Transition

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Transition from developer to unit-owner control of a residential community association generally unfolds in one of two ways. In many instances, the “Transition” process is uneventful – there are no major design or construction defects and the sponsor/developer works with the association board to amicably resolve all outstanding matters such as completing punch-list construction items, making sure the association’s reserves and other accounting matters are complete, release of bonds, etc.

While a peaceful Transition is often accomplished between a unit-owner board and sponsor/developer, there are unfortunately some instances when Transition is not so easy and litigation ensues.

Typically, Transition litigation arises when there are major design/construction defects which are too costly for the sponsor/developer and the contractors to voluntarily repair. When Transition litigation becomes inevitable, the following are three important steps a board can take to minimize costs and maximize potential recovery:…

Continue Reading Navigating the Transition Litigation Process to Minimize Costs and Maximize Potential Recovery

Pursuant to the Planned Real Estate Development Full Disclosure Act (“PREDFDA”), N.J.S.A. §45:22A-21 et seq., a developer of a proposed condominium development that is subject to the registration requirements of PREDFDA must establish an association responsible for the management of the common elements and facilities of the proposed condominium development. N.J.S.A. §45:22A-43. The developer is required to organize the association prior to the filing of the master deed or declaration of covenants and restrictions. The association may be established as a for-profit or nonprofit corporation, unincorporated association, or any other form permitted by law.

No matter the nature of the association, its responsibility is the same – “the administration and management of the condominium and condominium property, including but not limited to the conduct of all activities of common interest to the unit owners.” New Jersey Condominium Act (the “Condo Act”), N.J.S.A. §46:8B-12. The powers of the association are vested in an executive board that is tasked with carrying out the responsibilities of the association. Upon the formation of the association, the developer will appoint representatives to sit on the executive board and carry out the duties of the association. However, as the developer begins to sell units in the condominium development, pursuant to PREDFDA and the Condo Act, the developer is required to surrender control of the executive board to unit owners elected by the members of the association. This process is known as “transition.”

PREDFDA and the Condo Act require that no later than 60 days after the sale of 25% of the “lots, parcels, units or interests, not fewer than 25 percent of the members of the executive board shall be elected by the owners.” N.J.S.A. §45:22A-47; see also N.J.S.A. §46:8B-12.1. Once the developer sells 50% of the units, etc., within 60 days thereafter 40% of the membership of the executive board is to be comprised of unit owners elected by the owners. Final transition, and complete surrender of the executive board by the developer to the unit owners, occurs once the developer has sold 75% of the units in the development.…

Continue Reading The Passing of the Torch – Transition of Control of a Condominium Association from the Developer to Unit Owners

Transition is often confusing for condominium associations run by Boards populated with unit owners who are not attorneys and who have no prior experience going through the process. Upon transition of control of the condominium association’s board of directors from the sponsor-developer to the unit owners, a key responsibility of the Board is to engage the services of an engineer or architect to conduct an inspection of the common elements to determine if there are any deficiencies. One of the most important considerations for the Board in transition is spending the Association’s money wisely when it comes to engineering investigations…
Continue Reading Transition By Condominium Associations: Focus of Engineering Investigation—Fiber Cement Claddings

How do engineers find this moisture damage without tearing off all of the brick and cast stone? They use moisture probes, which are inserted through the mortar joints in the brick and cast stone and into the sheathing and framing. These probes measure the amount of moisture inside the sheathing and framing.
Continue Reading Transition by Condominium Associations – Focus of Engineering Investigation – Part 2

Transition is often times a confusing issue for condominium associations run by Boards populated with unitowners who are not attorneys and who have no prior experience going through the process. Upon transition of control of the condo association board of directors from the sponsor-developer to the unitowners, a key responsibility of the Board is to engage the services of an engineer or architect to conduct an inspection of the common elements and building design to determine if there are any deficiencies.
Continue Reading Transition by Condominium Associations – Focus of Engineering Investigation

Don Brenner, Chair of Stark & Stark’s Construction Litigation group, interviewed Ron Wright, Chief Operating Officer of R.V. Buric Construction Consultants in a four-part video series. In this first installment, Mr. Brenner and Mr. Wright discuss transition analysis for condominium associations and how building forensic investigations are conducted.
Continue Reading Transition Analysis for Condominium Associations