Can Delinquent Owners Voting Rights Be Revoked?

In an effort to encourage members to pay their dues on time, homeowners associations impose certain consequences for late or lack of payment. One of these consequences is to suspend delinquent owners voting rights. But, is that even allowed?

On the Subject of Delinquent Owners Voting Rights

Homeowners associations work in much the same way as other organizations. These associations rely on members, otherwise known as homeowners, to pay their dues and assessments. The association then uses these funds to pay for the various expenses related to managing the community. Member dues are either collected on a monthly, quarterly, or annual basis.

Before purchasing a home in an HOA, buyers are informed that they must pay dues upon joining the association and that failure to pay dues can result in penalties, both monetary and otherwise. Typically, joining an HOA is mandatory when buying a home in the community.

Member dues are important to all homeowners associations for a number of reasons. First of all, it is an HOA’s primary source of income. It is where the association obtains the funds to pay for expenses such as maintenance fees, management fees, and insurance. Secondly, a portion of dues usually goes into the association’s reserves. The reserve fund functions as a nest egg of sorts, which the HOA will use for major repairs and replacements in the future.

With insufficient funds, an HOA would fail to maintain the community. Curb appeal will drop, and property values will follow not long after. In the end, it is the homeowners who will suffer, as the value of their investment plummets.

This also creates an unfair situation for members who continue to pay their dues religiously. When the HOA has a lot of delinquent members, it will be forced to levy special assessments. Non-delinquent members will, of course, pay that amount, whereas delinquent members will likely not. In essence, non-delinquent members have no option but to cover for delinquent members or stop paying their dues as well.

Is It Legal for an HOA to Suspend Delinquent Owners Voting Rights?

For the most part, homeowners pay their dues on time and in full. But, it is also not uncommon for HOAs to have members default on their payments. There are several possible reasons why an owner might stop paying their dues. This includes financial hardships, unemployment, and a down economy. Sometimes, owners simply forget. Other times, though, owners do it as a way to rebel against the HOA.

Given how important dues are to associations, a majority of them impose penalties when owners miss the deadline. One of the most common penalties is a monetary one — i.e. late fees. For some members, a late fee is enough to scare them into settling their outstanding balance. But, late fees don’t always work, so boards need to resort to other means.

There have been many cases of delinquent owners denied voting rights in HOA communities. The question that often pops up, though, is whether or not a homeowners association even legally has the power to revoke a member’s right to vote in board elections and other community matters.

State Laws Differ

Can delinquent owners voting rights legally be revoked? It depends on the location of the homeowners association. For instance, in Connecticut, Section 47-244 (a)(19) of the Common Interest Ownership Act states that an association may not suspend an owner’s right to vote even if they are behind on dues. Meanwhile, in New Jersey, the law dictates that an association can suspend voting rights provided the governing documents reflect this ability. Since the law can vary from state to state, it is imperative that boards check with an attorney before revoking the voting rights of delinquent owners.

Governing Documents

If the law is silent or defers to the governing documents, then the next step that boards should take is to check those very documents. Most associations’ bylaws already give the board the authority to suspend delinquent owners voting rights. In such cases, boards should follow the protocols and procedures set forth in their bylaws. This includes any notice requirements if any.

Amending the Governing Documents

If state laws permit it but the governing documents don’t, a board may not have the ability to revoke a delinquent member’s voting rights. The delinquent member might contest the board’s authority on the matter and even pursue legal action (and win).

If an HOA board wishes to include the suspension of voting rights as a consequence of delinquency, then it is necessary to amend their governing documents. This will usually require the association to obtain a majority vote from the membership, though the process may differ from one HOA to another. It is best to check the governing documents for instructions on amendments as well as consult an attorney to ensure everything remains lawful.

When amending the documents to include this penalty, boards should be specific with the language they use. What voting rights will the association take away from delinquent members? Is it only the right to vote during board elections or will it also include voting on association matters? It is also a good idea to answer the following questions:

At what point in the delinquency period should an owner’s voting rights be revoked?
What are the notice requirements?
Will the association reinstate a delinquent owner’s voting rights once they settle their balance?

Other Possible Penalties for Delinquency

Aside from suspending a delinquent owner’s voting rights, many associations also impose other penalties to encourage members to pay their dues. This includes levying late fees, revoking a member’s right to use the amenities and facilities, placing a lien on the house, and foreclosing on the lien. The latter two are admittedly more severe consequences, but they do happen quite often.

Boards, though, should take a delinquent owner’s financial situation into consideration. If an owner is struggling to make ends meet, the board could offer them a payment plan to ease the burden. Of course, boards must be careful when offering payment plans, as some owners may abuse the opportunity.

A Necessary Evil

Suspending delinquent owners voting rights is completely legal in many states, though an HOA’s governing documents should often reflect it as well. Some boards may feel uncomfortable revoking a non-paying member’s ability to vote. But, in the long run, imposing such a consequence will encourage members to pay on time and prevent the association’s finances from collapsing.

Managing a homeowners association can be a challenge, especially when it comes to navigating the law. This is where Clark Simson Miller can help. Call us today at 865.315.7505 or contact us online to request a free proposal.

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