Without proxies given to the board, many association meetings may not have quorum if these options are removed. The larger management companies report a majority of associations that met in the first two months of this year that had a quorum prior to the meeting would not have had a quorum if there were no board majority/equal proxies turned in.

No quorum means no meeting. No meeting means no election. No meeting means board members will continue to serve until the next annual meeting. No meeting means a tax resolution cannot be adopted.

This resolution provides that any excess of membership income over membership expenses for the for the tax year shall be applied against the subsequent tax year member assessments as provided by IRS Revenue Ruling 70-604. If the resolution is not adopted, associations may be required to pay tax on income that would not otherwise be taxable.

Condos are peoples homes. In many instances this is their largest investment. Senate Bill 2404 will eliminate an owner’s choice to select board majority on a proxy. House Bill 2067 will eliminate an owner’s choice to select board majority/board equal on a proxy and require that all standard proxy forms include a “disclosure statement informing unit owners that an association may conduct direct elections by electronic, machine, or mail voting.”

A statement of this nature should not be made mandatory on all standard proxy forms because it is confusing and misleading. It implies that owners may vote in all elections by electronic, machine, or mail voting, when the fact is that electronic, machine, and mail voting may be utilized only under the circumstances described in HRS Section 514B-121(e).

Both bills must be defeated.

Owners express confidence in their board by exercising their choice for board majority or board equal.

Often they do not know the names of the board members or their neighbors. Often they do not know who will be attending the meeting.

Quorum Problems

There are almost 400 units in my building. Seventy or so owners, less than 20% of the membership, attended the 2023 annual meeting. Without the proxy options, we would not have had quorum.

At my association’s annual meeting owners have suggested amendments to the governing documents. Two recent amendments banning smoking on the property and regarding responsibility for repairing and replacing the window walls (glass and frames) were the result of owner concerns at annual meetings.

The latter received the requisite approval of 67% of owners in less than eight weeks. Had their been no quorum there would not have been a meeting nor discussions leading to these provisions.

My association does an independent reserve study every three years, as required by state law. This results in adequate portions of maintenance fees dedicated to reserves, obviating the need for large financial assessments that would place a burden on the owners, especially seniors and others on fixed incomes.

This year approximately 45% of our maintenance fees are dedicated to reserves and the balance to operating expenses. If other associations are not following the law and keeping reserves at low levels it is because of pressure from the homeowners, who do not want to pay more in maintenance fees.

The many associations with hundreds of thousands of owners who are following the law should not be penalized by the actions of the few.

The passage of these two bills will put all associations in a precarious position. They must be defeated.