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From developer to homeowners association: Making the transition

Q: Is there any set procedure for the turning over of common areas from the care of the developer to the association?

A: NRS 116.3108 pertains to the delivery to the association of property held or controlled by the developer. The procedure for transition consists of the following items to be delivered to the association: The original or a certified copy of the recorded declaration, as amended; the articles of incorporation; articles of association; articles of organization; certificate of registration; certificate of limited partnership; certificate of trust or other documents of organization for the association; the bylaws, minutes and other books and records of the association; and any rules or regulations which may have been adopted.

In addition, an accounting for money of the association and audited financial statement for each fiscal year and any ancillary period from the date of inception of the association to the date the period of the developer’s control ends. The financial statements must fairly and accurately report the association’s financial position.

The developer is to deliver a complete study of the reserves of the association conducted by a person who holds a permit to conduct such a study. The reserve account should contain the developer’s share of the amounts then due and the transfer the control of the account. The developer is to transfer control of the association’s operating account.

The developer is to transfer any tangible personal property of the association that has been disclosed in the public offering as being personal property of the association. A copy of any plans and specifications used in the construction of the improvements of the community which were completed within two years before the declaration was recorded must also be included

In addition, the developer is to provide the association with all of the insurance policies then in force, copies of any certificates of occupancy, any renewable permits and approvals issued by governmental bodies (such as pool and spa permits), written warranties of the contractors, subcontractors, suppliers and manufacturers that are still effective.

Finally, the developer is to transfer a roster of the owners and the mortgagees of units, addresses, and telephone numbers, if known. Contracts of employment and any contract for service are also to be given to the association.

In a number of cases, especially when a community is being built in phases, it is not unusual for the developer to begin to transfer the completed phases to the homeowners. Once these phases are transferred to the homeowner association (regardless of whether the developer maintains control of the association), the homeowner association will then be responsible for the maintaining of that phases’ common areas through their assessments. Most developers will first walk through the phase with at least one homeowner member of the board and the community manager along with an inspection expert hired by the developer. The purpose of the inspection is to create a punch list of any maintenance issues that must be corrected by the developer prior to the transfer of the phase to the homeowner association. A second inspection with all of the players is initiated to confirm that the maintenance issues have been corrected, at which time the developer and the association signs off on the inspection. It is not unusual for either party to video the inspection.

Q: I live in a small homeowner association. It is not gated and non-contiguous. We have four private streets as well as two county streets. Because the private streets are not as wide, they cannot support parking and through traffic simultaneously. We have always had a no overnight parking policy on the private streets with several well positioned tow away signs for all to see. The problem is that many residents and their guests simply ignore the signs despite the fact that some of them have been previously towed away.

If there was a police or fire emergency on any of the private streets and an illegally parked vehicle impeded the first responders, could legal action be taken against the association?

A: Both the fire department and the police department could have the vehicle tagged and towed. They can cite the violator (owner of the vehicle) and have them fined. I have never seen an association fined, but have seen an association warned by the fire department. As long as the association enforces its regulations and can prove that they enforce the regulations, there should be no penalty assessed against the association.

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