Over the last two weeks, we spoke about the events that trigger turnover and what the developer’s responsibilities to the association are at turnover. Now comes the hard part. It is important to understand that the first Board of Directors comprised solely of the unit owners has an awesome responsibility. It is their job to ensure that the developer delivered all that was promised and that the physical property and the association’s finances were properly maintained during the time period the developer was in control of the association. Your law firm, engineer and accounting firm should coordinate their efforts to determine issues like:
Did the developer improperly fail to pay the association’s bills or fail to pay assessments on developer owned units?
Has the developer improperly failed to fund reserve accounts?
Has the developer improperly charged unit owners for services never provided?
Has the developer failed to deliver possession of the property to the unit owners free from structural, electrical, mechanical or other defects?
Has the developer failed to build the amenities as promised?
If the experts find that the developer has failed in regards to any of the above matters, the association’s law firm must be prepared to go to court if necessary and protect the association’s rights. The association needs to be careful, however, because again, there are strict statutes of limitation in regard to pursuing money owed by the developer to the association and forcing the developer to honor its warranty and make necessary repairs. Sometimes the association needs to act quickly in order to get results. You may also want to strike early before the developer has the opportunity to divest itself of any ownership in any remaining unsold units so the association is not left chasing an empty shell who suddenly packed its bags and got out of Dodge with no other assets to attach. This is a very legitimate concern with lesser known fly by night developers. Florida law does not quire developers to post any bond to ensure the developer meets all of their obligations and that the unit owners have a source of funds to seek if the developer fails in that regard. Another potential pitfall is that these cases typically do not provide for prevailing party attorney’s fees. So, you have to be careful to not spend $10.00, chasing 5.
With the tremendous amount of new construction throughout Florida over the years, the turnover process and developer responsibilities to Florida community associations will no doubt be the subject of much litigation in our courts, both now and certainly into the foreseeable future. The important thing to know is that the Board should seek professional help at this crucial period of time, because the decisions made will have a long lasting effect on the community.