In the Beginning... The land was void and lacking development. The developer said, "I shall fill the land with many dwellings and they shall be called condos, townhouses and planned communities. I shall profitably populate the dwellings with numerous homeowners. When my work is complete, they shall govern themselves in an honorable and forthright manner. And it will be good..."

With current lifestyles, it's clear that homeowner associations will be a growing segment of the housing market. While the objective of every developer is to fill projects with happy owners, this often does not happen. The primary reason is not the quality of the construction...but the quality of the association governing system.

Self governance is complex and assuming that owners will naturally succeed goes contrary to the evidence. Even ordered things break down and chaos will not result in order. Those developers that plant a poor governing structure will harvest unhappy owners looking for relief from the developer. Fortunately, there is a better way.

Homeowner association developments, whether new construction or apartment conversions go through three phases: the interim phase, the transfer phase and the ongoing governance phase. The most critical of these is the interim phase as it sets the tone for the future.

The interim phase covers the time when owners occupy a development while still under control of the developer. There is a board of directors that rules, however, it is made up of the developer's representatives so owners have little or no real power. There can be clashes because the developer, whose interests are short term, makes decisions that impact the owners, whose interests are long term. Developers have a variety of control styles. One may be an autocrat, calling all the shots and failing to organize the owners. Another, where sales are brisk, exercises minimal authority and turns control over to the owners prematurely, leaving inexperienced owners to fend for themselves.

The wise developer integrates interested owners early on.. Temporary or "ad hoc" committees working with a knowledgeable developer or management agent become educated on procedures. This participation prepares those that are interested for roles on the board. The committees also make valuable budgetary, construction, landscaping and policy recommendations to the developer that will be in both parties' best interests. The committees also serve as buffers between the developer and owners answering owner questions that don't require a developer response.

One developer vs. owner issue that is particularly sensitive involves budget and reserve funding. The developer's short term interests to minimize personal costs and keep monthly fees low to promote sales may set up the future association for budgetary shortfalls and special assessments. This stumbling block can come back to haunt the developer. If the buildings and common elements are inadequately maintained due to inadequate funding, the deterioration may be construed a construction defect and the developer's fault. If, on the other hand, the developer initially establishes reasonable budgets and reserves, the new association will be more proactive in maintaining the property. This is obviously in the developer's best interest.

Another interim phase concept that can be developed is a transition board of directors. In this scenario, the developer appoints several owners to the developer board while still controlling the majority. This allows key owners to become educated as to board procedures and give other owners a more vocal position with the developer.

In the beginning...take the time to build a firm and lasting foundation by uniting the developer and new homeowners as allies. The wise homeowner association developer knows that the governing structure should be as sound as the building structure. This is a firm foundation that will stand.

For more information on this subject, see www.Regenesis.net.

Published: April 28, 1999

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Editor's Note: This article reflects the opinions of Richard Thompson only and not necessarily the views of this or any other publication, organization or Website owner.

Richard Thompson owns Regenesis, a management consulting company that specializes in condominium and homeowner associations. He is a nationally recognized expert on HOA management issues. Regenesis publishes The Regenesis Report, a monthly newsletter for HOA boards, developers and managers. To subscribe, go to Regenesis.net. He can be contacted by email at .