Guest blog by Donie Vanitzian, JD
Owners at our homeowner association are frustrated. For three years, we’ve been trying to recall our five-director board, fire the management company and obtain a forensic audit. The board’s attorney and management either ignore our petitions or invalidate them. Directors laugh, “You wrote the petition wrong” or “We weren’t served.” Please explain how to do this properly to withstand invalidation.
A petition should be viewed as a contract between the signatories and the association. Before embarking on this endeavor, make certain you comply with applicable laws and that association governing documents do not conflict with statutory requirements. Unless your governing documents indicate otherwise, a petition to remove your present board is a “removal” not a “recall,” (according to CA Civil Code sections 5100 to 5145).
A petition to remove the board of directors should be crafted with some modicum of particularity so as to withstand the type of scrutiny you describe. Unfortunately, some attorneys feel it’s their job to help a current board stay in power and ignore or invalidate petitions without explanation. It is for that reason many petitioners take extreme precautions, such as notarizing signatures to minimize invalidation.
Some associations believe that maintaining files containing titleholder signatures creates liability by owners claiming their stored signatures were used to steal their identities. If that happens, the association will not be able to verify petition signatures and may try to invalidate them.
Other associations decide willy-nilly whether petition signatures comport with past signatures.
Having a notary confirm each signature avoids confusion or argument regarding authenticity.
A petition can be invalidated for many reasons. A seemingly minor defect, such as an incorrect heading (“recall” instead of “removal”) or a failure to include a demand for the current board to call a special meeting for election, can be fatal.
A proper petition heading correctly identifies by name each director petitioners seek to remove and demands a new election be scheduled to elect new directors. The petition needs to state that a special meeting is demanded for the purpose of holding an election.
For each signatory, the removal petition’s body should have separate lines for each of the following:
- The property titleholder’s name.
- The property address, city, state and ZIP Code.
- The property titleholder’s signature.
- Date signed.
All information must be clear and legible.
The petition may have many pages because of all the information necessary for each titleholder. Therefore, at the bottom of each petition page indicate “Page x of xx.”
Always make copies of the original petition before serving it on the board. The proper way to “serve the petition on the association” may be found in association governing documents.
Service is usually accomplished by attending a duly noticed board meeting. Wait until the meeting is called to order and convenes. Any time during that meeting or during the required “open forum” portion when owners may speak, simply place it on the table where directors are seated or hand it to them. Because that act of service occurs during a duly convened meeting it must be documented in the board minutes. It also tends to eliminate petition invalidation by improper service.
Even though Corporations Code section 7510(e) indicates 5% of owners must petition to call a special meeting (10% for stock cooperatives), it is wise to have a much larger percentage of owners sign in the event of signature invalidation or disqualification.
Once served, the board must cause notice to be given to all titleholders that a meeting will be held at a time fixed by the board not less than 35 days nor more than 90 days after it receives the petition request. If the board fails to call a special meeting within 20 days after it receives the petition, the petitioners are entitled to call the meeting, under Corporations Code section 7511.
After a new board is elected, it can move to conduct a forensic audit and terminate the management company.
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 or email@example.com.