Transition Agreements for Condominiums: Let the Association BeWare
Transition is every association’s independence day. It marks leaving home, growing up, being “on
your own.”
Transition turns responsibility for the common elements and
for running the project over to the Association. The Developer bids you farewell and leaves the project.
A transition agreement is often signed which in formal terms
depicts this separation. Often the first
draft presented to the Association comes from the Developer. Probably the Association should not sign it
but make changes.
No question, the
Associations needs its lawyer to review the document. Do not try to save money here.
The big issue in the agreement is the release the builder wants to obtain from the
Association. From the
Developers’ standpoint, it wants to fix whatever needs to be fixed and leave
for good.
The Association may want the Developer to remain liable for
repairs for a given time period. In
other words, not only does the developer have to fix whats broken, but enough time must pass to show that
everything was properly fixed.
The builder may also want the association to defend and
indemnify it from third party claims.
Really? When did the Association
become an insurance company? Trick
question. It never did and this issue
needs to be looked at and negotiated.
The Association may have to certify it received all
transition related documents from the developer. If so, the Developer must first certify this
is true.
The Association may be asked to represent that it is confident
all of the books and affairs are in order when transition occurs. If so,
the Association needs to independently verify this is so.
And who will identify all common elements and verify they
were properly installed and functioning.
Some common elements are missed all together in transition. An expert must be retained to make sure this
does not happen at your complex.
Yes, this really is a multifaceted project. It does not have to cost a small
fortune. But no, doubt, from the Associations standpoint it must be properly
done.
Lieberman & Blecher represents community associations
within the State of New Jersey. www.liebermanblecher.com
Posts
