Most new community associations begin under the control of a developer. Homeowners do not gain control over their community until certain milestones are met, such as a specific number of residents or homes built.
The transition from developer to homeowner control can be a stressful time if not managed correctly. New Board members will be responsible for all aspects of community management, including financial oversight, maintenance planning, community operations, and more. They will likely have little prior experience completing these tasks.
That is why having a good plan for the transition is so important. Keep reading to learn how to navigate these important changes and establish a strong foundation for your community’s long-term success.
What is Developer Turnover?
When a community is first established, the developer typically controls the community associations. This control is important in the early stages of a community as it allows the developer to oversee all community operations while homes are being built and sold.
However, once the right conditions are met, control of the association will be transferred from the developer to homeowners. The conditions for this transfer are typically governed by state law and your community’s governing documents.
During the turnover, the following are transferred to the new Board.
Architectural and operational documents.
- Financial records.
- Governing documents.
- Vendor contracts.
- Reserve studies.
- Maintenance records.
- Insurance policies.
Steps for an Easy Transition from Developer to Homeowner Control
Once the turnover begins, it is easy for a new Board to become overwhelmed by the sheer number of documents and tasks coming their way. That is why establishing a solid transition process is so essential.
The following steps should help your community transition from developer to homeowner control.
1. Start planning early:
Don’t wait until the transition date to begin making preparations for the transfer of power. Doing so could cause Board members to become easily overwhelmed and burned out. Instead, prospective Board members should begin learning about the association’s operations well before homeowner control officially begins.
2. Conduct a thorough document review:
The most successful community associations keep immaculate records. To begin on the right foot, make sure your Board carefully reviews and understands all documents received from the developer.
3. Evaluate your community’s financial position:
Maintaining the community’s financial health should be one of the Board’s top priorities during the transition. Your Board members should review the following immediately.
- Current operating budgets.
- Reserve account balances.
- Outstanding debts or liabilities.
- Assessment collection records.
- Pending financial obligations.
4. Build a strong Board and leadership team:
As the transition of power approaches, your entire community should prioritize finding the right members for the fledgling Board. Plus, new Board members should take advantage of all educational opportunities and professional guidance to ensure they are well-informed enough to make decisions to support long-term success.
5. Partner with a professional community association management company:
Finally, finding the right professional community association partner, such as Community Property Management (CPM), can help the transition go as smoothly as possible. Our experience management team has decades of experience working closely with Boards to provide the guidance and resources they need during this essential stage of community association development.
Contact CPM today to learn more.