RealManage Insight

Tips to Transition Control from Property Developer to HOA Residents

by Sandra Vela Mora on Feb 22, 2018 8:20:00 AM

Starting a homeowner association from the ground level can be a difficult task, but the benefits they provide are extraordinary.

Many brand-new divisions remain under the control of their developer until a majority of their units or homes are complete and occupied. Until that takes place, a developer's board of directors maintains control creating rules and enforcing regulations on the property. 

But what is the process to transition power from property developers to HOA residents? How long does it take to complete the transition?

In the following guide, RealManage will provide tips about transferring control from the builder/declarant to the Homeowner Association's control.  

Pre-Transition Period

Developers typically maintain control before the transition.

Residential developers retain the majority of control pre-transition, even in regulated states. Sometimes homeowners have little input in the operation of the community before the declarant transfers control, but there are many associations in which the developer/builder will bring homeowners on to the board in a director or committee member capacity to get their input. 

When will the developer turn over control to the HOA?

The declarant, and in many cases state statutes, determines when the homeowners association will transfer over to resident control. Transition period could begin 90 days after the majority of units are purchased but not always. 

How can homeowners have their voices heard?

Before a homeowner's association is turned over, you will have little say in the rules implemented by the developer and its board of directors. However, you can voice your opinion by using the following tips. 

1. Hire an HOA management company.  A management company will be able to act as a liaison between the developers and residents.

RealManage is a professional HOA management partner that can ensure a smooth, power transition process from the declarant to the residents. Get your free HOA management assessment to find out how RealManage can help your community association.

2. Request documentation from the board of directors. Homeowners can ask for documentation from the property developer's governing board. 

Residents should find out the correct process to request information. Many times, community members are required to submit requests for information in writing, and the request should be a specific as possible.  For example, you can ask for meeting minutes or financial documentation. Be prepared that in some instance you may be required to pay out of pocket, but not always.

3. Form a Residential Advisory Committee. This committee will oversee the process to transfer control from developer to residents. It cannot override the decisions of the developer's governing board.  

The Turnover Phase

Evaluate the Condition of the Community

Newly elected HOA board members should assess the health of the community and incorporate professionals to assist. Those items for assessment should include reviewing the reserve study to determine if you are well funded,  reviewing the community budget, potentially getting an audit done to ensure financial health, working with an insurance agent to make sure the community is properly covered, making sure you have received the deeds for the common areas, and getting training on understanding on what your responsibilities as a board member now are.

The developer will also hand over essential documentation before they turn over control of the community to the homeowner association.

Documentation should include:

  • The recorded Declaration (original or certified).
  • The developer's Articles of Incorporation.
  • A comprehensive listing of owners and mortgages.
  • Contact information for owners.
  • Current bylaws and meeting minutes.
  • Rules and regulations.
  • Tangible property.
  • All association funds.
  • Accounting of financial statements.
  • The Financial Records of Association.
  • Active insurance policies.
  • Manufacturers, contractors, subcontractors, and suppliers warranties.
  • Copies of service and employment contracts.

You can also hire a homeowner association management team to help initiate the process to launch your association.

RealManage can provide you with expertise and professional oversight to start your group on the right foot. We provide managerial services to single-family associations, condominium, townhouse associations, and luxury high-rises. For more information, contact RealManage today.

 The Purpose of an HOA Board Meeting - Free Guide Download

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