ASSOCIATIONS Page 63 to physical defects. More often than not, neither the developer nor the owner has an accurate, or even similar, perception of the respective roles of the developer and the association.
EXPECTATIONS AND REALITIES
Buying into an estate is a big financial commitment, and the purchaser enters into the agreement with a number of expectations. If the reality does not match the created expectation there will be unhappiness, and all the relationships around the purchase are bound to be confrontational. So it is very important to carefully manage what expectations are created, and how those expectations are to be fulfilled. That involves a number of different players – the developers, the planners, the architects, the builders, the sales team, the marketing team, the purchasers themselves and, ultimately, the residential community, board or HOA.
CHANGING RELATIONSHIPS
The relationship between the parties involved is formulated well before the first owner moves in. It starts off during the design phase for both the physical structures and the governing documents, develops through the construction phase into the sales period, and then continues to evolve as the owners begin to take control of the association and shape the reality of their purchase. If not well planned and properly managed, these transitions can become adversarial.
Different relationships are appropriate for different phases of the life cycle of a development. For example, during the construction phase, the board focuses on the quality of the workmanship, and adherence to plans and specifications can minimise the potential for construction defects to become an issue.
While the sales phase overlaps all the other phases from before construction to after the first residents have moved in, selling also has its specific challenges, such as ensuring honest representation in marketing material, and attention to detail when drawing up contracts of sale, finance, etc.
Once most of the units have been sold, the developers should start handing over responsibility for the administration of the community association and the maintenance of the common property.
Preferably, this should be a gradual process that allows the owner board members the opportunity to receive proper training and to gain experience. Also, a progressive transfer of control helps protect the developer from malicious and financially harmful actions by the owner members of the board while the developer still has a substantial economic interest in the project.
Commonly, the guidelines require the election of a minimum number of owner board members at various stages of sales, beginning at 25 % and continuing to 75 %.
At this point, the owners usually elect the entire board with the exception of one developer representative who can remain until the completion of sales for the project.
PLANNING FOR TRANSITION
The ultimate goal of transition is for the homeowners to take over and move forward with a good reputation, no litigation, healthy finances and an optimistic view of the future. There is no one-size-fits-all“ right” way of transitioning, but there is a wealth of experience from which to learn. The Association of Residential Communities( ARC) has produced a set of guidelines that builders and associations can use to develop and turn over a community association project in such a way that transition becomes much easier and less confrontational.