Question: I am an owner in a new homeowner's association and am interested in seeing our association get off on the right start. I have been told that in a few months we will be going through a developer transition and owners will be invited to run for election to the Board. I am concerned that as newcomers, we may not be as informed about our responsibilities during this transition process. What really is involved in running a new Association? Should I run for election to the Board?

Answer: Service on a community association Board of Directors is a thankless job. The hours are long and there is no pay. But if you want to make sure that your investment (your home) will not be wasted, you may want to seriously consider putting your name on the election ballot.

When a builder develops a community association, whether it is a condominium or a home owner association, until a certain percentage of the units are sold, the developer retains control of the association. This means that the developer's representatives are on the Board of Directors of the Association. All fees and assessments are (or should be) deposited into your association's bank account, but the developer -- through the Board -- controls the funds, sets the budget and makes the rules.

At some point in time, however, the developer is obligated to turn over control of the association to the owners. Some states have laws spelling out when control must be turned over; and most association legal documents also spell out this requirement.

Transition between developer control and owner control of an association is perhaps the most important aspect of any community association. If done properly, your association will be off to a good start; if done poorly, it will take you a long time to get back on track. And, unfortunately, some associations never succeed.

A community is generally governed by an association, through an elected Board of Directors. Although many owners do not understand this, when the very first home in a complex is sold, the association is already in existence. The developer usually selects the first board of directors, which controls the association until turnover of control is accomplished. In general, the laws in the surrounding jurisdictions require that control be turned over to the owners within so many years after the first sale, or when a certain percent of the homes have been sold, whichever comes first. The turnover requirement should also be spelled out in your association's governing documents.

Unfortunately, many developers do not understand the importance of working with owners so that they will be able to manage the association themselves. It is not good practice, in my opinion, for a developer merely to announce one day that a meeting will be held, at which time the owners will elect a new board of directors. Owners are new to the complex and do not know one another. They are reluctant to vote someone into office without knowing who that person is or what that person stands for.

You can take the lead and arrange for a meeting of the owners. Have it in the social hall, a nearby church or school, or even in someone's home. Once you learn who is interested in taking an active role in the association, contact the developer and ask for a preliminary meeting for the purpose of asking your questions and raising any of your concerns. You and your group should try to pin the developer down as to when control will be turned over. You should also discuss the level of cooperation which the developer will give you during transition. Find out whether the developer intends to be helpful, or will just "wash his hands" and walk away. Some developers will even front some seed money so that the "rump" association will be able to hire an attorney to assist them at the earliest possible time.

At some point in time, the developer will have to schedule a meeting of owners. The purpose of the meeting will be for the owners to elect a new board of directors. I find it curious that owners are often asked to vote for members of a board that will control their own destiny without having any information on who these prospective members are or what they stand for. If possible, a notice should be circulated to all of the owners advising them that there will be a meeting before the election, at which time people can campaign for seats on the board. In my opinion, a community association is a mini-democracy. We have political campaigns for government officials; we should also have campaigns for directors of community associations.

Once the owners are in control, there are four mandatory steps that must be taken by the new Board:

Published: March 8, 2004

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