1	The Life Cycle of a Home Owners Association
2	The Three Questions All New Boards Ask At Transition Do we have to raise assessments? Do we sue the developer? Do we fire the management company?
3	The Developer… Has a vision Determines the role and responsibilities of the Association Approves a budget which determines the amount of the assessment Through the attorney, incorporates the association and records the covenants, which make the owners mandatory members of the association Appoints members of the association’s board of directors Often development company employees Controls the operation of the association, often until 75% of all lots are sold
4	Conflict of Interest The act of a developer appointing himself and his business associates to the Association’s Board of Directors has a legal conflict of interest but is not acting illegally. The developer sits on the association’s Board of Directors as an individual without the corporate protection of the development company. As an Association Board member, their fiduciary responsibility is to the Association, which may be in conflict with the best interest of the development company
5	Transition to Homeowner Control During developer control, the developer may or may not let homeowners serve on the board, or committees Developer Transition is a mathematical calculation specified in the Association’s legal documents which determine when the Developer can no longer appoint the board Open elections are held between all members of the association. (Usually when 75% of the lots are sold) Thus begins the reign of peace and tranquility forever and ever…
6	Five Characteristics of a Successful Transition The developer appoints a transition committee at least one year prior to transition Realistic budget so that dues supports expenses at transition Open communication with owners Well written legal documents Well maintained developer records
7	How to be a Good Developer Representative Understand that the developer must financially support the association in the beginning Set a realistic budget Insure competitive bids are taken for goods and services Schedule sufficient time to prepare for and attend all meeting of the association Take responsibility for developer representations concerning the association
8	Developer Transition Checklist Tax Returns Financial Statements, including balance sheet, income statement, and YTD general ledger Bank Reconciliations Paid Invoices Complete set of owner histories Delinquency report Prepaid report ORIGINAL copies of legal documents Owner correspondence Copies of any rule and regulations Architectural guidelines Deeds to all common area Warranties for common facilities
9	Developer Transition Checklist ARC approvals Keys Tax ID number Maps/site plans Contracts Board member resignations Loan agreements All cancelled checks Minutes of all meetings