What is Developer Turnover to Owner?

When a developer builds a brand-new condo community, there comes a day when the developer must turn over ownership to the homeowner’s association. That process is called developer turnover.

 

 

What is Developer Turnover?

Florida law Section 720.307(1) defines developer turnover as “the transfer of association control from developers to non-developer owners.” When this occurs, homeowners’ association members can elect a majority of the board members and begin governing the property themselves. 

 

When Can Developer Turnover Occur?

The Florida Homeowners Association Act dictates when this transfer will occur. Florida law governs that developer turnover can happen when the earliest of either of the following things occurs:

Three months after, 90% of the units in all phases of the community have been purchased and are owned by members of the homeowner’s association. 

Another percentage of units are sold and conveyed to members, or some other date arrives that is clearly specified in the governing documents. The developer can agree to different terms as long as they are defined in the homeowner’s association documents.

Another way developer turnover may occur is if the developer abandons or deserts their responsibility to maintain or complete the amenities or infrastructure as specified in the original documents. Usually, this is determined after a two-year absence. Some conditions that may lead to this are:

• The developer files for bankruptcy.
• The developer loses the title to the property in foreclosure by the bank.
• The developer suffers serious financial hardship and does not have the funds to complete the project.

 

How to Prepare for Developer Turnover

If the board knows that developer turnover is coming up or they become aware of the developer’s financial hardships, they should prepare early. Be ready to appoint board members, assign responsibilities, and take control as soon as you are able.

Even after developer turnover takes place, the developer may still own a small percentage of the units (typically 5%). Until that 5% is sold, the developer has the right to elect one board member and contribute to votes and decisions about the property. If 50% of the units are still unsold, homeowners’ association members have the right to elect one board member as their voice in decision-making. 

Before making the transition, the board members should obtain all necessary documentation from the developer, assign roles within the board and be fully prepared to take over control.

Regardless of when the developer turnover occurs, it’s in everyone’s best interest to make it a smooth transition. 

 

Get Help During a Developer Turnover

Homeowner association conflicts can arise at any time between the board and the developer. Therefore, it’s essential to have a trusted legal partner on your side to guide you through the developer turnover process and facilitate any changes to association documents as needed. Contact Haber Law today for help with your developer turnover or other homeowners’ association issues.