Pros and cons of proxies in association elections

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The annual meeting at a community association can be a giant headache. Some associations can't draw enough owners to vote for board members. Others have so many eager candidates that elections are contentious and sometimes challenged in court.

Blame the voting system, some industry insiders have said.

Two provisions in both the Illinois Condominium Property Act and Common Interest Community Association Act contribute to the problems.

One provision is the quorum requirement, which is the minimum percentage of owners needed to hold an annual meeting. The quorum usually is 20 percent.

The other provision, called proxy voting, allows owners to designate another person to vote on their behalf. Proxies count toward the quorum requirement.

Michael Baum, president of Baum Property Management in Aurora, proposes doing away with both.

"They fit hand in glove," he said. "Proxies exist to get quorum. People hand over their proxies so they don't have to go to meetings. If it weren't for quorum, you wouldn't need proxies."

Quorum requirements and proxies are practices that stem from corporate law, but community associations should be treated more like municipalities than corporations, he said.

"Where in the real world of any other form of government do we see proxies?" he asked.

"In a democracy like ours, the person with the most votes wins, regardless of the number of votes. We don't have a do-over in three months because there wasn't a quorum."

"Proxies can be used for good, and they can be used for evil," said association attorney David Sugar of Arnstein & Lehr LLP in Chicago.

On the negative side, proxies create the potential for fraud and abuse.

"In large condominiums that are politicized, owners are frequently harangued to sign their proxies over to a particular group," Sugar said.

"I have seen real destruction with the proxy process," Baum said. "I have seen crackpots get on the board, not because of merit, but because they collected one more proxy than someone else. Entire boards get changed on election night, and all vendors eventually get replaced."

On the positive side, proxies allow greater numbers of owners to participate, Sugar said.

"You're not going to get hundreds of unit owners to show up at a particular time on a particular night to vote at an annual meeting," he said.

Salvatore Sciacca, president of Chicago Property Services Inc. in Chicago, likes proxies for his client associations, which tend to be smaller than 100 units.

"It's tough to get a quorum," he said. "Proxies are an important way to do that. They also give people an opportunity to have their say. Even with (a discretionary proxy), it's better to have someone vote on their behalf than not at all.

"But you absolutely have to have a verification process to make sure there are no duplicates or other malfeasance," Sciacca said.

As an alternative, Illinois law allows associations to adopt mail-in ballots.

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