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Questions & Answers by John H. Gettinger, Esq.

Question: Can unit owners call a special meeting of the unit owners to rescind the prior election of managers if they feel that the election was unfair since a group of unit owners controlled the election through the collection of proxies?

Answer:  No. Unit owners do not have the power to "rescind" the election of directors by vote of the unit owners (whether in person or by proxy) at an annual meeting at which a quorum was present. New York Corporation Law (§610) and by-laws typically permit for the appointment of inspectors of election. If unit owners feel that there may be an irregularity in the vote and/or use of proxies, he or she is entitled at the meeting to require the Board to appoint one or more inspectors of election. It is the duty of the inspectors to determine the existence of a quorum, the validity of proxies, hear and determine challenges arising in connection with the right to vote, and count and tabulate ballots. At the request of a unit owner, inspectors are also required to make a written report of any challenge, question or matter determined by them and execute a certificate of any fact determined by them. Any report shall be prima facie evidence of the facts stated and of the vote as certified by them. Failing to pursue this course of action at the meeting, unit owners cannot seek to rescind the vote later by action of the unit owners.

Moreover, there is nothing legally wrong with "proxy hoarding." New York Corporation Law (§609) and by-laws typically permit unit owners to vote in person or by proxy at a meeting. The form of proxy is liberally construed and it does not matter whether the form is a general or designated proxy. There is also nothing legally wrong with one or more unit owners actively soliciting proxies from unit owners and voting a significant block of proxies for one or more candidates. An election can be won or lost through a well fought proxy battle.

Typically by-laws permit unit owners to call a special meeting for the purpose of removing a director with or without cause. As such, as a practical matter, rather than seeking to rescind the election, unit owners can call a special meeting for the purpose of removing one or more of the directors elected at the prior annual meeting. However, this vote would not "rescind" the prior election of the directors so that the new directors would be elected by vote of the unit owners, but the remaining directors would appoint the new directors to serve in the place of the directors removed.

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