Thursday, 15 Nov 2018
News

5 steps for new condo associations

Many residents do not realize that the association already exists when selling the first condo unit housing. (Bill O 'Leary / The Washington Post) Q. I live in a condominium complex with a large number of units. Recently, the developer informed each owner that he would hand over control of the association and that a meeting was scheduled for early next month. I've talked to several owners and none of us has any idea what it means. More specifically, what should we do in anticipation of this meeting? What are our rights and responsibilities at the time of transition? A. In recent years, there has been a dramatic increase in the number of new condos in the Washington area. Each co-ownership is governed by a condominium association through its board of directors. Many residents do not realize that the association already exists when selling the first condo unit housing. The developer appoints the first board of directors, who controls the association until the rotation. In general, laws in the surrounding jurisdictions require that control be exercised by unit owners within two years of the first sale or when 75% of units have been sold, whichever comes first.[[[[More Kass: Three new headaches for homeowners' associations]Unfortunately, many developers do not understand the importance of working with unit owners, so they will be willing to manage the association themselves. In my opinion, it is not a good practice that a developer is content to announce the holding of a meeting at the election of a new board of directors. Administration to govern and manage the association. You should call a meeting of the owners. Install it in the lobby, in the main lobby or even in someone's apartment. Once you have determined who is interested in playing an active role in the association, contact the developer and ask them to make an appointment for a preliminary meeting to express your concerns and ask your questions. In fact, some developers offer funds to a lawyer who will be hired to attend such a meeting. The meeting planned by your developer aims to elect a new board. I find it interesting that unit owners vote for board members who will control their fate without having any information about who these potential members are or what they represent. If possible, a notice should be circulated to all owners informing them of a meeting prior to the elections, to allow residents to campaign for seats on the board of directors. In my opinion, a condominium association is a mini-democracy and, just as we have political campaigns for government officials, we should also organize campaigns for the directors of the condominium association. Once you have taken control, you must take at least five steps: ● The new board must decide to retain the existing management company – which has been selected by the developer – or choose a management company. totally independent management. The association may decide not to hire such an enterprise and become "autonomous", but I do not recommend it. Any association – whatever its size – needs an official direction to help solve the many problems that affect the condo. ● Open a bank account in the name of the association or transfer any current account for the signature of a board member. ● An independent auditor or chartered accountant must review the books of the association. It is important for members of the new board to be convinced that the developer, while controlling the association, has correctly paid all of its obligations to the association – and that these payments come from the developer's funds and not from the association. Keep in mind that even if the developer controls the association, he also has access to funds from the association. Often this access is unlimited. You want to make sure that funds that should have been paid by the developer are not inadvertently paid for the product of the association. [More Kass: How D.C.’s revised tenant law affects renters in single-family homes] The developers deal with the issue of the payment of co-ownership fees in different ways, but they must in any case be held responsible for all their legitimate obligations. In addition, in many cases, the developer, while serving on the board of directors, has allowed many unit owners to become seriously late in paying their condo fees. The new board must establish a thorough and comprehensive collection policy that will be applied consistently. ● The association should retain the services of a lawyer to guide it in its activities. The lawyer will not only have to deal with the problems of developers, such as those of the guarantee, but also assist the association in its daily activities. An association of condominiums is not just a mini-democracy, it is also a business and must also function in this capacity. ● The board should consider hiring an engineer to inspect the complex as soon as possible. The engineer must determine if there are any warranty defects that should be reported to the developer. For example, in the district, a developer must file with the mayor a form of security, such as a letter of credit, to ensure that any warranty problem can be resolved if the developer tries to avoid the payment. The engineer may also assist the board in determining the appropriate level of required reserves. The rotation of the developer's control is probably one of the most important functions to ensure the future success of a condominium. Developers often do not understand this because they do not want to encourage the new board to actively participate, fearing that it is too conscientious in reviewing their activities. A good dialogue between the unit owners, the developer and the council contributes greatly to the creation of a condominium. Benny L. Kass is a lawyer from Washington and Maryland. This column does not constitute legal advice and should not be used without the approval of a legal advisor. Send your questions to blkass@kasslegalgroup.com. .

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