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Condo Associations Need Smooth Transitions From Developers

Posted on Fri, Jan 30, 2009 @ 07:18 PM

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.



I own a unit in a 62 unit complex. Developer sold 30 units to original owners, then fell upon "hard times. The developer sold the remaining 30 units to a group of individual investors, yet remains in complete control of their voting rights. Currently has 2 spots of the five seats on the board & is attempting for a third. This will give control of HOA voting rights and control of the board. Does anyone know if this is legal? Complex is in California.

posted @ Thursday, August 20, 2009 8:49 PM by Kitty

We are in the same boat.. Their is a black out to financial access , no board meetings, they have complete control. Now they are saying they are wanting to transfer control over to the the owners now. We have no idea what awaits us. Do we see a lawyer before the turnover or after the turnover. What is the best option? I believe we should speak with one before the turnover, the other members think we should just get the board in our hands and see what we are dealing with. I think that can be the major problem. Once they turn it over to us I think we are then stuck with what they turnover to us, I believe we should have a transition study, They are not providing one. Any ideas? Thanks! 

posted @ Monday, September 14, 2009 12:06 AM by TL

Same situation, 28 unit housing project, only 10 were sold. The developer decided to rent the rest out and has taken control of the board. Our HOA Ross Morgan is now his property manager as well as our HOA firm, conflict of interest? Anyway, we just heard that the developer hasn't paid his HOA feels on the remaining 18 homes and now has borrowed from our reserves to pay his past due HOA fees! Is this legal? We can't change the CC and Rs becuase the developer controls the board, the budget, the HOA company, etc. Does anyone know what we can do with developer turned slum lord?? Please help.

posted @ Tuesday, September 15, 2009 2:00 PM by Polk Village Idiot Sylmar

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