Condo Media - February 2014 - 55

Transition to Owner Control

A

new condominium begins legally
with the filing of the declaration
creating it. But it begins in the
most important sense for owners
when the developer transfers control of
the association to them. Although this
transition typically occurs long after the
declaration has been filed and not until
many of the units have been sold, it is the
seminal event in the life of a new condominium, establishing the foundation on
which its future will be built. A seamless
transition won't guarantee smooth sailing
for the association, but it will improve its
prospects for successfully navigating the
challenges ahead.
We asked an attorney and a manager
who have guided communities through
the transition process to explain how it
works - or should work - to identify
the steps new board members (or preboard members) should take, and to
highlight the issues they should consider
as they prepare to assume control of and
responsibility for their community.
Jennifer L. Barnett, Esq.,
Associate
Marcus, Errico, Emmer
& Brooks, P.C.
Some developers
appoint a transition

committee to work with the developer
and the developer-controlled board
through the pre-transition period, but
if not, owners can form an advisory
committee on their own, Barnett notes.
The problem with a pre-transition
committee (developer-sanctioned or
not), she says, is that it will have no
authority and no official standing,
other than that granted by the developer. Even so, volunteers serving on
the committee can identify issues they
want the developer to address and try
to work with the developer to schedule
and plan for the transition event.
The committee can also collect
information the new board will need
and begin pre-interviewing managers and other professionals the board
will want to retain to provide the
specialized advice the association will
need. While a pre-transition committee can't actually hire anyone, spend
association funds, or make any formal
commitments for the association, it
can begin "getting its ducks in a row,"
so the new board will be able to move
quickly after taking control, Barnett
emphasizes.
Although there is no requirement
that volunteers who serve on the transition committee go on to serve on

the board, as a practical matter, "the
vast majority" do and their experience working on transition issues will
give them valuable information about
the association and some insight into
what will be involved in running it,
Barnett says.
The two biggest concerns for owners
in a new condo are its structural soundness and its financial stability, and she
advises owners to begin assessing both as
soon as possible. Toward that end, she
suggests, one of the first things a new
board should do is create a transition
team, including: an engineer to identify
any structural problems; an accountant
to review the finances; and an attorney
to provide legal advice on (among other
issues) how to deal with any structural
defects the board uncovers.
Some boards balk at the cost of
hiring these professionals, but Barnett cautions, "failing to hire them
and identify problems early on could
cost the association a lot more in the
long run." For example, if the board
is going to pursue the developer for
structural defects, it will want to do so
"while the developer still has assets"
that would pay for a judgment in the
association's favor. "Most developers
establish condominiums as single-purCondo Media * February 2014

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Condo Media - February 2014

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