Preparing Your Community for Success: Transitioning From Developer to Homeowner Control

Crishana is the general manager of The Adagio Condominium located in Bethesda, MD. An active member of the chapter since 2002, she’s a passionate advocate for the community association industry and believes in the power of volunteerism and paying it forward. Her commitment and enthusiasm have allowed her to be recognized as a Rising Star, Committee Chair of the Year, Volunteer of the Year and to receive the Chapter Appreciation Award. A natural mentor, she strives to influence everyone in her sphere to be better, every day. She truly believes that the chapter represents the best and brightest in the industry. An avid runner, she spends many early mornings preparing for her next big race.

Transitioning from declarant/developer control to homeowner control is one of the most important phases in the development of a community association and yet, many communities enter this phase without the proper guidance and expertise to navigate this challenging phase. It is more than a punch list of outstanding items due before bond release. It is the foundation by which the future operations of the association are built and its imperative that associations use every tool at its disposal to ensure a smooth transition process.

First, it would be remiss from the start it was not mentioned that the declarant/developer is a valuable component of the transition for the association.

The relationship between the declarant/developer and the association is critical to the success of any transition. Your relationship should be one of cooperation and not an Us vs Them relationship.

Cooperation with the declarant/developer should not be construed as a form of collusion, where the interests of the ownership are not represented by the board of directors. Neither should it be a means by which the declarant/developer to perpetuate their policies. Rather, it should be a mutually beneficial relationship where both parties are able to achieve its goals.

Secondly, the association should not partner with its management company to act as liaison between the developer and the residents. The management company should be expected to represent the interests of the residents and to act as a conduit of information between parties and coordinate transition activities accordingly.

Now that we’ve established how important this transition phase is to the success of your community, who are the experts that should be utilized during this phase. While the experts used will vary depending on whether your community is a cooperative, a condominium building (garden, low-rise, high-rise) or a homeowner’s association

Attorney

The Association’s attorney is a critical part of the transition team. As part of the review of the documentation provided from the declarant/ developer’s governing board, they can ensure that you have the essential documentation for the association and help locate any documentation that may be held in public record should the developer not turn it over accordingly. Specifically, this information would include:

• The recorded Declaration (original or certified copy).

• The developer’s Articles of Incorporation

• Owner and mortgagee listing with contact information

• Bylaws

• Rules and regulations

• Meeting minutes • Insurance policies

• Manufacturers, contractors, subcontractors, and suppliers warranties

• Copies of service agreements and employment records (if any).

Additionally, in the event of manufacturer or building defect claims, the Association’s attorney will be instrumental in advocating and negotiating terms for settlements and other agreements on behalf of the association, ensuring that the homeowner controlled protects the interests of the community and its members.

Auditor

The primary function of this expert is to determine the financial health of the association and make recommendations to the board to ensure its health going forward. An audit of the association’s financial position at transition is crucial to determining whether the association is financially stable, and its reserves are well funded. Additionally, a review of the budget will indicate whether it is set properly to pay the operating expenses for the association, without risk of large deficits or surpluses at the end of the association’s fiscal year.

Engineers – Electrical, Mechanical, Structural

The infrastructure of the community and its various systems need to be properly maintained and preserved. These systems, electrical, mechanical and structural are complex and need the expertise of engineers for each discipline to carefully inspect each system and report any deficiencies that would need correction prior to transition to homeowner control.

Additionally, these experts would be able to determine whether these systems are capable of certain modifications later to accommodate the needs of the community as they change. For example, with the increased availability and use of electric vehicles, owners are asking whether a condominium association’s electrical systems can handle the increased electrical load. An electrical engineer can help prepare an association at transition to better prepare for these kinds of requests.

Fire Protection/Safety Systems Analyst

Dry sprinkler systems, wet sprinkler systems, fire suppression systems, oh my! Most boards, declarant or homeowner controlled, do not have fire system safety systems backgrounds and as these systems help protect life and property within a building, it is imperative that these systems are installed properly and tested prior to transition. A faulty sprinkler system can cause extensive damage to a property. All the better to assured that its operating properly.

Insurance Agent

The association’s insurance agent should review the current policies to ensure the community is properly covered. A risk audit and site visit by the agent can also identify areas within the community that expose the association to risk and have those areas addressed prior to transition.

Landscaper/Certified Arborist

For those properties that have substantial common areas, your landscaping company and a certified arborist are valuable as they can examine the types of plants, trees, flowers and other vegetation on your property to determine whether these items were planted in accordance with a master landscape plan (if applicable). They can also confirm that the landscaping allocated for planting was planted and not missed. Additionally, they can identify plants that are not ideal for a particular climate and make recommendations for more appropriate alternatives.

Pool Company

Ahh, the pool, the one amenity in a community that’s typically only available for a limited amount of time every year but in the eyes of your residents, it is the crown jewel of your amenities. Delays in pool openings as a result of transition issues are never welcome. Your pool company can help identify problems that are outside of normal maintenance issues. Take advantage of this expertise and have your pool company perform a comprehensive inspection. Their business is pools and they can readily identify issues that may pose big problems for the association later.

The Forgotten “Advisor”

It is important not to forget an advisor that has real life, real world experience living in your communities and that advisor is your residents. It is helpful to form a residential advisory committee to provide feedback to the declarant/developer board and communicate issues that directly affect residents that may have been overlooked in transition process. While this committee cannot override decisions of the declarant/developer board, it can provide another layer of oversight that is very useful.