HF 4723

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/07/2024 02:43pm

A bill for an act
relating to common interest communities; governing the right of unit owners to
speak at board meetings and proxy voting; amending Minnesota Statutes 2022,
sections 515B.3-103; 515B.3-110.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2022, section 515B.3-103, is amended to read:

515B.3-103 BOARD OF DIRECTORS deleted text begin , deleted text end new text begin ; new text end OFFICERS AND DECLARANT
CONTROL.

(a) An association shall be governed by a board of directors whose appointment or
election shall occur no later than the date of creation of the common interest community
and shall be reflected in the association's records. Except as expressly prohibited by the
declaration, the articles of incorporation, bylaws, subsection (b), or other provisions of this
chapter, the board may act in all instances on behalf of the association. In the performance
of their duties, the officers and directors are required to exercise (i) if appointed by the
declarant, the care required of fiduciaries of the unit owners and (ii) if elected by the unit
owners, the care required of a director by section 302A.251, 308B.455, or 317A.251, as
applicable. The officers and directors appointed by the declarant shall have a duty to fulfill,
and to cause the association to fulfill, their respective obligations under the declaration,
bylaws, articles of incorporation, and this chapter and to enforce the provisions of the
declaration, bylaws, articles of incorporation, and this chapter against all unit owners,
including the declarant and its affiliates, in a uniform and fair manner. The standards of
conduct for officers and directors set forth in this subsection shall also apply to the officers
and directors of master associations in the exercise of their duties on behalf of the master
association.

(b) The board may not act unilaterally to amend the declaration, to terminate the common
interest community, to elect directors to the board, or to determine the qualifications, powers
and duties, or terms of office of directors, but the board may fill vacancies in its membership
created other than by removal by the vote of the association members for the unexpired
portion of any term.

(c) The declaration may provide for a period of declarant control of the association,
during which a declarant, or persons designated by the declarant, may appoint and remove
the officers and directors of the association. The period of declarant control begins on the
date of creation of the common interest community and terminates upon the earliest of the
following events: (i) five years after the date of the first conveyance of a unit to a unit owner
other than a declarant in the case of a flexible common interest community or three years
in the case of any other common interest community, (ii) the declarant's voluntary surrender
of control by giving written notice to the unit owners pursuant to section 515B.1-115, or
(iii) the conveyance of 75 percent of the units to unit owners other than a declarant.

(d) The board shall cause a meeting of the unit owners to be called, as follows:

(1) If the period of declarant control has terminated pursuant to subsection (c), a meeting
of the unit owners shall be called and held within 60 days after said termination, at which
the board shall be appointed or elected by all unit owners, including declarant, subject to
the requirements of subsection (e).

(2) If 50 percent of the units that a declarant is authorized by the declaration to create
have been conveyed prior to the termination of the declarant control period, a meeting of
the unit owners shall be called and held within 60 days thereafter, at which not less than
33-1/3 percent of the members of the board shall be elected by unit owners other than a
declarant or an affiliate of a declarant.

(3) If the board fails or refuses to cause a meeting of the unit owners required to be called
pursuant to subsection (d), then the unit owners other than a declarant and its affiliates may
cause the meeting to be called pursuant to the applicable provisions of the law under which
the association was created. The declarant and its affiliates shall be deemed to be present
at the meeting for purposes of establishing a quorum regardless of their failure to attend the
meeting.

(e) Following the termination of any period of declarant control, the unit owners shall
appoint or elect the board. All unit owners, including the declarant and its affiliates, may
cast the votes allocated to any units owned by them. The board shall thereafter be subject
to the following:

(1) Unless otherwise approved by a vote of unit owners other than the declarant or an
affiliate of the declarant, a majority of the directors shall be unit owners or a natural person
designated by a unit owner that is not a natural person, other than a declarant or an affiliate
of a declarant. The remaining directors need not be unit owners unless required by the
articles of incorporation or bylaws.

(2) Subject to the requirements of subsection (e)(1), the articles of incorporation or
bylaws may authorize the declarant or a person designated by the declarant to appoint one
director, who need not be a member. The articles of incorporation or bylaws shall not be
amended to change or terminate the authorization to appoint one director without the written
consent of the declarant or other person possessing the power to appoint.

(3) Subject to the requirements of subsection (e)(1), the articles of incorporation or
bylaws may authorize special classes of directors and director voting rights, as follows: (i)
classes of directors, (ii) the appointment or election of directors in certain classes by certain
classes of members, or (iii) class voting by classes of directors on issues affecting only a
certain class or classes of members, units, or other parcels of real estate, or to otherwise
protect the legitimate interest of such class or classes. No person may utilize such special
classes or class voting for the purpose of evading any limitation imposed on declarants by
this chapter.

(4) The board shall elect the officers. The directors and officers shall take office upon
election.

(f) In determining whether the period of declarant control has terminated under subsection
(c), or whether unit owners other than a declarant are entitled to elect members of the board
of directors under subsection (d), the percentage of the units conveyed shall be calculated
using as a numerator the number of units conveyed and as a denominator the number of
units subject to the declaration plus the number of units which the declarant is authorized
by the declaration to create on any additional real estate. The percentages referred to in
subsections (c) and (d) shall be calculated without reference to units that are auxiliary to
other units, such as garage units or storage units. A person shall not use a master association
or other device to evade the requirements of this section.

(g) Except as otherwise provided in this subsection, meetings of the board of directors
must be open to the unit owners. To the extent practicable, the board shall give reasonable
notice to the unit owners of the date, time, and place of a board meeting. If the date, time,
and place of meetings are provided for in the declaration, articles, or bylaws, announced at
a previous meeting of the board, posted in a location accessible to the unit owners and
designated by the board from time to time, or if an emergency requires immediate
consideration of a matter by the board, notice is not required. "Notice" has the meaning
given in section 317A.011, subdivision 14. new text begin A unit owner or a person designated in writing
by a unit owner as the unit owner's representative must be permitted to attend and speak
during a meeting. The unit owner or representative must be allowed to speak at a time
designated by the board on any subject that is on the meeting agenda before the board takes
action on the agenda item. The unit owner or representative must be allowed to speak on
any subject not on the meeting agenda that is related to the common interest ownership
community at a time designated by the board. The board may place a reasonable limit on
the time a unit owner or representative is allowed to speak on any one subject. new text end Meetings
may be closed to discuss the following:

(1) personnel matters;

(2) pending or potential litigation, arbitration or other potentially adversarial proceedings,
between unit owners, between the board or association and unit owners, or other matters in
which any unit owner may have an adversarial interest, if the board determines that closing
the meeting is necessary to discuss strategy or to otherwise protect the position of the board
or association or the privacy of a unit owner or occupant of a unit; or

(3) criminal activity arising within the common interest community if the board
determines that closing the meeting is necessary to protect the privacy of the victim or that
opening the meeting would jeopardize investigation of the activity.

Nothing in this subsection imposes a duty on the board to provide special facilities for
meetings. The failure to give notice as required by this subsection shall not invalidate the
board meeting or any action taken at the meeting. The minutes of any part of a meeting that
is closed under this subsection may be kept confidential at the discretion of the board.

Sec. 2.

Minnesota Statutes 2022, section 515B.3-110, is amended to read:

515B.3-110 VOTING; PROXIES.

(a) At any meeting of the association an owner or the holder of the owner's proxy shall
be entitled to cast the vote which is allocated to the unit. If there is more than one owner of
a unit, only one of the owners may cast the vote. If the owners of a unit fail to agree and
notify the association as to who shall cast the vote, the vote shall not be cast. Any provision
in the articles of incorporation, bylaws, declaration, or other document restricting a unit
owner's right to vote, or affecting quorum requirements, by reason of nonpayment of
assessments, or a purported violation of any provision of the documents governing the
common interest community, shall be void.

(b) If permitted by the articles or bylaws, votes allocated to a unit may be cast pursuant
to a proxy executed by the unit owner entitled to cast the vote for that unit. The board may
specify the form of proxy and proxy rules, consistent with law.

(c) If authorized by the statute under which the association is created, and to the extent
not limited or prohibited by the articles of incorporation, bylaws, or declaration, the vote
on any issue or issues may be taken by electronic means or by mailed ballots, in compliance
with the applicable statute, in lieu of holding a meeting of the unit owners. Such a vote shall
have the force and effect of a vote taken at a meeting; provided, that the total votes cast are
at least equal to the votes required for a quorum. The board shall set a voting period within
which the ballots or other voting response must be received by the association, which period
shall be not less than 15 nor more than 45 days after the date of delivery of the notice of
the vote and voting procedures to the unit owners. The board of directors shall provide
notice of the results of the vote to the unit owners within 30 days after the expiration of the
voting period. All requirements in this chapter, the declaration or the bylaws for a meeting
of the unit owners, or being present in person, shall be deemed satisfied by a vote taken in
compliance with the requirements of this section. The voting procedures authorized by this
section shall not be used in combination with a vote taken at a meeting of the unit owners.
However, voting by electronic means and mailed ballot may be combined if each is done
in compliance with the applicable statute.

(d) The articles of incorporation or bylaws may authorize class voting by unit owners
for directors or on specified issues affecting the class. Class voting may only be used to
address operational, physical, or administrative differences within the common interest
community. A declarant shall not use class voting to evade any limit imposed on declarants
by this chapter and units shall not constitute a class because they are owned by a declarant.

(e) The declaration or bylaws may provide that votes on specified matters affecting the
common interest community be cast by lessees or secured parties rather than unit owners;
provided that (i) the provisions of subsections (a), (b), and (c) apply to those persons as if
they were unit owners; (ii) unit owners who have so delegated their votes to other persons
may not cast votes on those specified matters; (iii) lessees or secured parties are entitled to
notice of meetings, access to records, and other rights respecting those matters as if they
were unit owners, and (iv) the lessee or secured party has filed satisfactory evidence of its
interest with the secretary of the association prior to the meeting. Unit owners must also be
given notice, in the manner provided in section 515B.3-108(b), of meetings at which lessees
or secured parties are entitled to vote.

(f) No votes allocated to a unit owned by the association may be cast nor counted toward
a quorum.

new text begin (g) Notwithstanding any other provision in this chapter, a vote cast by a board member
on any matter requiring a vote of the board must be cast in person or by absentee ballot,
and must not be cast by proxy.
new text end