“Transition” refers to the process where a developer of an association turns over or “transitions” control of the Association to its owners as required by the recorded restrictions or state law.
The developer and builder remain liable for construction deficiencies, regardless of transition. An association should never “sign off” on any potential deficiencies as part of a transition without consulting with relevant professionals, including an attorney.
An owner comprised board does not exist until the transition process takes place, and therefore cannot take any action as a board prior to that time.
The transition date is very important as it represents the date upon which control of the association is conveyed to its owners. The specific date or time frame is determined by the recorded restrictions or state law.
The role of any advisory committee appointed by the developer is determined by the developer. Typically, a committee has no authority to act on its own but rather only to make recommendations.
Is there ever a situation where a developer will pay expenses out of their own pocket to keep assessments artificially low?
While some developers may subsidize the operation of an association, any effort to keep fees “artificially low” especially where owners are not informed, is inappropriate. Potential purchasers should always ask for financial information related to the association, so that they have an accurate understanding of the association’s financial health, and to what degree a developer may be supplementing the community.
Generally, homeowners have the right to inspect an association’s financial records, whether still controlled by the developer or not. Homeowners have no right to inspect the developer’s own financial records, absent making claims in a lawsuit.
If the developer enters into a contract on behalf of the association, what happens after the transition? In this case, is the association responsible?
Whether an association is responsible for contracts entered into by the developer, depends on the specific contract, an association’s restrictions and state law. While the developer has a right to enter into contracts, the duration of those contracts in specific instances may be limited. In Ohio, developers may not enter into contracts for more than one year after transition, unless the contract is for necessary utilities.