Creating a "new" HOA

I am often asked by homeowners when they will be able to create a homeowner association after the developer of their community leaves. To begin, let me back up a bit and say that these people are living in a community that has not yet been transitioned from the developer to the residents. Their community is called a pre-transition community. What the homeowners don't realize is that their HOA was created long before they purchased their home and that they are already part of an existing homeowner association. I believe these residents think it's necessary for them to create an association at the point of transition but this is not the case.

I suggest that homeowners consult their deed restrictions and their management company for further clarification. As a homeowner, where you told there was no HOA when you purchased your home?

Tips for new board members

I recently found a great article directed to those that will serve as a board member of their homeowner association. Click here to view the article.

My community is still incomplete & the builder has abondoned us. What are the rules regarding the power of the HOA and residents in this circumstance?

We recently met with yet another homeowners association that had been abandoned by their developer. In an Oct. '08 posting I wrote about this same problem and unfortunately we, the management company, are again faced with the tremendous role of attempting to fill the role of a community developer. This is a serious situation for the community and as we have done in the past, we stressed that our role as the property management company has never changed. However, since the community is about half completed, what has changed is the number of builder initiated issues needing immediate attention.

It is common for homeowners to feel "stuck" or to think that they have few options in this situation. In reality, the residents can seize control of their Board of Directors if the existing Board is not fulfilling their duties and/or if they cannot be located. Be advised that the property management company and the homeowners wanting to take control should follow the deed restrictions or consult an attorney for guidance.

In my opinion, the most important needs to consider are those of the homeowners. They are frustrated, worried and I don't blame them. Fortunately, since we do have experience dealing with abandoned communities since 2006 we will make the effort to work with them through this process. Have you been in a similar situation? If so, what did you do?

Webinar Training

We are developing a webinar based training module for Board members and Officers. Numerous homeowners have told us that they don't understand their role as a member of the board or as an officer. Our goal is provide them with practical guidance and a firm foundation by which they can properly and effectively govern their HOA.

The first webinar date and training contact will be announce soon so please check back. What are some topics of interest that you would like to see in our webinar to help you as a leader in your association?

Dealing with service providers/vendors

I wish I could say that it's easy to find dependable and organized service providers but alas, it is not. Most of the vendors we deal with are commercial grade but I've found that you really need to know your stuff when it comes to telling them what you need and verifying if the work was done correctly.

How does self management work?

Self management of your HOA is big responsibility and you need to consider a few points before you decide to go this route. Typically, a community may choose to self manage their HOA in order to reduce expenses. Management fees can be a considerable part of the HOA's budget and for good reason. We have parted ways with communities over the years that chose to go with self management. These have been either small communities of 30 homes or less or communities with very involved residents with available time to commit toward the necessary workload. If you do decide to self manage your HOA be advised of the following:

* If your community is gated someone will need to assume the responsibility of programming entry codes and remote controls and communicating with gate repair techs. Trust me, this can be time consuming work.

* When homes are listed for sale you will need to communicate with title companies, banks and listing agents. Each one of these entities will require different information that is necessary to complete their desired transaction.

* Invoicing for and collecting dues can be labor intensive work so be prepared.

* Thorough recording keeping is a must.

* Communication with vendors must be consistant.

Could you please explain the transition process to me? I've heard my neighbors talk about a transition but I'm not sure I understand what they mean.

When referring to the HOA, the transition signifies the moment when the homeowners assume control of HOA by electing a new Board of Directors and Officers represented by homeowners. Typically during the development phase of a community, the Association is in the hands of the declarant a.k.a. the developer. The developer has the authority to control the affairs of the HOA according to the powers granted to him in the Deed Restrictions (DRs). The developer and his partners may also be members of the initial Board of Directors.

The DRs are usually written in favor of the developer and he (not the homeowners) decides when he will transition the property (and the Board of Directors) to the homeowners. In some cases, the developer may choose to retain control of the HOA for several years if the DRs allow him to do so. The size of your HOA (# of homes) and the frequency of sales of the units are two important factors which will most likely determine when the developer may want to complete the transition.

In my opinion, homeowners often want to assume control of their HOA (via the transition) too soon. Homeowners should talk to their management company and the developer to learn more about the transition timeline for their community. I think it is best to determine the full scope of responsibilities the developer is obliged to complete before the homeowners allow him to relinquishes his responsibility to the HOA.

Have you been involved in the transition process before? What was your experience?