Many homeowners, in newly-developed communities, are excited about the prospect of transition from developer to homeowners. Certainly, an owner-controlled community gives more power—more, well, ownership—to the residents of the community, and homeowners tend to enjoy this level of autonomy. The actual transition from developer to owner control can prove fraught with danger, however, and if everything is not done smoothly and strategically, the incoming board members could be left with some huge messes to clean up.
So how can communities seek to make this HOA transition as smooth and as seamless as possible? What follows are just a few brief tips:
- First, remember that handling all of the legal aspects of this transition can take a year or more, so it is good to start acting as early as possible. Even if the community only has two homeowners, those homeowners should start talking about what they would like to see happen with the community, and they might even begin talking with an attorney.
- It is also important to review the CC&Rs of the community, and to know which rights the homeowners—and the developers—have. In particular, look for specific dates for when the developer is supposed to move out of the way and let the HOA board take control.
- During the transition period, board members are encouraged to meet weekly, discussing which developer rules they would like to change, and how they ultimately want the community to look.
- It is smart to do a thorough review of the developer’s financial records, ensuring the community is in decent financial shape.
- Finally, but crucially, the incoming board members should ensure that they review all vendor contracts that the developer had established—reaching out to solid vendors and expressing their desire to continue the relationship, but replacing vendors thought to be subpar.