Q: A number of unit owners in our medium-sized condominium are concerned about the process of taking over control from the developer. We recently received a notice from the developer indicating that a meeting will be held shortly for the purpose of turning control over to all of us as unit owners. Exactly what does this mean, and what protection should we consider?
A: Perhaps the most important time in any condominium owner's life is when he or she -- as a member of the condominium association -- takes over control of the building's destiny. As in any other fledgling organization there is a lot of preliminary spade work needed to assure a smooth transition as well as an effective on-going organization.
All too often, developers of condominiums do not understand the necessity for arranging a smooth transition or prefer to ignore the question completely.
In too many instances in the Washington area, condominium developers let real estate firms handle the initial sales of the individual units and manage the condominiums. Often these management firms have no expertise in the area of condoninium management.
In order for a condominium to succeed, active participation of the unit owners is necessary. Once apathy sets in, the traditional concept of democracy that is embodied in condominium living loses its effectiveness, and the result is minority rule.
Thus, it is important for you, as condominium owners, to organize yourselves to assure the maximum participation of all of the owners. An ad hoc committee should be established; perhaps the best way to accomplish this is to circulate a newsletter to all unit owners informing them that a meeting will be held on a given date.
You have indicated that the developer has set up a date for a special meeting, at which time a board of directors will be elected to run the association. I would suggest that you all respectfully decline the invitation to attend that meeting, and ask for a postponement to give you time to get organized. There are a number of matters which must be accomplished prior to take-over.
1. Proper Accounting: From the day that the first condominium unit in your building was sold, a condominium association came into being. Obviously, until all unit owners elect their own board of directors to govern that association, the developer is in charge and controls the association.
But regardless of who is in control, the by-laws of each condominium association require that proper accounting be maintained. Thus, before control is turned over to you as unit owners, it is important to retain an accountant to carefully analyze the books to determine whether there are any discrepancies or shortages.
Are the reserves adequate, and has the developer been properly crediting the condo fees to the association? Has the developer used association funds to pay non-association expenses? Are certain personal contractual obligations of the developer being paid out of association funds?
2. Structure: General speaking, there are statutory warranties in the Washington area that a developer is required to give each dondominium owner. Nonetheless, it may be important to have the building inspected prior to taking over control to determine the condition of the building at that time. It is advisable, at least for larger buildings, to hire a structural engineer to issue a written report to the unit owners.
Benny L. Kass is a Washington atorney. Write him in care of the real estate section, The Washington Post, 1150 15th St. NW, Washington 20071.