Developer transition is one long process that boards meet in pieces, usually out of order and usually late. Here it is in sequence, with the detail in the pieces linked from each stage.
Stage one: understand what the declarant holds
The party that created your association is called the declarant, and what a declarant is and what rights it holds is where the vocabulary starts.
While the control period runs, the developer appoints and removes the board, holds a vote for every unsold lot, and signs the association's contracts. What developers can and can't control during that period sets out where those powers stop, including the fiduciary obligations that attach to directors even when owners didn't elect them.
Stage two: know the date it ends
Two documents decide it: your declaration, and your state's community-association act. The statute sets a ceiling and the declaration can't exceed it.
Under RCW 64.90.415, part of Washington's Uniform Common Interest Ownership Act, a declarant control period ends no later than the earliest of four events: sixty days after 75 percent of the units that may be created have been conveyed to owners other than the declarant, two years after the last conveyance of a unit except to a dealer, two years after any right to add new units was last exercised, or the day the declarant records an amendment surrendering all rights to appoint and remove officers and board members.
The same section stages owner representation. At 25 percent conveyed, at least one member and no less than a quarter of the board must be elected by owners other than the declarant; at 50 percent, no less than a third.
It also covers the halfway house. A declarant that gives up appointment rights early may keep a right to approve specified actions for the rest of the period, described in a recorded amendment, and its failure to veto or approve a proposed action in writing within thirty days of written notice counts as approval.
How a community changes hands at turnover covers the arc from the owner's side.
Stage three: take the delivery
Turnover is a delivery, and the association is owed a specific set of material: the books and minute books, an accounting of every dollar since the association first held funds, the plans and specifications, insurance policies in force, unexpired warranties from every contractor and manufacturer, the permits, the owner roster and every contract the association is paying for.
The turnover checklist sets out the eleven categories one statute uses, along with the money questions that belong in a written letter.
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The physical side of the delivery costs just as much. The entry gate, the mail kiosk, the irrigation controller, the retention pond: the association maintains them from the day of turnover, and it needs the drawings, the warranties and the service history for each one.
Stage four: check the money
A transition audit establishes the opening position in writing while the records and the memories are still available. Auditing the developer's books covers what the exercise looks at, what an audit adds over a review, and the red flags that turn up most often.
The one to look for first is reserves.
Stage five: work the first ninety days
A ninety-day plan for the first owner-controlled board runs it as: confirm the election and the corporate filings, open the books and rebuild the budget against what the community spends now, read every inherited contract and note its renewal date, re-check the insurance for a community that is now much larger, then set a meeting and records rhythm and stop.
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Washington adds a step some boards don't expect. Within thirty days after the control period ends, or where there was no such period, no later than sixty days after 75 percent of the units have been conveyed, the board has to schedule a transition meeting and notice it to the owners. Check whether your state requires the same.
Stage six: fix the rules that need fixing
Amending CC&Rs after turnover covers which provisions are in the declaration, which are board-adopted rules that need no membership vote, and how the amendment threshold in your documents interacts with the one in your statute.
Do this last.
Where a new board can get trained
Volunteer boards inherit all of this without the background. CAI's homeowner education program runs a Board Leader Certificate course in five modules: governing documents and board roles and responsibilities, communications and meetings and volunteerism, the fundamentals of financial management, working with professional advisors and service providers, and association rules and conflict resolution. It's offered online or through local CAI chapters, and the same page carries a free course on community association living aimed at owners rather than directors.
Those five modules are close to a map of the first year after turnover.
Related Reading
- HOA Developer Turnover: How Your Community Changes Hands
- The Declarant Control Period: What Developers Can Control
- The HOA Turnover Checklist: Documents, Funds, and Records
- Auditing the Developer's Books at Turnover: A Board Guide
Keep this list somewhere the next board will find it.
Communities standing up their own operation after a handover run the roster and the documents on HOA-OS, and the ledger and the vote from the Community plan up. The 30-day trial includes the full package and asks for no credit card.