The transition of ownership from the Sponsor/Developer to the Association is a pivotal period for the Association, most often one the first major tasks undertaken by the Association Board once the residents take control of the Board. Doubtlessly, it is also a process that is full of annoyances and vexations for the Association Board, Management Professionals, and residents. One of the key parts of the transition process is an engineering evaluation of the common property for which the Association will bear responsibility. There are several tasks that the Association Board and Management Professionals can undertake to help the transition engineering evaluation be a smooth and (relatively) stress-free part of the transition process.

First, and foremost, collect all the documentation in one place (preferably in a digital/electronic format for easy distribution). Whatever engineer the Association retains for the transition evaluation, they will be asking for copies of the design documents (especially the design plans) used in the construction of the development and approved by the permitting authority, as well as the public offering statement (including governing documents, such as the master deed, bylaws, and declarations) – the design documents to tell them what was supposed to have been built and the public offering statement to tell them the parts of the development for which the Association bears responsibility (the common elements). There are more “design documents” than you might think – while the design plans are the most essential of the design documents, most projects also have (excruciatingly detailed) written specifications, numerous submittals from manufacturers, contractors, and sub-contractors, and other contractual, financial, and regulatory documents (a “project binder”). In many cases, the Association will not see the full design documents unless the transition process goes into litigation and passes through the “document discovery” phase. For the purposes of a transition engineering evaluation, design plans and public offering statement are sufficient to at least start. The Association should make sure that it retains copies of all documents it supplies to its engineer, and would be well-advised to review these documents prior to supplying them to the engineer for legibility and completeness – Sponsors/Developers will often supply low-resolution/reduced size/incomplete design plans; if the text on the design plans is illegible or partially illegible, the design plans will be of reduced (quite possibly no) value to the engineer.

Second, the Association Board should read and clearly understand the governing documents and the scope of work that it has retained the engineer to perform. The Association Board should communicate clearly to the Association membership (residents/owners) what the Association is responsible for and for what the individual owners are responsible. The transition engineering report is about the elements for which the Association is responsible – if the Association Board wants to include issues beyond this, they should be very clear to both the membership and the engineer that such issues are beyond their official remit and they should also consult with the Association’s legal counsel to verify that such issues are suitable for inclusion in the transition engineering evaluation (this will vary from state to state depending upon the specific language underlying planned community ownership in that state).

Third, the Association Board should manage expectations, both their own and those of the Association membership. The transition is a legal process – it is typically lengthy, involves significant negotiation, and seldom results in unalloyed happiness on either side. Being a legal process, transition defects need to be supported – the most useful transition defects are accompanied by citations of violated building codes, violated industry standards, and/or design plan excerpts showing how the existing construction was not built in a fashion that complies with the design plans approved by the Authorities Having Jurisdiction (the parties that provided the permits allowing the construction of the community to take place). “Common sense” is a poor basis for claiming a defect, as is “it’s ugly” or “it’s inconvenient”. Construction codes and industry standards are generally intended to maintain a minimum level of public safety and building performance. There is generally no construction code or legal requirement to design with an intent to allow modification at a later date – many planned communities are designed to or very near the limits of zoning ordinances and/or building code limits, and homeowners discovering that they cannot get permits to expand decks, patios, or driveways, build an addition, or add site improvements/amenities to their property is almost never an actionable transition defect. The Association Board needs to understand that the Sponsor/Developer may argue about almost everything, and that most transitions will spend a significant period in mediation (if not litigation) before any significant remediation occurs, unless there is an unarguable, clear, and present, life safety hazard.

The Association Board cannot make the transition process smooth, or without stress, but, by keeping track of the documentation, understanding their remit, and managing expectations, the Association Board can avoid making the process harder and more stressful than it needs to be.

-Lyle Hoffman, H.H.S., Senior Project Manager/Licensed Code Consultant - The Falcon Group