Transition Study Question

I live in a 4 building condo development in the state of Maryland. My development is divided into 2 separate condo associations. Association I consists of 2 buildings and Association II consists of the building I live in plus the building that has yet to be constructed.

My Association is still under control of the developer until the other building is completed. In lieu of not having a resident condo board for almost a year now, myself and some of the other residents requested that the developer allow us to form resident committees so we could monitor our books; and they agreed.

Last week I received a letter from the developer stating that our 3 year warranty will be up in May 2010 and that we should bring in a third party engineer to inspect our common area components. I have 2 questions:

1. I am assuming that they mean a transition study; right?

2. Since we are still under control of the developer, shouldn't the developer be responsible for paying for our transition study since technically they are our HOA? The other building that will make up or HOA is not even built yet.

Any help would be appreciated.

Yes, BUT..... if it is still under developer control, then the developer basically IS the HOA, no? If only half the buildings are built, wouldn't the exisiting HOA (controlled by the developer) be the entity responsible for anything that must be carried out? And if the development is still being developed, how would an inspection of the common areas be called for? Wouldn't this more likely be required upon turnover?

It sounds as though the resident committee was only authorized to review the books, so how can it be responsible for carrying out any official responsibility related to the association?

This will be an interesting thread to watch- a number of dynamics in play. My curiosity is piqued!

Marcus by all means ask the Developer for clarification however I suspect this is not a transition study. Look in your documents for a section on construction warranty as I imagine that is what he is talking about. Below is a copy of ours:

Section 14.10. Warranties. The Developer warrants, for two years, the full cost labor and materials for any repair or replacement of roof and structural components, and mechanical, electrical, plumbing, and common service elements serving the Condominium Property or additional property as a whole, occasioned or necessitated by a defect in materials or workmanship. This two year limited warranty shall commence for property submitted by this Declaration on the date the deed or other evidence of ownership is filed for record following the sale of the first condominium ownership interest in the property and for an additional
property submitted by Amendment to this Declaration, on the date the deed or evidence of ownership is filed for record following the sale of the first condominium ownership interest in the additional property; in either case to a purchaser in good faith for value.

The Developer further warrants, for a period of one year, the materials and workmanship of structural, mechanical and other elements pertaining to each unit, and shall furnish the full cost of labor and materials for any repair or replacement of structural, mechanical and other elements pertaining to each unit, occasioned or necessitated by a defect in materials or workmanship. This one year limited warranty shall commence on the date the deed or other evidence of ownership is filed for record following the first sale of a condominium ownership
interest to a purchaser in good faith for value.

In the case of ranges, refrigerators, washing machines, clothes dryers, hot water heaters, and other similar appliances installed and furnished as part of the unit by the Developer, the valid assignment by the Developer to the purchaser in good faith for value of a condominium ownership interest of the expressed and implied warranty of the manufacturer shall satisfy the Developer’s obligation under this section with respect to such appliances, and the Developer‘s warranty under this section is limited to the installation of the appliances. The Developer shall assign to the purchasers, at the time of the sale of the condominium ownership interests, all warranties made to the Developer that exceed the time periods specified in this section with respect to any part of the units or Common Areas and Facilities.

Basically what you need is an inspection by an outside party looking for any items that need to be taken care of before the warranty expires.

The cost of this should be born by the HOA, but it should come from operating expenses not reserves. Reserves are there for the day a major repair is needed. As a note, you should look for a reserve study to assess what repairs can be expected and how much you should be putting back now so you don't end up with a large bill later.

As for who will do the inspection, I would start with calling some home inspection companies as I would think that they would know of companies that do the same kind of thing on the large scale. (Some may even do this as well.)