Proxy

Definition

A proxy is a person who has been legally designated or authorized to act on behalf of another person, often in voting or attending meetings. In real estate and other industries, it commonly pertains to shareholders, board meetings, and voting processes. A proxy not only refers to the individual standing in for someone else but also the document granting them this authority.

Examples

Example 1: Shareholder Meeting

John is a shareholder in a real estate investment trust (REIT). As he is unable to attend the annual general meeting, he appoints Lisa as his proxy to vote on his behalf. Lisa is provided with a proxy document that authorizes her to make decisions for John during the meeting.

Example 2: Homeowners Association

Sarah lives in a condominium complex with a Homeowners Association (HOA). Unavailable for the next meeting, Sarah appoints her neighbor, Greg, as her proxy. Greg legally represents Sarah, discussing and voting on issues such as maintenance or new rules.

Example 3: Co-op Board Meeting

Abel, who owns a unit in a cooperative apartment, cannot attend the annual meeting due to travel. He sends a proxy document to the board, allowing another resident or a board member to cast his vote.

Frequently Asked Questions (FAQs)

Q1: How do you appoint a proxy? A: You appoint a proxy by completing and signing a proxy form, which specifies the person’s name and the scope of the authority granted.

Q2: Is a proxy legally binding? A: Yes, a proxy is a legally binding document that grants authority to someone else to act within the stipulated limitations.

Q3: Can a proxy be revoked? A: Yes, you can revoke a proxy at any time by providing written notice to the relevant parties, or by showing up in person and revoking the proxy at the meeting.

Q4: Are there limitations to what a proxy can do? A: The proxy’s powers are typically confined to the actions outlined in the proxy document, such as voting on specific issues or representing at a meeting.

Q5: Is the proxy responsible for decisions made on behalf of someone else? A: Yes, proxies are expected to act in the best interest of the person they represent based on the granted authority. Misconduct or an egregious deviation from the given authority might lead to legal consequences.

Power of Attorney: A legal document that grants one person the ability to act on another’s behalf in legal or financial matters.
Designated Agency: In real estate, this term refers to a situation where an agent or agency is designated to represent one party in a transaction, ensuring no conflict of interest.
Dual Agency: Represents the concept where a single realtor or real estate agent represents both the buyer and seller in a transaction, with the appropriate consents.
Voting Trust: An agreement where a shareholder’s voting rights are transferred to a trustee to vote on their behalf in corporate matters.
Representative: A person authorized to act on behalf of another in various capacities like business, governance, or personal matters.

Online Resources

Investopedia - Proxy: Detailed explanation of proxies in the financial and investment context.
IRS: Powers of Attorney and Other Authorizations: Information on IRS protocols for powers of attorney.
Nolo - Your Guide to Power of Attorney: Comprehensive guide to understanding and utilizing powers of attorney.

References

“Real Estate Law,” by Marianne M. Jennings
“Understanding Business Law,” by Graeme W. Austin, Larry A. DiMatteo, Lesicar Couzens, John Cameron
“Corporate Governance and Group Dynamics,” by Lawrence E. Mitchell

Suggested Books for Further Studies

“Real Estate Law” by Robert J. Aalberts: A thorough overview of laws affecting real estate with practical applications.
“Modern Real Estate Practice” by Fillmore Galaty, Wellington Allaway and Robert Kyle: A foundational book for anyone interested in a real estate career.
“Principles of Corporate Governance” by Various Authors: In-depth discussion on the principles guiding corporate governances and the role of proxies.

Proxy in Real Estate Quiz

### What is the primary role of a proxy in a real estate context? - [x] To represent another individual at a meeting or in voting situations - [ ] To manage property rentals - [ ] To prepare legal real estate documents - [ ] To act as a sales agent > **Explanation:** A proxy's main role is to represent another individual at a meeting or in voting situations, thereby allowing decisions to be made even in the person’s absence. ### Can a proxy make decisions beyond those specified in the proxy document? - [ ] Yes, they have complete freedom to decide on any matter. - [ ] No, they cannot make any decisions. - [x] No, they are limited to the authority given in the proxy document. - [ ] Yes, but only if approved by other members at the meeting. > **Explanation:** Proxies are limited to acting within the boundaries prescribed in the proxy document and cannot exceed their authorized actions. ### How can you revoke a proxy? - [x] By providing written notice to relevant parties - [ ] By verbally informing the meeting chair - [ ] By notifying other proxies present - [ ] Evaluation by a legal team is required > **Explanation:** A proxy can be revoked by providing written notice to the party or parties involved or by the principal attending the meeting in person and revoking it there. ### Are proxies legally recognized in real estate meetings? - [x] Yes, they are legally recognized when properly documented. - [ ] No, they are informal representatives. - [ ] Only in corporate settings - [ ] Only for residents of certain states > **Explanation:** Proxies are legally recognized representatives in real estate meetings when proper documentation and protocols are followed, such as providing a signed proxy form. ### Who can act as a proxy for a shareholder in an annual shareholder's meeting? - [ ] Only corporate officers - [ ] Only other shareholders - [ ] A hired professional representative - [x] Any individual authorized by the shareholder > **Explanation:** Any individual authorized by the shareholder through a proxy document can act as a proxy at the meeting. ### What terminology best describes the document authorizing someone else to act on another person's behalf? - [ ] Affidavit - [ ] Contract - [x] Proxy document - [ ] Lease agreement > **Explanation:** The document authorizing someone else to act on another person's behalf in specific matters is called a proxy document. ### Can a proxy vote on all matters? - [ ] Yes, they can vote on anything. - [ ] No, they can only vote based on prior majority decisions. - [x] Only if authorized by the specific outline in their proxy document. - [ ] Only if they've attended pre-meetings. > **Explanation:** A proxy can vote only on the matters where they have been given authority as specified in the proxy document. ### What is one of the critical features of a proxy's responsibilities? - [ ] Managing all financial transactions - [ ] Leasing property on behalf of the principal - [x] Acting in the best interest of the person they represent - [ ] Registering property deeds > **Explanation:** One of the critical features of a proxy’s responsibilities is acting in the best interest of the person who appointed them. ### Who typically benefits from appointing a proxy in a homeowners' association (HOA) meeting? - [x] The homeowners who cannot attend the meeting - [ ] Only the board members - [ ] General contractors - [ ] Local realtors > **Explanation:** Homeowners who cannot attend HOA meetings appoint proxies to ensure their voice and vote can still be counted during the meeting. ### What main aspect makes a proxy legally valid? - [ ] Contains a notary stamp - [x] Signed by the person granting the authority - [ ] Witnessed by three persons - [ ] Recorded in a public registry > **Explanation:** For a proxy to be legally valid, it must be signed by the person who is granting the authority through the proxy document.