Podcast
Questions and Answers
What percentage of the assessment on unsold units may the developer be obligated to pay in most condominium associations?
What percentage of the assessment on unsold units may the developer be obligated to pay in most condominium associations?
What is a best practice for developers to eliminate shortfalls in reserves during transition?
What is a best practice for developers to eliminate shortfalls in reserves during transition?
During the transition period, what is a significant potential liability for associations?
During the transition period, what is a significant potential liability for associations?
What is a common area of concern for both developers and homeowner boards during the transition period?
What is a common area of concern for both developers and homeowner boards during the transition period?
Signup and view all the answers
What are three areas of developer activity that create the greatest potential for liability?
What are three areas of developer activity that create the greatest potential for liability?
Signup and view all the answers
What is a recommended resource for those involved in the development process to educate themselves on liability and litigation issues?
What is a recommended resource for those involved in the development process to educate themselves on liability and litigation issues?
Signup and view all the answers
Why is it important for developers and associations to understand theories of law regarding construction defects and warranties?
Why is it important for developers and associations to understand theories of law regarding construction defects and warranties?
Signup and view all the answers
What is a goal of developers and homeowner boards working together during the transition period?
What is a goal of developers and homeowner boards working together during the transition period?
Signup and view all the answers
What is exempt from the release of liability?
What is exempt from the release of liability?
Signup and view all the answers
What is the time frame for the Developer to commence repairs, replacements or improvements?
What is the time frame for the Developer to commence repairs, replacements or improvements?
Signup and view all the answers
What is the duration of the express warranty provided by the Developer?
What is the duration of the express warranty provided by the Developer?
Signup and view all the answers
What is the purpose of the resolution attached as Exhibit B?
What is the purpose of the resolution attached as Exhibit B?
Signup and view all the answers
What is the time frame for the Developer to complete all repairs, replacements or improvements?
What is the time frame for the Developer to complete all repairs, replacements or improvements?
Signup and view all the answers
What is released as part of the Agreement and Release?
What is released as part of the Agreement and Release?
Signup and view all the answers
What is the condition precedent for the Developer to commence all repairs, replacements or improvements?
What is the condition precedent for the Developer to commence all repairs, replacements or improvements?
Signup and view all the answers
What is the purpose of the Agreement and Release?
What is the purpose of the Agreement and Release?
Signup and view all the answers
When does the warranty commence according to the agreement?
When does the warranty commence according to the agreement?
Signup and view all the answers
What is the duration of the warranty provided by the Developer?
What is the duration of the warranty provided by the Developer?
Signup and view all the answers
What is the limit for disputes to be resolved by binding arbitration?
What is the limit for disputes to be resolved by binding arbitration?
Signup and view all the answers
What is the responsibility of the Association after completion of all work?
What is the responsibility of the Association after completion of all work?
Signup and view all the answers
What is implied by the waiver of claims in the Agreement?
What is implied by the waiver of claims in the Agreement?
Signup and view all the answers
What happens to disputes exceeding Fifty Thousand Dollars if not resolved by mutual agreement?
What happens to disputes exceeding Fifty Thousand Dollars if not resolved by mutual agreement?
Signup and view all the answers
What is the responsibility of the Developer after completion of all work?
What is the responsibility of the Developer after completion of all work?
Signup and view all the answers
What is the purpose of the ten-year warranty as to major structural repairs?
What is the purpose of the ten-year warranty as to major structural repairs?
Signup and view all the answers
What is the primary role of homeowner committees during the early stages of development?
What is the primary role of homeowner committees during the early stages of development?
Signup and view all the answers
What is the recommended approach for committees in terms of their responsibilities and goals?
What is the recommended approach for committees in terms of their responsibilities and goals?
Signup and view all the answers
What is the key benefit of effective communication between the board and owners in a community association?
What is the key benefit of effective communication between the board and owners in a community association?
Signup and view all the answers
What is the primary focus of the Maintenance Committee?
What is the primary focus of the Maintenance Committee?
Signup and view all the answers
At what stage of development is it recommended that homeowner committees should be functioning?
At what stage of development is it recommended that homeowner committees should be functioning?
Signup and view all the answers
Who makes the final decisions in the early stages of development?
Who makes the final decisions in the early stages of development?
Signup and view all the answers
What is the role of the Communication and Education Committee?
What is the role of the Communication and Education Committee?
Signup and view all the answers
What is the relationship between homeowner committees and the board of directors?
What is the relationship between homeowner committees and the board of directors?
Signup and view all the answers
What type of insurance protects the association if an employee suffers a work-related injury or illness?
What type of insurance protects the association if an employee suffers a work-related injury or illness?
Signup and view all the answers
What is the primary purpose of homeowner committees?
What is the primary purpose of homeowner committees?
Signup and view all the answers
What is a best practice for the association regarding insurance coverage during the transition period?
What is a best practice for the association regarding insurance coverage during the transition period?
Signup and view all the answers
What may insurance be subject to during the transition period?
What may insurance be subject to during the transition period?
Signup and view all the answers
What is a significant potential liability for associations during the transition period?
What is a significant potential liability for associations during the transition period?
Signup and view all the answers
What is the purpose of the developer-controlled transition period?
What is the purpose of the developer-controlled transition period?
Signup and view all the answers
What is a benefit of homeowner committees during the transition period?
What is a benefit of homeowner committees during the transition period?
Signup and view all the answers
What is a recommended best practice for developers during the transition period?
What is a recommended best practice for developers during the transition period?
Signup and view all the answers
What is a crucial aspect of homeowner involvement in the transition process?
What is a crucial aspect of homeowner involvement in the transition process?
Signup and view all the answers
What is a challenge for owner leaders when sales fall off during the transition period?
What is a challenge for owner leaders when sales fall off during the transition period?
Signup and view all the answers
What is a best practice for developers to encourage homeowner involvement during the transition process?
What is a best practice for developers to encourage homeowner involvement during the transition process?
Signup and view all the answers
What is a consequence of decreases in the sales rate during the transition period?
What is a consequence of decreases in the sales rate during the transition period?
Signup and view all the answers
What is a benefit of homeowner activities, even without developer sanction?
What is a benefit of homeowner activities, even without developer sanction?
Signup and view all the answers
What is a recommended approach for developers to counter the effect of the sales rate?
What is a recommended approach for developers to counter the effect of the sales rate?
Signup and view all the answers
Why is it important for developers to provide homeowner board members with comprehensive information?
Why is it important for developers to provide homeowner board members with comprehensive information?
Signup and view all the answers
What is a consequence of a slow transition process due to decreased sales?
What is a consequence of a slow transition process due to decreased sales?
Signup and view all the answers
Study Notes
Transition from Developer Control
- Developers may be obligated to pay 100% of the assessment on unsold units in most condominium associations and a smaller percentage in homeowners associations.
- Developers must provide an affirmative statement of this procedure from the first sale.
Best Practice
- Developers should eliminate shortfalls in reserves at transition by updating reserve studies during the developer control period.
Liability and Litigation
- Liability is a concern during the transition period for developers and homeowner boards.
- Construction defects, breach of warranties, fraud, negligence, and breach of fiduciary duty are potential areas of liability.
- Theories of law regarding construction defects vary from state to state.
Warranties and Arbitration
- A 10-year warranty is provided for major structural repairs.
- The Association has one year from the expiration of the warranty to commence an arbitration or civil action against the Developer.
- Disputes under $50,000 are resolved through binding arbitration with the American Arbitration Association.
Agreement and Release
- The Agreement and Release waive and relinquish claims concerning defects or deficiencies, except as provided in the 10-year warranty.
- Upon completion of all work, both parties have no further responsibility to each other, except as provided in the 10-year warranty.
- The Association shall use its best efforts to assist the Developer in securing a final release of the bonds posted with the municipality for public improvements.
Exclusions
- The release does not affect any claims asserted or arising out of reports prepared by the Developer or its representatives.
- The release does not affect any warranties, including those under the [State] New Home Warranty and Builders Registration Act, and the Planned Real Estate Development Full Disclosure Act.
- The 10-year warranty as to major structural defects provided by a third-party insurer is unaffected by the release.
Insurance
- Fidelity insurance may be subject to Federal National Mortgage Association guidelines that require a limit equal to three months' operating budget plus the entire reserve account.
- Workers' compensation insurance protects the association if an employee suffers a work-related injury or illness, even if the association does not have its own employees.
- BEST PRACTICE: The association obtains separate and distinct workers' compensation coverage when it becomes a legal entity.
Transition from Developer Control
- Homeowner committees provide valuable information about homeowners, an opportunity to cultivate homeowner board members, and a cadre of volunteers to help with numerous tasks.
- BEST PRACTICE: Developers encourage homeowner involvement by ascertaining their skills and interests, facilitating neighbor interactions, and creating committees.
- Transition is a process that depends on the rate of home sales, with decreases and increases in the sales rate each causing problems for associations.
- BEST PRACTICE: Developers counter the effect of the sales rate by encouraging greater owner participation and earlier education than the sales level might warrant.
Homeowner Involvement
- BEST PRACTICE: Developers provide homeowner board members with comprehensive information to facilitate their involvement.
- Homeowner committees are advisory in the early stages of development, when the developer makes the final decisions.
- Subsequently, committees will remain advisory and report to the board regardless of who controls it.
Homeowner Committees
- BEST PRACTICE: Each committee has a statement of responsibilities and clear goals.
- The more common homeowner committees include:
- Communication and Education Committee: responsible for effective communication between the board and owners to hinder cliques and factions and provide services that owners want.
- Maintenance Committee: responsible for inspecting the common area's physical elements and identifying needed repairs.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
This quiz covers the responsibility of developers in paying assessments on unsold units in condominium associations and homeowners associations. It also discusses best practices for eliminating shortfalls in reserves at transition.
