March 6th, 2009
Transitioning Condo Associations from Developer to Owner Controlled
Purchasing a new construction home in a homeowners association can be time-consuming to manage just within your own four walls. But, take the time to learn and understand what your developer should and should not be doing during the crucial homeowners association turnover period. “Turnover is a process, not an event and it can take a few months or many years” stated Shirley Feldmann, founder of Association Advocates, Inc., which specializes in consultation and project management services for homeowner associations. A unique service they offer is in critical step of when a developer turns the association over to the homeowners and their management team, either professional or self-managed.
The majority of association homeowners have not been involved in this process, unlike the developer which goes through the process on every project they build or convert, this repetitive knowledge gives the developer an edge up on naive associations. That’s why is it important to have a professional management company as your advocate to make sure the rights and obligations of all parties are taken into consideration. A pro-active stance by an association can save the time, headaches and financial resources of it’s members and management team down the road.
Although it varies by state law, associations typically must be turned over to the homeowners when around fifty-percent of the units have been closed by the developer. Some developers attempt to delay the turnover, because of inefficiencies or inadequacies of the project might be discovered by the new homeowners. Timing is crucial, you don’t want the developer to turn over the association near one hundred percent closed, before you know it, they have moved out and on to the next project. Feldmann adds:” To ensure a proper turnover, new home buyers should: Understand developer obligations, note legal time frames, determine board responsibilities and start-up protocols, review the association’s budget and make appropriate changes, decide if they want to hire a management company or self-manage, and determine when and how to hire other professionals including an attorney, engineer, and an accountant.”
While most developers are reputable, although they view each project from strictly a business perspective, while homeowners can be more emotionally involved. Approaching the turnover from a professional standpoint can eliminate stress and confusion for all parties involved. Recently I became aware of a conversion project that the developer (a first-timer) didn’t pull all the building permits, had numerous liens and building code violations against the building, this was discovered nearly two years after the first closings. These problems caused mortgage underwriters for buyers of the first resale’s to decline loaning money on the building. And, the monthly assessments more than doubled to pay the expenses of architects, engineers, and property managers to untangle this mess.
Online resource: www.AssociationAdvocatesInc.com