5 Tips for a Smooth Community Developer Turnover
It is typical for the developer to retain control over the HOA when a new community is built. Control of the community should eventually be transferred to the residents. This is a critical time for the community. There are a lot of decisions to be made, documents and records to collect, and rights to be transferred. With so many details to keep track of, it’s easy to miss something, and that can mean dire consequences down the line. We want to help you avoid that with a few tips for a smooth community developer turnover.
1. Plan ahead
You shouldn’t think of the transition just as the day when the developer “hands over the keys” to the residents. Instead, think of it as an ongoing process that may take over a year to complete fully. Failing to plan ahead will cause lots of problems down the line. The developer and the documents they kept on the community won’t be available forever. You do not want to realize years after the transition that certain financial documents, accounts, or legal documents have been lost to time. Organize early, meet with developers ahead of time, and make sure no stone is left un-turned and nothing falls through the cracks while you work to get the community’s priorities aligned with the developer’s.
2. Set your priorities
It’s important to understand that developers don’t always care about the same things as the residents of a community. Usually developers want to see a return on their investment, so they need to sell units. In order to offer the best deal possible, they often opt for fewer services in order to keep association dues down. While many communities will continue to see lower dues as a priority, yours may not. Instead, you may decide additional offering additional services or making improvements to the community is worth the higher cost of dues.
3. Know your rights
It’s not uncommon for developers to try to keep control of a community for as long as they can, especially if they still have units to sell. For this reason, it’s essential that you know your rights as a community member and are ready to pressure your developer as necessary. As always, you should be intimately familiar with your community’s governing documents, including the CC&R’s. Often, this is where you will find specific guidelines for the transition, including dates and events that should trigger a turnover. If not specified in those documents, these kind of timelines might be found in local or state-level laws. Regardless of whether you can find a timeline mandated by governing documents, local laws, or nothing at all, it’s a good idea to find an attorney to help navigate the transition. They will be more familiar with the law and how its applied, so you can make sure you come out clean on the other side.
4. Review the financials
If your community has gotten used to the developer handling things, you may not have a good idea of your financial situation. As soon as the developer transfers control over to the homeowners, any outstanding debts, maintenance fees, structures, and common areas suddenly become your problem. To get their arms around the financials, many communities choose to hire a CPA or financial advisor. Just like your lawyer can help you navigate the legal complexities of a community developer turnover, a good accountant should be able to help you with the financial complexities.
5. Know what you want
Usually, the developer will be working with a management company to handle the day-to-day operations of the community. This management company will usually have access to all the important community documents and will have an intimate knowledge of how it works. To make your transition smooth, you want them on your side. Despite this, you need to keep in mind that the management company has skin in the game as well. In their ideal world, they will maintain their contract with the community despite the turnover. For communities who want to work with a management company, this might be exactly what you want. It saves you from researching, negotiating with, and transferring responsibilities to yet another company. However, if you were unhappy with the service you were getting or considering becoming self-managed after the turnover, you need to keep that in mind during all your interactions with the current management and plan for the future.
6. Get the right tools for the job
Self-managed communities often find themselves overwhelmed by the responsibilities they have to their community. For these communities, maintaining good relationships with the lawyers and accountants that helped you through your transition can be a godsend. You may also find value in software and technology that helps you stay organized and communicate with residents. For these communities, an all-in-one community management software platform like Condo Manager can be a godsend. Condo Manager is software specifically built for the needs of management companies and self-managed communities. It combines advanced accounting features with a robust community and resident profile system and communication features. It eliminates the need for complicated mail-merges and juggling spreadsheets and accounting software like Quicken by keeping all your data accessible in a single location.
Developer turnover can make or break a community. But if you have a good plan before moving forward, there’s nothing to fear. If self-management is in the future of your community, it’s absolutely worth investigating tools like Condo Manager. Contact us online for a free demo or give us a call at (800) 626-1267 to see what we can do for you.