Every co-op, condo, and HOA must elect a board of directors to oversee the community’s finances, physical maintenance, and other day-to-day operations. While board elections don’t rise quite to the level of a state or even local election in terms of gravitas, an apathetic or inept board can profoundly impact the cohesion and quality of life in a given building or association— and a truly bad board can run a community into the ground. Given the high stakes, it’s crucial that board elections be carried out properly and fairly. How can board election fraud be prevented? And how it can be detected—and corrected—when it does occur?
In the News
The issue of widespread election fraud in condominiums and HOAs came to the forefront recently in Florida when it was discovered that at least 30 percent of the common interest communities in Miami-Dade County regulated by the Florida Department of Business & Professional Regulation (DBPR) were the subject of complaints or were actually being investigated for committing some kind of election fraud or administrative irregularity.
In an investigation by The Miami Herald and Univision, multiple HOAs in Florida were accused of forging ballots, casting duplicate ballots, intimidating owners to change their proxies, and attempting to cover up the voting irregularities.
Before we delve into the muddy waters of fraudulent elections, we must first understand the guiding tenets for associations and how the election process is supposed to work.
In New Jersey, condos and community associations are organized pursuant to title 15A of the New Jersey Nonprofit Corporations Act, and if you are in a co-op, your building is organized pursuant to title 14A of the New Jersey Business Corporations Act. According to a 2015 presentation entitled How to Run Effective Community Association Elections, by the Hackensack-based law firm of Kates, Nussman, Rapone, Ellis & Farhi LLP, and certified public accounting firm Wilkin & Guttenplan P.C. in East Brunswick, any rules for elections are typically found in the portions of the statutes regarding “Meetings of Members” and “Elections of Trustees.” Also, each community’s governing documents and particular bylaws will contain provisions as to how members are elected. The association has a fiduciary and operational responsibility to follow the statutory guidelines regarding elections, and secondly, the board must be careful not to exceed its authority in drafting elections rules, setting deadlines and imposing requirements that go beyond applicable state statutes or the governing docs.