Ask the Attorney by
This column is comprised of questions that have been posed to me by homeowners, property managers and related professionals regarding legal issues that they have encountered with respect to their associations. Discussion of these questions, as well as prior questions, can be found on the CAI-MN LinkedIn page: www.linkedin. com/groups?gid=1769135 This article involves two similar questions that were raised: (1) How to increase attendance at meetings to ensure that quorum is met? (2) Is it permissible to reward attendance with a waiver of assessments? Obtaining quorum at a meeting of the members is crucial. Without quorum, the association is unable to conduct business. If quorum is not met, the meeting may have to be rescheduled to a later date, which increases the cost to the association. We have attendance problems reaching quorum at our annual meeting—what do you recommend we do to increase attendance? While this is not an issue that is faced by all associations, I hear this complaint frequently. I have attended annual meetings that have been recessed until a later date to allow for a quorum to be reached, and I have seen members going door to door to round up enough neighbors to start a meeting. In my experience, the main reasons that a quorum is not met are that the quorum requirement is too high and/or the members don’t have any concerns with how the association is being run or are simply apathetic and do not care. When an association is facing a large special assessment or dealing with other controversial issues, you often see a large turnout at the annual meeting. Conversely, when all is going well with an association, it seems that few members have the time to come to the annual meeting. This poses a problem for an association with a high quorum requirement.
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Minnesota Communit y Living
Some associations that I work with have a 50-percent quorum requirement. This has proven very difficult to obtain during the “good times” of the association. Lowering a quorum requirement is usually done via an amendment to the bylaws. This is a straightforward process that should be fairly inexpensive to accomplish. One concern I hear with amending the governing documents to lower the quorum requirement is that only a small portion (I always recommend 10 percent) of the members may get to make the decisions in the association. While this may be true, it will be the members who care about the decisions that will show up and vote, and during the “bad times” you can be assured that the meetings will have a much greater turnout than 10 percent! Regardless of the quorum requirement, a well attended annual meeting is beneficial for all associations. Neighbors get to interact with each other and all concerns about the association can be addressed. There are a number of ways to increase turnout at the annual meeting. For example, some associations combine the annual meeting with a pot-luck dinner. I have also heard of associations having door prizes for attendees. Board members obtain donated prizes from local businesses and then have a drawing at the end of the meeting for those in attendance. Although I have not yet seen it in Minnesota, associations in other states have started to levy fines against homeowners who do not attend an annual meeting in person, or by proxy. This would need to be done via an amendment to the governing documents. While not as “Minnesota Nice” as the pot-luck or prize drawing, this can be a powerful tool to ensure that members attend the annual meetings, or at least provide a proxy if they are unable to attend in person. This question will be posted to the CAI-MN LinkedIn Group discussion page (link above), as I am sure there are other ideas that are used to help encourage attendance at annual meetings.
Nigel H. Mendez, Esq., Carlson & Associates, Ltd.
I’m a board member who was told that we should not waive assessments as an incentive to attend the association’s annual meeting. Why should we not waive assessments for those who attend the annual meeting? The powers and duties of a board of directors are set forth in an association’s governing documents and relevant Minnesota statutes. I have not seen governing documents that specifically authorize a board of directors to waive part of an assessment as an enticement for attending a meeting. Likewise, I am unaware of any statutory authority for this practice. Association boards have a fiduciary responsibility to the members of the association. They are elected to follow and enforce the governing documents. One of the responsibilities of the board is to create a budget for the coming year based on the anticipated expenditures and necessary reserve contributions. That budget is then divided up among the various members according to the terms provided in the declaration. If a board offered to waive any portion of assessments, the budget would instantly have a shortfall. To compensate for this problem, the board would have to superficially increase the budget to account for the estimated number of waivers that it would be granting, or have a budget shortfall, which may lead to a special assessment. Finally, and maybe more importantly, most Declarations state that there must be either a uniform rate of assessment, or that assessments must be allocated according to specific percentages provided in the declaration. By granting a waiver of assessments to some members, the board would be in violation of the declaration. To have a question answered in a future article, please email it to me at nmendez@carlsonassoc.com with the subject line “Ask the Attorney.” While I can’t promise that all questions will be answered, I will do my best to include questions that have a broad appeal. Questions will also be answered by other attorneys practicing in this area of law. The answers are intended to give the reader a good understanding of the issue raised by the question but are not a substitute for acquiring an opinion from your legal counsel.