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What is “Transition or Turnover?”

What is “Transition or Turnover?”

  • Posted: Oct 20, 2015
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“Transition” is the term of art describing the multi-step process to transfer responsibility for the Community Association to the homeowners/unit owners. Transition is a process, not an event. At the end of that process, control of the Community Association is ultimately turned over to the owners.   For condominiums, the Declaration establishes a “Period of Declarant Control” based upon statute. For property owners’ associations, the Declaration may establish such a period, but currently, the declarant control period is is not addressed by statute. During the Period of Declarant Control, the Developer appoints members of the board of directors for the Association; hires and has contact with the Association’s management company; and is the architectural control committee. At the expiration of the Period of Declarant Control, the Developer resigns its board of director positions. The owners hold a meeting to elect a new board of directors comprised of owners. The Developer turns over the Association’s books and records, and relinquishes control of the Association to the owners.   How do we begin the transition process? As transition nears, it is time for the Declarant and the owners to initiate discussions on the transition process, and for owners to become familiar with the governing documents. There are several suggestions to help get the process started in earnest. For example, owners can propose adding one or more homeowners to the Board prior to transition; can set up a transition committee or advisory committee; can schedule a community meeting to explain that control of the Association will soon be turned over to the owners; and can seek volunteers for the transition committee. Some of the owners may have experience and expertise in the issues the community may face, and these owners can be very helpful druing transition.   Conclusion Transition requires a thorough review and understanding of all aspects of your Association, including knowledge of financial issues; maintenance and engineering needs; the need to transfer common area (in non-condominium associations); insurance policies and needs; management responsibilities; covenant enforcement; and so on. Without knowledgeable guidance from an independent attorney experienced in common interest communities, owners can be overwhelmed with the immense responsibilities. Start early with your transition committee and contact a knowledgeable attorney to begin the process with your association.   Stop us if you’ve heard this one before: You announce an HOA election providing proper notice, yet only a handful of owners show up to vote. You end up short of your quorum requirements, and you have to start all over again with your fingers crossed that next time, your luck will be better, and your election will be successful. Or instead, you hold your election, get definitive results—you think—but then the election gets challenged. We can help you do better!  many community association lawyers who’ve devoted their extensive—and impressive—careers to solving the challenges HOAs face every day. You’ll learn from members valuable, workable tactics you can implement immediately to make your election process smoother, more successful, and less contentious. You’ll learn: 1- How to determine the specific steps your HOA must follow to conduct proper elections 2- Details on the most common mistakes boards make from election start to finish, and the most likely challenges to your election—and how to nip them in the bud 3- Information to help you identify your quorum requirements and creative tactics to ensure you get a quorum 4- Common rules governing who can run for your HOA board, along with insights on the pros and cons of changing your eligibility requirements—and tips on how to do it if you decide you should 5- Suggestions for general rules your board may want to consider passing to make holding elections easier 6- Tips to provide effective notice—and undercut any attempt to unwind your completed election based on claims of insufficient or improper notice 7- What you must know about proxies 8- Techniques you can deploy on the day of the election to avoid on-the-spot glitches Plus much more! It’s just an hour of your time, but you’ll walk away much wiser and better prepared for your HOA’s next election.   If you contact KBRLegal.com They are the experts in Association Law in South Florida. The Courses they give monthly can help you with understanding what is needed as a board member and your community.  …

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DEVELOPER TRANSITION

DEVELOPER TRANSITION

  • Posted: Oct 20, 2015
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Community associations are conceived by the developer who typically forms a non-profit corporation to own the land and amenities   In the case of condominiums, certain parts of the building exterior. Initially, the developer owns all of the lots or units in the association and has all of the votes; therefore, the developer controls the association. A board of directors typically consisting of the developer and other individuals professionally related to the developer is established to manage the affairs of the association including not only the physical attributes, but also the financial and administrative issues such as collecting owner assessments, holding the annual meeting, and enforcing the deed restrictions.   Early in the development process the developer, acting on behalf of the board of directors, may hire a manager or management firm and delegate much of the day-to-day operation of the association to this third-party manager. This seems to be where things get a bit confusing at times for not only the developer but for the homeowners and the manager as well. The management company often finds itself in a juggling act between meeting the desires of the developer while also acting in the best interest of their employer (the board of directors). The board has a fiduciary responsibility to make decisions and set policies that are in the best interest of the association and the manager is bound by contract to carry out the decisions and policies of the board. Sounds simple, but in the real world of community living and governance, misconceptions about the different parties’ roles and responsibilities grow right along with the community.   To clarify the roles that each party plays, you will find below a short list of the most common misconceptions about developer-controlled communities. Please keep in mind that the clarifications are based on typical scenarios and you should always refer to the governing documents for your specific community to obtain the most reliable answers. Does the manager work for the developer? NO, Managers act at the direction of the entire board of directors, not the developer, one individual director or committee member (unless the board grants a particular individual the authority to deal with a specific matter). The management agreement between an association and a management company usually stipulates that the board should identify one person to act as liaison to the manager. The developer pays the manager. Not so! Typically, the developer will subsidize or deficit fund the association until there are homeowners paying in sufficient assessments to cover the expenses. The association, whether funded by developer subsidy or owner assessments, pays the manager and all other contractors that perform work for the association. The board collectively decides on all such transactions.   The developer does not pay assessments. In some cases, the developer drafts the documents in such a way that it is exempt from paying regular assessments. With that get out of jail free card exemption, the developer assumes the responsibility for funding the budget until there are enough homeowners paying assessments to cover all of the expenses of the association. The board of directors (including the developer members) must set the rate of the assessment based on what each lot should pay – – assuming the community is complete and all lots were assessed.   The manager is the homeowners’ advocate. Well, not exactly. Although the manager is responsible for implementing the decisions and policies of the board, homeowners should have enough interest in their community to present their concerns to the board either in person or in writing. The best way to be heard is to submit to the management company in writing anything you would like passed on to the board. The manager does not vote on any board issues. Owners should attend board meetings to learn what’s happening in the association. Those who can’t attend meetings should read the newsletter, visit your community website or contact board or committee members for updates. If you are unaware of whether or not your association maintains a website, you should contact the manager or management firm.   The manager is responsible for choosing contractors. Keeping in mind that the management company itself is a contractor of the association, the board (with occasional recommendations made by the management company) tries to choose the best contractors for the association. The manager does not have direct control over the contractors’ actions and they are not responsible for poor performance. The manager is responsible for monitoring contractors’ performance and reporting problems to the board. The board is responsible for any subsequent actions. The developer is responsible for the quality and quantity of the amenities, replacement of defective components and addition of amenities during the development period. Once amenities are completed, they are turned over to the association for the purpose of upkeep, insuring, and use.   The developer is responsible for construction defects in individual homes. Only if the developer built the home is he responsible for defects or poor construction. The homebuilder is responsible for problems that arise relating to construction of the home, lot drainage and other issues involving an individual home within a community. In a single family development, this distinction is very clear; however, in a condominium project, the governing documents will detail those items that become the individual owner’s responsibility versus association responsibility.   To summarize, the management duties of a developer-controlled community should not differ significantly from a homeowner-controlled community. In each case, the manager works at the direction of the board of directors. The developer board just happens to be comprised of the same person(s) wearing several hats developer, director, committee member and association member. Both the manager and the board must work together and in the appropriate capacity that best serves the association and its entire membership. When these interests work in harmony, the community as a whole is strengthened.   We stand ready to assist our Community Association clients at every stage of a project. In the transition period, our attorneys consult with…

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