Your board of directors is conducting a regular board meeting when a disgruntled owner hands over a petition to the board. Now what? Is it valid? Do you have to hold an election or meeting? If so, by when? Where do you go from here? These are just some of the questions you might have when receiving a petition, and there are many others to consider. Membership petitions are becoming increasingly common for associations, and the relevant statutory authorities do not provide the clearest picture of how associations should handle them. Many owners believe they can demand anything they want through a petition, which is simply not the case.
Petitions are primarily governed by the California Corporations Code. Section 7510(e) of the Corporations Code states that 5% or more of the owners of a corporation can submit a petition for a special meeting of the members for any lawful purpose. Section 7511(e) of the Corporations Code states that the petition must be in writing and submitted to the board chair, president, vicepresident, or secretary. When receiving a petition, there are a few threshold issues to confirm. First, is the petition signed by 5% or more of the owners?
Related to this, do the signatures on the petition belong to actual owners? If 5% or more of the owners have not signed a petition, you can stop there because the petition is invalid. Of course, sometimes this is difficult to tell. When reviewing a petition, confirm that the signatories are record owners on title (i.e., the owners listed on the unit grant deed). Sometimes you will see multiple persons signing from one unit, which is only permissible if all such persons are actual owners. If not, only the owner(s) listed on the grant deed should be counted. Tenants and non-owner family members also do not count toward the 5% requirement.