Share this Article

Transitional Success in a Homeowner Association

Written by on Tuesday, 26 October 1999 7:00 pm

Transition from developer to homeowner control should be a carefully planned process. The earlier owners get involved in the process, the better. Unfortunately, many developers maintain total control until the required number of sales triggers a transition meeting that is hastily conceived and executed. This approach guarantees that much of the necessary information the new homeowners need will be overlooked.

As a precaution, a pre-transition committee should be established by homeowners to get up to speed on critical components of homeowner association business. If the size and number of volunteers warrant it, the following issues can be assigned to separate committees. Otherwise, a transition committee should make sure each one is included.

Management Items to consider:

  • Review the association's governing documents.
  • Review association's files, books and records.
  • Review potential management contracts.
  • Review existing and potential service provider contracts.

Architectural & Design Items to consider. Maintaining architectural standards are critical since they directly impact market values if let slide. There is a conflict of interest between the developer and the homeowners. Developers often impose minimal architectural restrictions to encourage sales. The homeowner association's long term interests are to maintain market value of the homes. The way to do that is to formulate a comprehensive policy. Items to consider:

  • Review the governing documents relative to the authority for making rules and regulations.
  • Review the existing policies, procedures, rules and regulations established by the developer.
  • Devise new rules, regulations, standards and enforcement procedures as needed.

Finance Items to consider:

  • Review the association's reserve fund status. If inadequate or unavailable, arrange for a comprehensive reserve study and funding plan so that the association gets started off right.
  • Adopt a Collection Policy collection of assessments.
  • Retain a CPA prior to turnover to perform an audit of the books. Since it is the developer's responsibility to turn over accurate records, it is reasonable to request he pay or share this expense.

Maintenance Items to consider:

  • Review the governing documents to determine the association's maintenance responsibilities.
  • Schedule a final walkthrough inspection with the developer to establish a punchlist of repairs and corrections.
  • Obtain copies of all plats, plans and "as-built" drawings for the common area.
  • Obtain copies of all guarantees, warranties and bonds provided by the developer, the builder, subcontractors and any vendors of materials or products used in development of the project.
  • Hire a structural engineer to review the buildings, plats, plans, engineering drawings and acceptable building standards and codes.

Insurance Items to consider:

  • Review the governing documents to determine what insurance coverage is mandated.
  • Confer with several knowledgeable insurance agents about recommended coverages.
  • Once a slate of coverages is determined, solicit competitive proposals Purchase Directors & Officers Liability Insurance effective with turned over to the homeowners.

Transition success requires advance planning. There is simply too much to consider and too much at stake to treat it lightly. There are long term consequences for what, or what doesn't, take place at this pivotal point in time. Remember that the developer's interests are short term while the homeowners' interest are long term so the developer may need some prodding.

Starting early will help both parties to do the right thing. If you are pre-transition and haven't gotten the ball rolling, roll on! For a transition checklist, email This email address is being protected from spambots. You need JavaScript enabled to view it. .

For more information on this subject, see .

Rate this item
(0 votes)

  About the author, Richard Thompson

Individual news stories are based upon the opinions of the writer and does not reflect the opinion of Realty Times.