Every new community, whether condominium, cooperative or homeowners association, at some time in its life will go through the process of turning over control of the association from the developer to the owners. The association’s documents typically will detail when turnover must transpire. It may happen when a specified percentage of the homes are sold, after the developer/builder sells the last home, or when a specified date occurs. Some community managers and board members who have gone through this process may be reliving angst and anguish as you read this article, but I am sure for others the memory was good and filled with a sense of accomplishment.
Contrary to popular belief, the best time to start the turnover process is when the community association is first formed, before the first home is sold. The knowledgeable developers will start a file of documents that will ultimately have to be turned over to the association. In most states there are specific state statues that will define to which documents the association is entitled. Because development periods are typically several years and there are dozens of legal documents and engineering plans required, it is very common for developers to lose track of where to locate everything years down the road. If not done by the developer, the community manager (or management company) should perform this function on an ongoing basis. This ever-evolving and expanding file is truly elusive so it is important that you create a process of tracking documents and engineering plans on a monthly basis.
Too often, association boards and owners view the actual turnover process as a time to blame the developer/builder for shortcomings to the clubhouse, facilities, common area, buildings and infrastructure. The tendency is to attack the deep pockets that the boards envision can be theirs. This common attitude and approach is expected by the developer who then counters with delays, road blocks, and certainly tight pockets. Oh, and don’t forget the legal bottleneck, which is another response mechanism when a builder feels threatened.
Why not consider another approach? Begin by taking a realistic attitude as to what your rights are and what the shortcomings were in the development and building process. Although this sounds fairly simple, in fact it becomes quite complicated. Engage an engineering firm that has plenty of experience in doing turnover studies for your type of community. You should also be sure your attorney has significant experience in the same. Your Reserve Specialist® will also be an integral part of the process. This is a start in building your posse so that you may have a team approach in helping you through this process. Begin early by making sure there is frequent and open communication with your developer. The association’s engineer should meet with the developer’s engineer to gain a clear understanding of the issues. This is best accomplished without the lawyers, at least at first, to demonstrate to the developer that the board wants a transparent, amicable discussion regarding any construction or design deficiencies.
Your team, composed of an engineer, attorney, Reserve Specialist®, board member(s) and community manager, is not yet complete. In conjunction with planning for the actual turnover of homeowner control, a Long Range Planning Committee should be established. Their job of its members will be not only to look at the long term goals and objectives of the membership regarding community life in general, but will also include the turnover process. The committee may take a more global outlook and will possibly be less threatening and more realistic about the outcome. They will also relieve the other turnover team members of some of the time burden, and the Long Range Planning Committee can be used as a buffer between the board and the homeowner board members because, in most cases, the developer is still represented on the board.
The above has just scratched the surface of turning over a community association to owner control. Hopefully, it has set the tone for a more successful effort in a process that can be very complicated and contentious.
This article is provided by Associa.