a great tool to keep things running smoothly. Let everyone know that there should be no comments or statements unless they are called on and have the floor. If there are concerns about bad behavior you can also make it clear that if anyone is disrespectful or interferes with the meeting process they will be asked to leave and/or be fined.
Allow an open forum at the end of the meeting (or while ballots for the election are being counted). Let everyone know upfront that there will be this opportunity at the end of the meeting. Also, explain that it is an opportunity to voice questions or concerns so the board of directors and any new directors can take the questions or concerns into consideration. It is not an opportunity to make demands or require responses on the spot. Additionally, set a time limit for each owner, such as two minutes, and nominate a member to keep time. When the processes and expectations for conduct are explained upfront in a formal professional manner it will set the tone for an efficient and productive meeting.
3. Stick to the association’s real business.
There are specific items which need to be addressed at an annual meeting. Most associations will have requirements contained in their bylaws on the process for providing notices of annual meetings. For instance, an agenda or a list of the specific agenda items which are to be covered at an annual meeting needs to be included in the notice. It is best practice to always send out an agenda with details showing what business will be conducted and in what order. This sets the tone for the structure of the meeting and can be used to keep the meeting on track.
As the meeting progresses, keep the agenda in mind and refer to it to keep things on schedule. If interruptions occur or if the meeting gets sidetracked, interrupt the meeting, refer to the processes explained at the beginning of the meeting, remind everyone there are certain agenda items which need to be covered and get things back on schedule. As the meeting progresses through each agenda item, announce what item is next and proceed to address that topic. The more formalistic the approach, the more efficient the meeting will be.
4. Keep things positive and professional and highlight the community.
Professionalism must apply to every aspect of the meeting. Officer reports should highlight positive efforts, goals, and what work was accomplished over the last year. Too often, I have seen members of the board of directors use a financial report as an opportunity to call out owners who are delinquent in the payment of assessments or to complain that bills are too high due to the behavior of an owner. This is not proper and will create a “board versus owner” culture, which is not productive or in the best interest of the community. For an annual meeting, it may be important to know the amount of delinquent accounts and the amount of arrears to the association; however, the names of the individuals that are delinquent should not be announced or discussed at the meeting. The discussion should focus on positive achievements and goals for the future.
5. Maintain Control.
The annual meeting is for everyone, not just the loudest or boldest people in attendance. Do not allow the meeting to be hijacked. If after setting forth the processes for how the meeting will be conducted and the expectations for those in attendance, owners still do not participate within the parameters, then action must be taken. If an individual continues to interfere with the meeting, then point out the fact that the owner is interfering with the purpose of the meeting and is wasting everyone else’s time. Let them know if the interruptions continue, they will be asked to leave, and if they do not leave, the meeting will be adjourned. This usually has a dramatic impact, as everyone else in attendance will realize that they will have to come back for a second meeting, which no one wants to do. If someone appears to have been drinking, ask them to leave before the meeting begins.
If behavior is vulgar, threatening or consistently disruptive, do not hesitate to call the police immediately. A homeowner association meeting is a public gathering and behavior must be appropriate. If the association has had a history of disruptive meetings or threatening behavior at meetings, contact the local police prior to the meeting and request an officer be present at the meeting. In some cases, you will need to hire an off-duty officer to assist the association. This is money well spent. A police officer standing in the back of a meeting will have a deterrent effect on inappropriate behavior and will allow the meeting business to be conducted in an efficient and professional manner.
6. Seek assistance from the positive members.
If things seem to be going in the wrong direction with a few members holding up the association’s business, ask for a show of hands from the audience on how they want to proceed. For example, you can ask for a show of hands for those who want to move on from topic XYZ and return to the agenda. This is an active and effective way for owners to raise their hands to let an interrupting member know that everyone else wants to move on. If you tend to be timid when people are upset, have your manager or your legal counsel conduct the meeting. You will still have input as a director and officer, but an outside third-person will conduct the meeting and assist the board with keeping the meeting on track.
An annual meeting can be an important and solidifying step in administering the community. However, it can also be an emotional outlet for unhappy homeowners. Prepare as best you can and commit to staying positive. Our guidelines on how to run an HOA annual meeting will take practice but will streamline your processes significantly.
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