Transition question...

Our Offering Plan says nothing at all about Transition. As I have mentioned previously, the Declarant/Sponsor/Builder, according to the Offering Plan holds the majority of the board until the last home is sold.

We are shortly getting to that point, and our resident board members have been told that the Declarant/Sponsor/Builder can just walk away after the last home is sold and have his appointed board members resign. Then, if we find that there were issues that were left undone, we would have to go after him and sue him.

Is that how the system works, or even if there is not a word about Transition in the Offering Plan, does there have to be a process which includes the formation of a Transition Committee to hire attorneys, Engineeers and CPAs?

Steve

I like Tim's suggestion. You owners DO want to know about construction defects and need to consider that there may be statutes of limitation issues. I believe I've mentioned this to you before. I think you all better get organized and act.

Steve

Were I in your shoes and I felt/believed the Declarant was just going to walk away, I would be rallying my fellow owners to form a Transition Committee funded by the owners to protect our interests.

The Declarant may have had to put up a bond of some type and this is one thing I would want to be sure he can not just run away with. Also if here is a Reserve Fund, I would want that protected.

We are in transition now. We are working closely with the a very amicable and professional Declarant and things seem to be going smoothly. The foundation of our Transition Committee is the Declarant appointed BOD with a few new faces we invited to join.

One management company we interviewed said the largest problems they have seen with transitions are the Reserves being there and the roads finished/dedicated.

At the present rate of sales, when do you anticipate the last unit being sold?

You better be safe then sorry.

SteveS8’s Offering Plan actually does address “Transition” : either enough owners get their skillsets ready now to land on their feet without chaos that tarnishes the Sponsor. OR all owners land on their heads.

Brief look at the some of that state’s Attorney General’s materials, suggests that New York developers have few restraints, that condo conversions of aging housing stock are real biggies, and that there will be little political will to impose prudent compliance controls.

To the good suggestions above, may be added that you track down a state with a consumer-friendly condo statute to show at least the veneer of what has evolved including engineering, financial and legal compliance audits asap. Our jurisdiction has a large list in its condo turnover provisions, but compliance is a different matter and believed widely variant.

A Declarant corporate shell may have little to fear from ignoring lots of it, or firing onto the table a big mess of incompletes before walking out. Hope enough owners prepare for worse but that it never arrives.

Thanks, Chuck,
Did you mean to say, "the Declarant CAN put anyone on the Board until the last house is sold and the CO given."
Because that is what has happened.
Steve

Setve,

The proper proceedure would be for the Declarant to appoint a Transition Team long before build-out. (perhaps 1 year) Transition is just the word meaning take over. It is the work proceeding this Transition Meeting that counts. The Declarant can appoint a resident member to the HOA Board, but unless you have more members thatn the Declarant, they can out vote you on any issue. Many Communities have the Resident HOA Board in place prior to build-out, and hopefully have all the issues ironed out with he Developer prior to take over. There are many issues that should have been addressed, for example: Are there any mechanics liens against the builder from the sub-contractors? This simple question if not addressed might leave you with the problem and cost after the Declarant leaves. For a sample of these problems in other communities just go on line and bring up HOA TRANSITION. ChuckJ

Yes the CO means Certificate of Occupancy. I agree that going off half cocked is dangerous, however doing nothing is worse. As long as the Declarants HOA Board is in control, they hold all the cards. If the Transition Team is not appointed early, the residents have to force the issue. If you have a web site, you can address the community for support. If necessary going to Corporate (above the Developer) with many emails stirsd up action. You might have to hire an engineer to inspect your community and legal help to go over your CC&Rs which might have to be changed. In my case, I have a team of 7 volunteers on the P&G Committee, and dwe have a handle on all the mechanical problems. Another thing you can do is go to the County and get a copy of all the Bonds held and their expiration dates. Then make sire that all the problems are resolved prior to the expiration. The county can hold back the bonds until your problems are resolved. ChuckJ