Condo Column: Condo Law Legislative Update - 2024 - Part I
Robert E. Ducharme
5 min read
Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws.” – Plato
This year’s slate of pending legislation includes an old, worn out retread, and some new ones. None have as yet passed and are in various committees.
Proxies. In 2016 the Legislature amended the Condominium Act and added language regarding directed and undirected proxies. To refresh, a directed proxy is one where the owner who will not be attending an association meeting gives their right to speak and vote to someone by way of a written document, a proxy.
A directed proxy tells the proxy holder exactly how to vote, such as for or against a budget or for or against certain people to be on the board of directors. An undirected proxy is one where the proxy holder simply gives the proxy to someone, usually the president of the association, without any directions on how to vote, leaving the proxy holder with great discretion.
The problem with undirected proxies is they led to situations where, such as in one case I had, an overbearing, some would say large and threatening president, would go around and threaten the single, elderly women to give him their proxies or he would make their life miserable, resulting in the president getting enough votes to control the association which usually meant no increase in the budget, no maintenance work done, deteriorating values, and the president staying in power for years.
To address concerns such as this, the Legislature created directed proxies in order to allow the owner to tell the proxy holder how to vote, and further added language that no person or entity, such as a board itself, could have more undirected proxies than ten percent of the total number of units in an association, limiting the power of any individual to control an association. For directed proxies there is no such cap.
Apparently, however, this dredged and undirected proxies made some association a bit confused, thinking this change in the law meant an association could only send out either a directed proxy or an undirected proxy. So this bit of legislation simply notes boards can send out either or both.
Many associations, certainly the ones I’m fortunate enough to represent, simply combined them allowing an owner to direct their proxy holder on how to vote on certain matters, such as the budget, but leaving to the proxy holder to hear discussion before voting for what the proxy holder believes best at a meeting, such as which candidates should elected to the board.
It’s a good bill, that will help clarify things, things that many are already doing, i.e. giving owners choices on how they want their votes cast.
Meetings of the Board of Directors. In 2016 the Legislature, to help prevent boards from acting in secrecy, such as signing contracts, getting loans and committing to projects without the knowledge or input of owners amended the Condominium Act to prevent board members from meeting without proper notice to all owners of the meeting with an agenda to all at least ten days in advance, so owners would know what their boards were doing and be given a chance to lend their voice.
In theory a good idea, but in practice it became difficult. Board members became scared to talk about association matters while walking to their cars for fear, which happened, of cranky, members complaining they saw board members talking and wanted to know why they weren’t notified.
And, of course, it made it difficult to deal with the number of things that came up routinely, such as responding to (sometimes near constant) emails from owners, how to review contracts such as for snow removal contractors and management companies, without creating more and more board meetings. Some boards were meeting multiple times a month, driving good people from being interested in being on a board, and longer and longer meetings
The Legislature has tried to address this by proposing an amendment that will allow board members to meet and do what information gathering and discussing they need to do, but no decision can be made outside a meeting.
A meeting of the board of directors also shall not include informational sessions held by board members to obtain and compare vendor proposals, including but not limited to, landscaping, lawn care, snow removal, septic services, well services, insurance, window cleaning, and common area maintenance; provided that the review and vote on any motions resulting from the informational session shall be conducted at the next scheduled board meeting.
This is good. It will allow boards to do their due diligence outside meetings, making it wiser to gather information and discuss, but no motion can be made or accepted outside a meeting.
There is a further tweak to this section of the Condo Act as well. As noted, the normal time frame to send out notices to all owners, with an agenda is usually ten days, true emergency meetings being excepted from any minimum time period. Another proposed amendment will lower this to five days in advance, “if at least 70% of owners are full-time residents.” I’m not sure what the driving motivation behind this is, other than to discriminate against off site owners. Either way, all still have to be sent notices.
It’s important to note that these requirement, old and new, do not apply to associations smaller than 26 units.
One other paragraph in this section has been added. Language has been added to note that these requirements of meeting out in the open, except as noted, do not apply to committees, so long as the Bylaws “do not permit the committee to expend association funds or to sign contracts on behalf of the association.” This is a really welcome addition.
I’m sure I’m not the only one, but I’ve had the case where a committee barred owners and board members form attending, levied fees on owners and signed a landscaping contract on behalf of the Association without the knowledge of the board of directors, creating chaos. This proposal may help reign in such rogue committees
The contractor will still have a case against the Association, and will likely sue, but the Association would have the right to hold the committee members who voted in favor of the contract and who signed the contract, personally liable.
Robert Ducharme
Attorney Robert E. Ducharme is a former teacher whose civil practice is limited to condominium law, primarily in Rockingham and Strafford counties. He can be reached at red@newhampshirecondolaw.com and Ducharme Law, P.L.L.C., found at www.newhampshirecondolaw.com.
