Before the adoption of the Colorado Common Interest Ownership Act (CCIOA), the transition of an association from developer control to homeowner control was often a haphazard, informal, and ongoing process.  CCIOA requires developers to gradually turn over control of the association as units are sold or time expires.  Even with the more structured transition framework under CCIOA, there are some important things every transitioning association should know to make the process go smoothly, including:

  1. Transition is a process which occurs over a period of time during which the owners gradually become more involved in the governance of the community.  This process includes transfer of control of the board to owners; transfer of financial operation of the association; acceptance of maintenance of common areas, and the turnover of documents from the developer.
  2. At the end of the period of declarant control, the developer is required to turnover certain documents to the association, including copies of plans and specifications, insurance policies, warranties, owner rosters, and service contracts.  Getting all the required documentation at transition will help the association maintain continuity, address areas where changes need to be made, and to keep accurate and complete records.
  3. As an association moves through the transition process, owners will be elected to the board to replace developer-appointed board members, as required by CCIOA.  This is only one manner of involving owners in the governance of the association before and during transition.  At all times, participation of owners should be provided for an encouraged by the developer as a step in training and educating the owners to take over the operational responsibilities of the association.
  4. One of the first actions of a new owner-controlled board should be to make a decision on the managing agent, attorney, and accountant for the association.  The new board should take into consideration the relationship between the current managing agent, attorney and/or accountant and the developer in determining whether the managing agent, attorney, or accountant should be retained.
  5. Other important actions of a new owner-controlled board include a review of the association’s legal documents, financial information, records, insurance, reserve study, common areas (for conveyance and for possible construction defects), and prior enforcement actions taken by the developer-controlled board.  This will help the owner-controlled board become familiar with the functioning of the association, identify areas where improvements need to be made, and highlight potential liability the association may have for actions taken by the developer-controlled board.
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