FAQs for HOA Transition from Developer to Homeowner Leadership
This quick reference guide provides clear, concise definitions for the technical terms a new board will encounter during the transition process. It empowers board members with the vocabulary they need to confidently engage in conversations with attorneys, accountants, and engineers.
Transition Audit: An independent forensic review of the developer’s financial records. This audit helps ensure that all funds were managed correctly and can be used to recover any mismanaged money.
Reserve Study: A long-term financial plan that assesses the physical condition of common area components and estimates the cost of future repairs and replacements. It helps a community plan for major expenses.
Transition Inspection: An independent engineering review of construction quality and potential defects. It is a critical step to identify issues before developer warranties expire.
Governing Documents: A collective term for the legal documents that establish the homeowners association, including the Declaration, Articles of Incorporation, Bylaws, and Rules & Regulations.
RFP (Request for Proposal): A formal document sent to prospective vendors inviting them to submit a bid for a specific project or service. This process ensures transparency and competitive pricing.
Warranties: Written guarantees from the developer or contractors that their work will be free from defects for a specified period.
CC&Rs (Covenants, Conditions, and Restrictions): The legal document that dictates the rules and limitations for property owners within the community. It is the most powerful of the governing documents.
Disclaimer: Association Management Group, Inc. (AMG) is not a law firm and does not provide legal advice or services. The information provided is for general informational purposes only and is based on sources believed to be reliable. Nothing herein should be construed as legal, accounting, insurance, engineering, or other professional advice. Community leaders and board members are strongly encouraged to consult with qualified legal counsel—particularly attorneys who specialize in community association law—before making decisions that carry legal or regulatory implications.