I frequently post on condo association issues... I feel it will at least get my readers and clients going in the right direction. With a recent rush of new clients out in the field looking for that terrific box to put their new couch they haven't bought yet, the last thing most clients consider is the association. I think the questions start flying (the freak out) when they walk into a place and have that "oh yeah" feeling.
It goes like this; "My 42 inch flat screen will look so freakin' awesome on that wall. What happens when the developer turns the building over?"
A quick guide. I know, I know... I just posted on this subject. Get use to it. Anyway, here's how I answered that question this evening.
My clients are very serious and on the hunt. We've mostly looked at re-sale condos... in fact that's all we saw the first time out. So, earlier this evening I had a couple new conversion buildings lined up. They were incomplete, so neither had a closed unit as of yet.
My clients liked one on the buildings and unit layouts. As we left the top floor they may consider, we entered the model (a higher end, bigger unit) to check out the finishes. From the unfinished units to the model it looked like good work... How do I know? My brokerage, inspectors and fellow agents actually taught me how to know.
Becoming more impressed with the building, the husband turned and asked, "What happends when the developer turns over the building?" Yes, just like above! Anyway, the listing agent kind of paused, and the wife and husband looked at me... So, maybe a little embarassing right? I haven't had that conversation yet. Do I even know? Of course! But geez, second time out... and he just put it out there... I haven't even had a chance to buy them a glass of wine yet.
Calmly, I suggested we can discuss that as we head to the next showing... great question. But I continued:
1. The developer is required to have a turn over meeting when 75% of the building units are sold (there is also various stipulations for a three year time period after declaration of the condiminium or after the first unit is sold etc...)
2. After the first sold unit and conveyance, the developer must pay assessments for each unsold unit and collect assessments from each owner that closed on a unit. Accounting of the collection and expenditures of the assessment monies must be provided. This must be done until the turnover meeting.
3. At turnover, 3 to 5 people will run for the board of the condo Association (an announcement will be made before the turnover meeting and will request volunteers to run for the board). These positions are usually filled by volunteers. A larger building may actually require you to "run a campaign" for election. The 5 elected members than choose who will be President, Secretary, Treasurer and the two voting members.
4. You have created a non-for-profit association with a board of directors and are now responsible for running the building! I outline some of the first and important things to do when this occurs my last post on the subject. Briefly;
A. Decide if you need a management company or will be self managed.
B. Get a structual engineering report of the building to make sure the developer has met his/her obligations. This can be exspensive, but the best investment ever made.
C. Assemble a common area punch-list and present to the developer with a deadline for completion.
D. Make sure the developer is paying the assessment for the unsold units... again, a lot of this will be done by the management company. But, the ultimate responsibility is with the Board... what if the management company is loafing on their responsibilities? What if they are not proactive and advocate on your behalf?
E. Set the assessment at an adequate amount to fund the building.
Knowing what to ask, what to do, and how to follow up is key. But again, if you have a professional on your side for your condo purchase, you will save yourself some pain and hours of research. Make sure they know this stuff.
Like I said in my last post... just invite me to your turnover meeting! I'll make sure you ask the right questions. After that, it's up to you.