Housing developments selecting the community association model, whether a property owners association or condominium, are typically controlled at the onset by a declarant developer. Because the interests of the developer and future homeowners do not always align, having a strong legal team to effectively guide those involved through transition of control of a community is an important tool.
How the Transfer of Governance Works
Transition from developer-control often is determined by a combination of recorded document provisions and applicable community association statutes. In many cases, transition occurs when a majority of the housing units are sold. Transition involves a lot of moving pieces and can overwhelm community associations if effective guidance is not provided. Failure to address concerns promptly may result in the waiver of claims the association may have had otherwise. It is important to engage legal counsel early in the process to ensure association interests are protected.
Our Recommendations for a Smooth Transfer
As legal partners in the transition between developers and associations, we guide homeowners and management companies to take the following actions to ensure a smooth transition:
- Start right away. Even before transition begins, associations can lay important groundwork to prepare. The sooner we are working with homeowners in a new development, the better. Our team is effective at navigating the developer-homeowner relationship and can help establish stronger and more cooperative communications and governance.
- Read the Recorded Documents. Homeowners who understand the contract entered into when purchasing in a developing common interest community are better positioned to advocate for themselves and the association during transition. MercerTrigiani is experienced at helping homeowners navigate and understand the often-complicated provisions of recorded documents in anticipation of transition.
- Connect with other owners. When the first buyers in a new development connect and communicate with each other early in the process, the community will have a stronger voice when working with the developer during the transition.
Along with facilitating the above in the early stages, our team will be instrumental in coordinating the actual transfer of governance.
The Role of MercerTrigiani in Developer-Owner Transitions
MercerTrigiani can be a key advisor during the transition between a developer and community association. In the early life of an association, we have routinely addressed concerns about the status and condition of common property for which the association is responsible. We also have experience dealing with questions of continuing developer responsibility relative to association operations. We review contracts entered into by the developer on behalf of the association and assist in ensuring all association records are provided to the homeowners. This transition period is a critical time for the community, and we are prepared to offer guidance to the community members who will lead the effort to establish systems that will govern the operation of the community.