Owners may challenging a proxy form

Q. We live in an Illinois common interest association of over 100 townhouses. Each year, we hold an annual election meeting and election for the board. Procedurally, proxy forms are sent out to each owner by the association. Executed proxy forms are then mailed back to the management company or brought to the annual meeting by the proxy holder. If an owner or board member questions the validity (for example, owner signatures) of submitted proxies (particularly those brought to the meeting) can an owner contest, or request verification, of the proxies?

A. Section 1-30(i)(1)(iv) of the Common Interest Community Association Act provides that owners in a common interest community association are permitted to examine and copy proxies for the election. To exercise this right, the owner must request the records for a "proper purpose," and the request must be in writing. That's a pretty low threshold.

Similarly, the threshold for a valid proxy is pretty low. To be valid, a proxy must be signed by the unit owner (or the owner's duly authorized attorney) and bear the date of its execution. In addition, unless the declaration or bylaws or the written proxy itself provide otherwise, proxies will not be valid for more than 11 months after the date of its execution.

It would be up to an owner challenging the proxy to demonstrate how a proxy is claimed to be invalid.

Determining if a proxy is invalid on its face (e.g., the proxy is not signed or dated, or its date is stale) should be pretty simple to determine. Claims that a signature on a proxy is "forged" or that the proxy bears the name/signature of a person that is not an owner, requires greater investigation.

Note that an invalid proxy, and the related vote, should be stricken, and the votes retabulated. This may or may not result in a difference in the actual outcome of the election.

If an owner or board member contends that the board is not addressing claims of proxy invalidity, or if the "challenger" does not agree with the board's response to the claims, the challenger can file a suit. A suit would seek a judicial determination as to the validity of the proxies in question, and a retabulation of the vote to reflect any invalid proxies/votes. That said, there could be a situation where issues with proxies are so widespread that the fundamental fairness of the election is called into question. The remedy there may be to invalidate the election and to hold a new annual meeting.

There isn't a legislative limit on time allowed to challenge an election. For that reason, I am an advocate of establishing association rules that provide a time frame after an annual meeting within which an owner must challenge an election.

Q. The board of our association adopted extensive rules when I was on the board several years ago. The new president of the association has taken the position that the rules do not have to be followed exactly as written, and that they are more like suggestions and are flexible. Is that accurate?

A. That is not correct. Rules are a set of explicit standards governing conduct, and that provide for what is or is not permitted. So, "no," rules established by the board are not merely suggestions or "guidelines."

Rules need to be enforced by the board, as written. Failure to enforce the rules as written creates exposure to a breach of fiduciary duty claim, or can fuel potential defenses of an owner in an action to enforce the rules. If the board does not agree with the current rules or particular rules, the board needs to amend or eliminate the rules in question.

• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.