The turnover or transition of a new homeowner association from developer control to homeowner control is a critical point in time. It is essential to cross every "t" and dot every "i". Here are some helpful tips for both the developer and the new homeowner board of directors:

Before Turnover

A developer controlled board of directors has the same duties and requirements as a homeowner controlled board. While the developer is still in control, a transition homeowner committee is entitled to the financial records that show the association maintenance fees collected, the reserve plan and funds, and the costs of performing services like landscape maintenance, pool maintenance, property management and accounting. The developer should never commingle construction expenses with the association budget. A financial audit is in order to ensure that all revenue and expenses are accounted for.

Turnover Meeting

State laws require that a turnover meeting must usually occur within a certain time period after developer has sold and closed a certain number or percentage of the homes, or the elapse of a certain time period after the declaration recording, whichever is earlier. Check the governing documents for the specific time table.

Records Required at Turnover

At the turnover meeting, the homeowners can expect the developer to relinquish administrative control to the owners. Once that is done, an election should be held to elect a board of directors in accordance with the governing documents. In addition, there are a number of important documents that should be transferred at the turnover meeting, if applicable. (Check your documents and state statutes for other specifics):

• Copy of the recorded governing documents, additions and amendments.
• Copy of the articles of incorporation.
• Minute books and other records of the association.
• Rules and regulations
• Financial Report for previous year including Balance Sheet plus Income & Expense statement
• All association funds including reserves and working capital contributions
• New bank signature cards
• Association personal property including an inventory
• If available: As-built architectural, structural, engineering, mechanical, electrical and plumbing plans; The original specifications indicating all material changes; Plans for underground site service, site grading, drainage and landscaping; Any other information relating to repair or maintenance of the property.
• Insurance policies
• Copies of any occupancy permits which have been issued
• List of the construction phase plumbers, electricians, general and subcontractors.
• Warranties on appliances
• Roster of owners, addresses and telephone numbers
• Leases to which the association is a party.
• Employment, service contracts or other contracts to which the association is obligated

Developer Follow Up

In order to facilitate an orderly transition, the developer or an informed representative needs to attend up to three meetings with the board of directors during the three months following the turnover meeting.

Identify Professional Advisors

The new board of directors is not expected to be knowledgeable in technical areas like management, accounting, investment and law. Some of these functions may be handled through a professional property management company if the association hires one. However, if the association chooses to self manage, it is very important to identify knowledgeable management consultants and other advisors to counsel the board.

Turnover is a pivotal moment in the future of each community association. Treat it with respect and take the time to do things right. What happens today, sets the stage for tomorrow's success. Make sure this play has a long run.

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

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Published: May 19, 1999

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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 .