Due Diligence review prior to TURNOVER

Started by JeffreyF2 • 9 replies • 260 views

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JeffreyF2 (Florida)
Posts: 12

Posted:

I live in a new D.R. Horton sub division in Florida ( I know what you are all thinking to yourselves) and we are about to assume the control of the HOA from the Declarant. The same management company is expecting to have their contract will be renewed and wants to maintain control of all of the documentation to keep control of the legal documents from A-Z. My position is that we should be allowed to do our Do Diligence before we actually take control. Access Management is 100 miles south of my location and they have a policy that they don't allow homeowners into their offices. SOOOOOO how can we force the issue to review the documents if we can't get into the place? .

KerryL1 (California)
Posts: 14,550

Posted:

Homeowners have rights in FL to review many, many "association documents." These right may well m be in your Bylaws or Covenants (aKA declaration, CC&Rs,)What you may review and or possibly possess partly depends on whether you're a condo HOA or SFHs as they are guided by different statutes (FL posters will help) The Management Company ("MC") should have all of the documents online.

There may be some attorney-client materials you cannot review between the developer & their attorney. Otherwise, what "legal" documents are your referring to?

Are you saying that NO owners may see any documents from the MC? There is no protected website for owners to review, e.g. to see the HOA's monthly financials, to see your own account? Surely you possess the Covenants, Bylaws and perhaps some Rules & Regs.

Are you part of an organized group of owners who will want to serve on the Board?

Based on long ago experience in my HOA, we & many after turnover would not keep the developer's MC. There is a conflict of interest in that now the MC may easily favor the developer vs the board of homeowners when dicey situations arise. And for the same reason new boards imo, should not keep the developer's attorney. That was a mistake the Board in my HOA made and this attorney insisted there were no construction defects in our high rise project. It's very possible there may be some in your HOA, so you want a neutral MC and a neutral HOA attorney.

Please note the posting rules above: no names of HOAs, developers, etc.

JeffreyF2 (Florida)
Posts: 12

Posted:

Sorry, next no names!!

WendyM5 (North Carolina)
Posts: 1,522

Posted:

have you even googled florida HOA document access laws? they are pretty fair and allow homeowners to look at pretty much everything, make copiees, etc. Send them a certified letter demanding an inspection with in the legal time frame of 10 days I think and then threated to take to court if they do not obey. You don't have to travel down there to do it, hire someone to go there on your behalf and give them a power of attourney form.

vis ta vie

DouglasK1 (Florida)
Posts: 2,046

Posted:

Assuming an HOA subject to Florida Statute 720 (Condos are subject to FS 718), here is an excerpt of document inspection requirements from FS 720.303:
(5) INSPECTION AND COPYING OF RECORDS.—The official records shall be maintained within the state for at least 7 years and shall be made available to a parcel owner for inspection or photocopying within 45 miles of the community or within the county in which the association is located within 10 business days after receipt by the board or its designee of a written request. This subsection may be complied with by having a copy of the official records available for inspection or copying in the community or, at the option of the association, by making the records available to a parcel owner electronically via the Internet or by allowing the records to be viewed in electronic format on a computer screen and printed upon request. If the association has a photocopy machine available where the records are maintained, it must provide parcel owners with copies on request during the inspection if the entire request is limited to no more than 25 pages. An association shall allow a member or his or her authorized representative to use a portable device, including a smartphone, tablet, portable scanner, or any other technology capable of scanning or taking photographs, to make an electronic copy of the official records in lieu of the association’s providing the member or his or her authorized representative with a copy of such records. The association may not charge a fee to a member or his or her authorized representative for the use of a portable device.
(a) The failure of an association to provide access to the records within 10 business days after receipt of a written request submitted by certified mail, return receipt requested, creates a rebuttable presumption that the association willfully failed to comply with this subsection.
(b) A member who is denied access to official records is entitled to the actual damages or minimum damages for the association’s willful failure to comply with this subsection. The minimum damages are to be $50 per calendar day up to 10 days, the calculation to begin on the 11th business day after receipt of the written request.
...

There are a small number of exceptions and more detail, please read the statute section for yourself. Note that this applies to all members, not just board members. If the MC won't comply with Florida law, then you absolutely don't want to renew with them.

Escaped former treasurer and director of a self managed association.

ArtB1 (Florida)
Posts: 97

Posted:

Having gone through a turnover here in Florida, you need to do an independent review.

Remember that management company worked for the builder and not the residents.

I would also high suggest a full inspection of utilities, ponds (if any), any common grounds for code violations, etc. IN order words, more in-depth than a home inspection.

This will be your one chance to have the builder to pay for any deficiencies.

You also need to know how much the builder was subsidizing any HOA expenses. Expect your HOA fees to increase.

KerryL1 (California)
Posts: 14,550

Posted:

To Art's point, closely scrutinize the reserve study, which is a document that all owners may have. It contains the info about all of the common area items that the HOA is obligated to repair/replece. Too often, developers, including ours, overestimate the "useful life"--how long a reserve component should last--on big ticket components, and underestimate the cost to repair/replace them.*

I've read here and in my own HOA (before I wondered in it) had a sort of a "Punch List Committee," who inspected the premises an demanded the developer make certain repairs and changes. But I don't know how this works.

Agree with Douglas that if the MC keeps being uncooperative, you owners do not want them.

* I haven't seen this on this forum, but wonder if a group of owners could hire a reserves specialist to read the existing study and perhaps even tour the premises. If a complicated HOA with a lot of internal reserve components, I doubt the developer would permit such a person access to, say, equipment rooms. But a certified reserve specialist should be able to read the study and be able to tell you if the est. useful lives and replacement costs are typical for most of your components. I'm thinking that you could hire a specialist for a few hundred dollars (depending on the complexity of your HOA). I'm guessing such an expert might be interested because your HOA is a potential future account. I would not approach the firm that did the developer's reserve study.

ElleN (Idaho)
Posts: 4,420

Posted:

Send a demand letter by certified mail to see xyz documents, citing the law DouglasK1 kindly cited. DouglasK1 just saved you around $500 in attorney fees.

If you do not know what a demand letter is, then google.

Post back with the response.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Personally, I would ask vs sending a demand letter.

You need to work with these people for awhile and, as the story goes, you get more flies with honey than with vinegar.

A polite letter saying something along the lines of:

In accordance with [statute] and [bylaw section] I am requesting to review the following documents:
xyz

Note: I said review. If you want copies, they can often be charged for (varies by State).

KerryL1 (California)
Posts: 14,550

Posted:

Definitely agree with Tim's advice on the tone of the letter. EVEN if the new Board comprised of owners decide to hire a different MC, it' in the est interests of your HOA to keep friendly relations with your MC. You'll need to work closely with them of some period of time including any transition to a new MC.

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