Maine Alliance for Road Associations
In a 12 lot HOA (T13-B) with road obligations, one lot has been owned by John Doe until recently ownership changed to ABC Properties, LLC, a single member LLC registered to John Doe and who serves as clerk. With respect to voting and holding office in the HOA, how would this work? Is any proxy between John Doe resident and "John Doe - Clerk" required to vote; can an LLC be an office holder? Thank you.
How do statutory associations deal with LLC property owners regarding voting status and officer eligibility?
Keep in mind that the statute is concerned with parcels of land and the parcel owners, not residents. The statute does not address the form of ownership so voting privileges by differing forms of ownership should be part of your bylaws.
Parcels may be owned by individuals, a group of individuals, partnerships, LLC’s, trusts or corporations, etc. The procedure to call meetings is the same for each (§3101.2) “Copies of the warrant or similar written notice must be mailed…..to the owners of all the parcels benefited by the private road….. at the addresses set forth in the municipal tax records …..” Therefore, your meeting notices must be addressed to the parcel owner as the owner is listed in the municipal tax records, not to the parcel resident. So, in my opinion, you should take the position that if the municipal tax records list the LLC member on the tax records that is the individual that holds the privilege of voting.
But what if the tax records do not name an individual and only names a corporation, trust, or partnership and your bylaws are silent on the issue?
You are in luck, §3101.4 stipulates, “The call to a meeting may state that an owner may elect in writing to appoint another owner to vote in the owner's stead.” And therein lies the likely answer to your dilemma. You may stipulate in your call to a meeting exactly how you will recognize individuals eligible to vote as well as how absentee ballots and proxies are handled. For example, for an LLC you may require a letter from the managing member stating who is eligible. Corporations, trusts and partnerships can be treated in a similar manner.
You may want to seek legal counsel as to the extent of the association’s responsibility to verify statements made by owners, but I suggest keeping it simple.
Similarly, eligibility for officer positions should be clearly addressed in your bylaws and if they are not then consider amending them.
What does the T13-B mean?
The association is an HOA identified by the Secretary of State as type "nonprofit corporation (T-13-B)", operating to my naive understanding as a MUTUAL vs PUBLIC benefit corporation.
The information on proxy handling seems to address the dilemma directly. Would a fair interpretation be: The corporate (LLC) lot owner may appoint another lot owner to vote in its stead by duly issuing a written proxy? The LLC per se has no agency unless stipulated in the bylaws?
Sincere gratitude for all suggestions and insight!
My bad, Elizabeth. In my quest to keep my reply short I left a gaping hole in my explanation. I should have explained my opinion better. The LLC (a nonnatural owner) does not need to appoint a proxy and should have the same voting privilege as natural owners. My point should have been clearer that when not mentioned in the bylaws the board may use the meeting notice to inform a nonnatural owner of the credentialing requirements for casting a vote. §3101.4 concerns voting, and it mentions that one owner may appoint another owner to vote in the owner’s stead and if that is permitted it may be stated in the call to the meeting, aka warrant or meeting notice. When proxy voting is permitted it should be mentioned in the meeting notice, as should an absentee ballot, the rules pertaining to filing each as well as any identifying credentials a board may want to impose to properly identify a valid voting member. So, in the meeting notice the board may want to require the representative of a nonnatural owner to state the position he or she holds in the owning entity when using an absentee ballot or in a written proxy and this is quite common.
The procedure should not be much different for in-person voting. The board should establish a voter validation process for in person meetings. For example, a sign-in sheet with the parcel identification as shown on the town tax records, owner name as shown on the tax records and a place for the signature of the person attending and for nonnatural owners a place for the attending natural person to state the position held in the nonnatural owner (manager, trustee, officer, etc.) If the meeting and voting is electronic audio or audio/visual, the board should also have some form of owner validation process.
In lieu of changing the bylaws, the board may want to adopt a policy to guide future boards and parcel owners to prevent unnecessary misunderstandings. Something to define “parcel owner” (or whatever terminology the used in the bylaws) similar to how the Maine Condominium Act (MRS Title 33,§1601-103. Definitions) defines “person” might work: “Definition of a parcel owner: A parcel owner means a natural person, corporation, limited liability company, business trust, estate, trust, partnership, association, joint venture or other legal or commercial entity.”
As always, boards should seek competent legal counsel when faced with confusion or misunderstands in important matters.
The Maine Alliance for Road Associations