Q: I am on the Board of a condo association that is part of a master planned community. There is a mix of condo buildings and single family HOA’s. The amenities are complete, and construction of the homes is near completion. There are a couple of vacant parcels surrounding us that we believe will be developed, but nothing is happening. The residents who live here would like to have control of the master amenities and budget, but the developer has said nothing about a turnover date. How do we know when we are entitled to control and how can we make this happen?
A: We often counsel homeowners on developer transition, and the important thing to remember is that turnover is generally a positive thing for homeowners because it gives them control of their community. At turnover, the homeowners are entitled to elect at least a majority of the board, which means, among other things, that they can hire vendors and create the association’s budget.
The timing for developer turnover is generally controlled by the master association’s documents. Generally, the homeowners are entitled to turnover when the developer has sold at least 90% of the homes in all phases of the community that will ultimately be operated by the association, unless the documents state otherwise. Although a single master association member can demand turnover, often a group of concerned homeowners will jointly hire legal counsel to provide competent guidance through the process.
Once it is determined that the developer has sold enough property to trigger turnover, the developer should be willing to relinquish control and can be compelled to relinquish control by a court of law if necessary. If the developer refuses to start the process, the homeowners with the assistance of legal counsel can schedule the turnover election in which they will elect the member-controlled board. At that point, assuming the members are in fact legally entitled to control, the developer will be obligated to transfer control of association funds and property and also must provide a professional audit and engineering report addressing the financial and structural “health” of the community.