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Ohio Developer Transition
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Transition to HOA Management From Developer

There is a moment where the real estate developer transitions control of the homeowners association from themselves, to the home owners.  The timing of the developer transition is controlled by legislation.  It is imperative to bear in mind that the developer’s motivation is fundamentally different from the homeowners motivation for controlling the HOA.  This transition is sometimes smooth and sometimes developer transitions are terribly complicated.  Often times, developer transitions find their way into litigation.

IS IT TIME TO TRANSITION FROM DEVELOPER TO HOA?

Chapter 5311 of the Ohio Revised Code is the legal authority on “Condominium Property.” Once the developer has sold 25% of the units, homeowners must fill the seats of not less than one-third of the board. The Condominium Act further mandates that the board must consist completely of homeowners (HOA) within five years of the Declaration being recorded, or when 75% of the planned units have been sold, whichever comes first.

The following are some of the required documents you should have to begin the HOA management:

  • all books, records, and meeting minutes;
  • all condominium documents, including, but not limited to;
    • Declaration and Amendments of Covenants, Conditions & Restrictions (CC&Rs) –
    • Articles of Incorporation
    • Bylaws
    • Rules and Regulations – Details how the CC&Rs are interpreted and implemented.
  • all other documents that should normally be kept by a board of directors, such as resolutions, contracts with its management company, utility providers (e.g., water, electricity, telecommunications, cable, Internet), and other service providers;
  • a copy of the development plans and, if possible, a list of all contractors and sub-contractors that participated in the design and construction of the project;
  • all certificates of occupancy that the developer recorded;
  • copies of all insurance policies in effect during the developer’s control;
  • all invoices received, and bills paid, for routine maintenance during developer’s control.

HOA ELECTIONS:

All power and authority of the unit HOA shall be exercised by a board of directors, which the unit homeowners shall elect from among the unit homeowners or the spouses of unit homeowners.

Chapter 5311 of the Ohio Revised Code 5312.04, Election of officers; powers; meetings. A board of directors of a HOA shall elect officers from the members of the board, to include a president, secretary, treasurer, and other officers as the board designates.

FILING CONSTRUCTION DEFECT CLAIMS:

After control of the association is obtained by members other than the developer, the association may institute legal actions in its name on behalf of all HOA members concerning matters of common interest to the members, including, but not limited to:

  • window installation problems such as leaks;
  • deterioration of stucco or stonework on the façade of buildings;
  • deterioration of decks and patio areas;
  • the common areas;
  • driveway and parking areas;
  • roof or structural components of a building or other improvements for which the HOA is responsible;
  • mechanical, electrical, or plumbing elements serving an improvement or building for which the HOA is responsible;
  • representations of the developer pertaining to any existing or proposed commonly used facility

Ohio law allows homeowners to bring negligence actions against developers for damage to their real property because of defective construction

NOTICE OF CLAIM PROCESS:

Actions brought by a homeowner or a HOA against a contractor (including builders, developers, and design professionals) for defective construction of a condo, the owner must provide written notice of the defects to the contractor at least 60 days prior to filing these claims. This is referred to as the Notice of Claim (NOC).

The construction professionals/developers receiving the NOC are then obligated to provide the owner with a good-faith written response within 21 days from the date the NOC was mailed.

If the contractor or developer fails to provide such a response, the owner may then file claims against the contractor or developer without further notice. If the contractor or developer does respond, the owner must then either accept the contractor’s offer or provide the contractor or developer with the reasons the offer is being rejected within 14 days. Once the owner has done so, the owner may proceed with litigation.