Condo Associations Need Smooth Transitions From Developers

Stephen Marcus on Fri, Jan 30, 2009 @ 08:18 PM

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A common interest ownership community (Condo Associations or HOAs) goes through a formative period comparable to a child’s early years. And for a newly minted homeowner association, it is the transition from developer to condo board and condo owner control that plays the pivotal role, shaping the condo associations future development and largely determining its chances for success. What happens before, during and after the developer transition will determine whether a fledgling condo association gets off on the right foot on the path to self-governance or stumbles out of the starting gate and then struggles, perhaps for years, to find its footing and regain its balance. The developer transition, in short, can make a new condo association or break it. The time for owners to begin thinking about the transition and preparing for it is long before it occurs.

The foundation for a smooth developer transition actually should begin, although it doesn’t always, with the property developer. The property developer initially owns all the condo units and so appoints and controls the condo association’s first condo board. State law and the condo associations governing condo documents will define the point at which the developer must turn over control to a condo board elected entirely by the condo owners. These requirements differ, but, property developers typically must begin appointing condo owners to the condo board when a specified percentage of the condo units have been sold, adding more owners progressively as more condo units are sold, and completing the transition to an owner-elected condo association board within a specified period after the condo association is created or after a designated percentage of the units have been sold.

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