No Volunteers for Board to Take Over Condo from Developer!

R.G. from Hartford County writes:

Dear Mister Condo,

What happens if too few owners run for a board at its initial creation/takeover from the developer? I have tried searching, briefly, online and in the declarations for an answer to this question, without success. If there is governing law can you give me the citation? I understand that in some states the state will appoint board members. Thank you for your assistance.

Mister Condo replies:

R.G., having active association members govern their own association is a critical function of unit ownership inside a condo or HOA. The transition from developer to Board control is a critical stage in the development of any condominium association. I am discouraged to learn that there doesn’t seem to be any volunteers willing to serve. In theory, the developer turns over control to the Board. If the Board doesn’t take over the control because there is no Board, it is quite possible that folks who are owed money be the association could sue the association. Again, because there is no Board to take counter action and defend against that suit, judgment would be found for the plaintiff and the association would then have collection actions taken against it. If the association were found insolvent, a judge could appoint a receiver to handle the collections process. That is really bad news for the owners of record when that happens. The receiver will then set the common fees, issue special assessments, and more. The receiver also has the ability to take collection actions against unit owners who don’t pay up. This means huge legal expenses for both the association and the individual owners. It is a downward spiral you really do not want any part of, in my opinion.

As long as there are enough volunteer leaders to support a Board, the Board should be formed. I have many recommendations for new Boards. First and foremost, don’t go it alone. Second, don’t cheap out. This is no time to “do it yourself” to save money. The Board should hire a community association attorney with experience in developer transition, a property manager to assist with property management issues, and an accountant to keep track of finances and/or audit the developer’s books as the operating fund and Reserve Fund are transitioned from the developer to the association. Look to your local chapter of the Community Associations Institute for additional resources. Here in Connecticut, that is CAI-CT, found on the web at http://www.caict.org. Good luck!

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