Q&A: Papa as Proxy?

Q We have a small condominium complex of 25 town houses. One home is owned by the son of the resident but the son does not live in the townhome. He has given his father a note allowing him to act on his behalf, as owner of the property. Does this allow the father to serve on committees or be elected to office? Surely, he does not have the financial concerns or common interests of an actual invested homeowner.

—Owner In Absentia

A “There are two threshold issues that need to be addressed in response to this question,” according to Wendell Smith, a partner in the Real Estate Department and a member of the Community Association Practice Group at the law firm of Greenbaum Rowe Smith & Davis LLP in Woodbridge. “First, does the note from the son to the father meet the appropriate legal requirements to constitute either a proxy or power of attorney for the father to either cast votes for the election of trustees or on association questions presented to the membership for decision? Secondly, do the governing documents permit the delegation of all membership rights of an individual unit owner by power of attorney?

“The definition of a proxy under the New Jersey Non-Profit Corporation Law (“N.J.S.A. 15A:5-18) is very broad and in essence only requires the authority to vote to be writing and it may also be given by “telegram, cable or its equivalent.” Theoretically, the governing documents of the condominium could restrict the form or scope of the proxy, but that is not the usual case. On the other hand, a power of attorney, if properly drafted, would normally delegate all of the son’s membership rights to his father, which would include the right to serve on committees and on the board subject to any restrictions or prohibitions in the association’s governing documents.

“The foregoing delegation is consistent with the right of corporations, fiduciaries, partnerships and other legal entities to designate an individual to represent them in all association matters. The association’s bylaws should be examined to determine whether or not they address the assignment of an individual’s membership rights by power of attorney. If not, it would be good practice for the association to amend its bylaws to permit such practice. Such provisions are increasingly common in state-of-the-art bylaws, especially in the case of resident sponsors or other family members.

“Finally, in response to the concern expressed about a non-owner not having the same financial concerns or common interests of an owner, I would point out that it is common for condominium association bylaws to permit tenants to be associate members of a condominium association but with an express provision that they cannot have any rights to vote, presumably because of these same concerns. However, it is my view that if a tenant were given a proxy or a power of attorney by the unit owner, such a bylaw provision would be preempted and the provisions of the proxy or power of attorney would govern.”

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