Improper handling of ballots and proxies can be grounds for challenging an election in a condo or co-op.

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Question:

It's been two weeks since our building's annual meeting, and we still haven't been told the results of the election. How long should it take to count the ballots and proxies? What can we do to move things forward and make sure nothing fishy is going on?

Answer:

Co-op and condo board election results are typically returned within a couple of days. “If they are delayed, it certainly could mean the board is not publishing the results for a reason and that might be because the voting didn’t go the way the board would have liked, but also because there are challenges being made,” says Steven Wagner, a partner at the Manhattan law firm Wagner, Berkow & Brandt who represents co-op and condo boards and owners. 

In many cases, the balloting in these situations is handled by an outside company with experience conducting elections for both co-ops and condos and other entities, such as unions. Shareholders or owners should be informed if there is any reason for delay. 

When there was a delay in election results recently at a co-op where Wager was the attorney for the shareholders, he wrote a strongly worded letter to the election company handling the balloting. 

“I not only demanded the results be published but that all the election materials—including ballots, proxies, sign-in sheets, and print-outs—be preserved in the event the results would be challenged,” he says. The letter was copied to the board and management.

The results were out the next day and the shareholders represented by Wagner had overwhelmingly voted out the incumbent board. “It appeared the outgoing board members were trying to hang on as long as they could,” Wagner says.

Challenging an election

If you decide to challenge the election results, you will want to put the challenge in writing. Wagner advises sending a letter challenging the election results.  

“State the grounds on which the challenge is being made,” he says. You can also raise concerns about the long delay in getting results and improper handling of ballots and proxies. 

Other grounds for challenge could be improper voiding of ballots or proxies, fraudulent proxies, the failure to ensure that the proxies are actually signed by the shareholder or owner who purportedly gave them, improper notice of the meeting, or other irregularities. 

“Ask the board, management, and the election company to preserve everything,” Wagner says.

Wagner notes that there is disagreement within the legal profession about whether those who want to challenge an election need to start a lawsuit in order to look at the voting material. Wager believes you can view it without filing a suit. “The alternative would make it very expensive to contest an election,” he says. 

If your demands are ignored, you would, however, have to go to court. Under the Business Corporation Law, there is an expedited procedure for challenging an election which would require the guidance of an attorney. 

“It is a special proceeding where you get in front of a judge quickly,” Wagner says. The pandemic has slowed court proceedings but Wagner says in spite of that, “you should still be taking the same steps.” 

Avoiding election delays

To avoid these kinds of situations and resolve delays Wagner suggests being proactive about procedural issues ahead of elections. 

This might involve countering illegal voting restrictions. For example, Wagner points out most co-op bylaws say you can attend a meeting and vote in person or by proxy. However, in one recent case, where Wagner represented the shareholders, the only restriction in the bylaws on proxies was that they were only valid for six months. 

The management and board then went beyond that restriction and said the only proxies that would be accepted were the ones prepared and circulated by the board. Wagner says “that was a major issue that needed resolving because my client had spent a good deal of time collecting proxies that I had prepared before the board started circulating theirs.” In the end the board’s attorney agreed there was no limitation on the form and accepted Wagner’s proxies. 

Other issues that come up are those concerning proxies with software-generated auto-signatures. There are provisions in the Business Corporation Law covering this but it’s an important issue because the independent inspectors of elections have limitations on checking the signatures. 

“They are not supposed to call people up to find out if they signed a proxy, but they are allowed to review documents that are already in possession of the co-op or condo,” Wagner says. Those documents can be used to match signatures with proxies. 

“That’s why it is so important to have an agreement on typewritten or Docusigned signatures because sometimes they look nothing like a person’s actual signature,” Wagner says. It’s good practice to keep a record of the emails sent from proxy giver to the proxy holder and submit it as further evidence that the proxy is valid.

Although the pandemic forced everyone to be more adept with online formats, Wagner says there are still some people who are not computer savvy and would rather vote in person. He will typically figure out an in-person element to the meeting so that those who want to can vote in person. 

If there is both a virtual meeting and an in-person component, it can be difficult to establish if there is a quorum—you will be counting attendees in two places. Wagner says to avoid quorum issues you may want to encourage everyone to submit proxies early and directly to the company doing the balloting and counting. 

If the board doesn’t have an independent balloting company handling the election you may want to establish an agreement in advance about procedures in the event of a challenge. For example, if at the meeting one side says they would like to challenge the election, the agreement might be that the election results will not be certified and the challengers will have an opportunity to look at the ballots, proxies, sign-in sheets, and any electronic material generated by a virtual meeting. 

Wagner says it’s important to put the basis for the challenge in writing within a reasonable timeframe, usually two or three business days from the election. “If there are some bonafide claims or we want the challengers to look at the ballots or proxies, we’ll ask the inspectors to hold off certifying the election until this has been concluded,” Wagner says.

Wagner has a proven track-record on helping his clients win board elections. “When I work with people on this, we win,” he says.  

New York City real estate attorney Steven Wagner is a founding partner of Wagner, Berkow, & Brandt, with more than 30 years of experience representing co-ops, condos, as well as individual owners and shareholders. To submit a question for this column, click here. To arrange a free 15-minute telephone consultation, send Steve an email or call 646-780-7272.

 

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