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HOAs and Transition from Developer Control – 101

Owners in most community associations—both homeowner associations and condominium associations—eventually reach the point where the developer transfers control of the Board of Directors to the owners. This blog post provides an introduction to the transition process and what owners can expect.

Susan Tarley

What is “transition?”

“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.

Tarley Robinson, PLC,  Williamsburg, VA – Attorneys and Counsellors at Law

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Susan Tarley

Susan chairs the firm's common interest community (HOAs and Condos) practice area. She was admitted into the College of Community Association Attorneys (“CCAL”). Susan is one of fewer than 150 attorneys nationwide to be admitted to CCAL, for distinguishing herself through contributions to the evolution or practice of community association law.

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Filed under: Business Law, Business Planning, Common Interest Community, HOA, HOA litigation, John Tarley, Susan B. Tarley, Unit Owners Association by Susan Tarley

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