Chapter 8

Card Set Information

Chapter 8
2013-04-25 21:36:09
Association Operations

Process of transition from developer to member Concept of bulk buyers and assignees What receivership is and how one creates one How to revitalize an HOA covenant
Show Answers:

  1. Name the Steps in a condo or coop to transition the association from developer to member control.
  2. When must a developer turn control over to the members in a condo, coop and HOA?
    Condo & coop
  3. Can a developer retain any members on the board? If so how many and what are the restrictions?
    • Condo & Coop - When 15% of units conveyed, members other than developer elect 1/3 of board.Developer continues to control 2/3 of board until members become eligible to elect a majority of the directorsDeveloper must provide association with an audit of association financial records within 90 days after transition (turnover)A developer is entitled to elect/appoint at least one board member as long as developer meets any of the following requirements: - In a project with less than 500 units and the developer owns at least 5% of units- In a project with more than 500 units and the developer owns at least 2% of units.
    • HOA - Developer is entitled to elect at least one member of the board of directors as long as developer holds for sale in ordinary course of business at least 5% of total parcels in all phases of community
  4. What must the developer turn over to the association after he has turned over control and in what time frame?
    A) Condo/coop
    B) HOA
    • A) An audit of association financial records within 90 days after transition meeting.
    • B) The records and property of association no more than 90 days
  5. What records are the members entitled to?
    All formal, informal and legal documents.
  6. Define:
    A) Bulk Assignee
    B) Bulk Buyer
    • A) Purchaser who acquires more than 7 parcels in a single condo after July 1, 2010 and prior to July 1, 2015 as determined by county records; receives assignment of some or all of rights of developer as set forth in declaration or statute by written document recorded in county records.
    • B) Purchaser who acquires more than 7 parcels in a single condo after July 1, 2010 and prior to July 1, 2015 but does not receive assignment of developer rights other than right to:
    • - Conduct sales, marketing & leasing activities within association
    • - Be exempt from payment of working capital contributions arising out of or in connection with bulk buyers acquisition of units.
    • - Be exempt from any rights of first refusal from association.
  7. Who may assign developer rights to a bulk assignee?
    • Developer
    • Previous bulk assignee
    • Court on behalf of developer or previous bulk assignee
  8. Define responsibilities of bulk assignee.
    Page 140 line 29-38
  9. What must the bulk assignees have?
    • Updated prospectus or offering circular
    • Updated FAQ&A
    • Executed escrow agreement if required
    • Financial report for prior year unless he cant obtain records in which case he must include disclosure that records are not available
    • Disclosure statement with description of rights developer has assigned to bulk assinee or bulk buyer.
    • Statement regarding responsibilities for warranties. 
    • If a conversion, statement regarding obligations for converter reserves or warranties
  10. What exemptions do bulk assignees have?
    • Warranties of developer unless performed by or on behalf of bulk assignee.
    • Obligation to:
    • - Fund converter reserves for units not acquired by bulk assignee.
    • - Provide converter reserves on any portion of condominium property except as provided in contract for purchas & sale with purchaser and pertaining to design, construction, development, or repair work performed on behalf of bulk assignee
    • Requirement to provide cumulative audit from date of formation of association.
  11. Define the steps to create a receivership.
    • Member may  petition court if board fails to elect or appoint sufficient directors to establish a quorum of the board and use required form of notice as described in statutes
    •            - Member soliciting receivership must give 30 days after notice sent. Member may proceed with receivership petition.
    • If association fails to fill vacancies within 30 days after notice sent, member may proceed with receivership petition
    • Upon appointment by court, receiver must notify all member in writing within 10 days.
  12. Define the 3 reasons to terminate a condo.
    • Economic waste
    • Disrepair of property
    • When continued operation made impossible by law or regulation
  13. What % of member is needed to terminate?
    80% TVI needed to approve termination of association or in not more than 10% object to termination.