Transition Law &
The Transition Team
The role of the Association’s Attorney in taking a Community through Transition is dynamic and multifaceted. The Association’s Transition not only deals with construction and financial auditing issues but as well encompasses an assumption of administrative and governing issues which are now assumed by the membership. The Attorney for the Association guides the Board, elected by the membership, in all of these areas.
Newly elected Homeowners representatives on the Governing Board have very little if any experience in Community Association governance. In addition, few Homeowner elective Trustees have ever had the responsibility in formulating Association operating and reserve budgets. These Trustees heavily rely upon the Association’s Attorney to assist them in becoming familiar and comfortable with responsibly representing the Association.
Transition in Communities is also in the process of developing a Community Association temperament and character. Understanding, the character of the Community is critically important. Experienced Property Managing Agents and Attorneys understand this and underscore this to newly elected Trustees. Once that Community character is somewhat defined, the Board is better able to understand the manner in which the Community is to be handled on a day-to-day basis.
Recorded Governing Documents, for most Communities, are boilerplate. In many respects those documents do not take into consideration the Community’s nature and character. One role of the Association’s Attorney is to assist the Board in either amending or supplementing those documents to reflect the particular qualities of the Community as voiced to the Board by the membership. Additionally, the Board, when comfortable, should typically begin to adopt administrative and policy resolutions which more clearly reflect the requirements of the Community. Experience shows that developer prepared Governing Documents, quite often, are not instep with current statutory requirements and or changes reflected in New Jersey Case Law. An experienced Community Association Attorney should be able to assist the Board in not only updating the Community’s documents but in preparing Resolutions, which are reflected of the memberships needs and desires.
When taking a Board through Transition it is the role of the Attorney to educate the Trustees as to their Governing Document and statutory responsibilities. The Attorney is there to field inquiries as to allow the Board to move forward with a level of comfort knowing that they are meeting their fiduciary responsibilities. The Attorney’s prior Transition experience is an invaluable asset to the Board and Community. That experience can place the Community’s Board on a proper and responsible path and allows the Board to chart a proper course for the Community’s future. It is so important to get off to the right start.
In beginning the Community’s Transition, the Association’s Attorney typically requires the developer provide to the Association certain documentation in order to allow the Board to begin the Transition process. There is statutory guidance as to the documentation which is to be provided by the developer to the Association.
That documentation includes but is not limited to, a copy of the Association’s Master Deed and all Amendments; the Association’s Articles of Incorporation; the By-Laws; the Minute Books of the Association; Rules and Regulations of the Association; Resignations of Members of the Governing Board who are required to resign because the develop is required to relinquish control of the Board; an accounting of Association funds, including capital accounts and contributions, tangible personable property belonging to the Association; Insurance Policies; Certificates of Occupancy issued for the property, written warranty of any contractor, subcontractor, supplier, and manufactures, if any, that are still effective; a roster of Unit Owner’s and their addresses and telephone numbers if known, as shown on the developers records; employment contracts, Management contracts, maintenance contracts, and any service contracts in which the Association is one of the contracting parties; and a copy of the plans and specifications utilized in the construction of the Community including the installation of all mechanical components serving the Association’s property.
At the inception of Transition it is recommended that the Association’s Attorney communicate with the Municipality where the project is located. Those communications should occur with the Mayor, Municipal Administrator, Municipal Clerk, Municipal Attorney, and Municipal Engineer. These individuals can prove to be willing and strong advocates for the Community. They are, in a certain sense, able to deal with the developer on a different level than the Association. Municipalities that have approved of the project are keenly interested in seeing the project built and installed as per the approved plans. It is the role of the Association’s Attorney during Transition to share with the Municipality the Community’s concerns as to the as-built conditions of the project and as set forth in the Association’s Transition Engineering Report. The Municipality should be requested to take in to consideration when passing upon a developers request for bond reduction or release those identified deficiencies cited in the Transition Engineering Report which deal with bonded site items.
Association Counsel typically issues both the Engineering study and Transition audit to the developer a long with a request for the developer’s reply within a reasonable time frame. That reply when received should be the trigger for a series of site inspections conducted with representatives of both the Association and developer to view first hand those concerns identified in the Engineering Report. Site inspections should result in a clear understanding as to what concerns the developer is willing to address and those in which it is not. The Association should place heavy reliance on its Attorney and Engineer for guidance in responding to the developer’s position.
It should be noted that given current market conditions developers have become more reluctant to take on an address construction issues within Communities. We are seeing widespread hesitation by developers in responding to Association Transition concerns especially those dealing with significant expenditures of money.
Our Firm understands this realty and has been dealing with difficult developers in spite of their reluctance to address Transition. Transition is the most critical stage in your Community’s evolution and we are here to make it as positive and cost-effective as possible. With our Transition experience and reputation, we can assure you that we are the Firm your Community to help you through this sometimes-difficult phase.