Owners in a homeowner association are allowed to give a proxy for an owners meeting to someone else to vote on their behalf. Members of a board of directors sometimes try to provide a proxy to another to appear and vote for them at a board meeting. The concept of a board member proxy raises a number of issues. First, may a board member give a proxy to someone to vote in his place? Second, if a board member does give a proxy, what are the possible ramifications and liabilities? Third, if a board member cannot give a proxy, may he give a power of attorney instead?

There is no specific homeowner association law precluding a board member from granting a proxy to a third party. However, it is basic corporate law that a board member cannot give his proxy to someone else due to increased liabilities and personal responsibility.

The protections afforded directors of volunteer corporations are based on those directors acting in good faith and relying on professional advice related to the issues concerned. If a director transferred this responsibility, he would be abrogating his fiduciary duties and be in breach of the spirit and the letter of the law.

Also importantly, many Directors and Officers insurance policies only cover the acts or omissions of board members acting in good faith and elected or appointed properly. One can only assume that the insurance companies would deny coverage for decisions made by a proxy holder and thereby expose the board member to substantial liability. And there are cases where members appointed to the board to fill vacancies are not covered under certain insurance policies which have language in them which limits the coverage to "properly elected" directors. Those insurance companies would likely decline coverage to members of the board and their proxy holders.

And there is no reason to believe that a power of attorney provides any more protection than a proxy. It is still likely a breach of fiduciary duty since the board member has not appeared and voted himself. Similarly, all of the issues regarding limited liability provided by the law and the insurance policies remain, even with the use of a power of attorney.

For these reasons, members of board should not provide proxies or powers of attorney to third parties to appear in their place at board meetings. Additionally, if a board member attempts to do so, the remaining directors should not accept the proxy holder. If there is not a quorum to proceed with the meeting without the proxy holder, the meeting should be adjourned until such time as a quorum can be present.

This article contains excerpts from an article by Michael T. Schulman, Esq. For more innovative homeowner association management strategies, see Regenesis.net.