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From Developer to Homeowners: A Brief Overview of Transition in New Jersey Community Associations

From Developer to Homeowners: A Brief Overview of Transition in New Jersey Community Associations

Congratulations on becoming homeowners in your new community! As you settle in and start to personalize your spaces, an important milestone awaits: the transfer of control from the developer to the unit owners. This process, known as “transition,” marks the moment when you and your fellow residents take the reins of your community, shaping its future and ensuring its smooth operation. To help you and your community begin this process, here is a quick overview of the key information about community association transitions in New Jersey:

What is transition?

It’s the process by which developers gradually relinquish control of the condominium association’s executive board to elected unit owners.

The Governing Statutes: 

Pursuant to the Planned Real Estate Development Full Disclosure Act (“PREDFDA”), N.J.S.A. §45:22A-21 et seq., a developer of a proposed condominium development that is subject to the registration requirements of PREDFDA must establish an association responsible for the management of the common elements and facilities of the proposed condominium development.  N.J.S.A. §45:22A-43.  The developer is required to organize the association prior to the filing of the master deed or declaration of covenants and restrictions.  The association may be established as a for-profit or nonprofit corporation, unincorporated association, or any other form permitted by law.  No matter the nature of the association, the responsibility of the association is the same – “the administration and management of the condominium and condominium property, including but not limited to the conduct of all activities of common interest to the unit owners.”  New Jersey Condominium Act (the “Condo Act”), N.J.S.A. §46:8B-12.  The powers of the association are vested in an executive board that is responsible for carrying out the responsibilities of the association.  Upon the formation of the association the developer will appoint representatives of the developer to sit on the executive board and carry out the functions of the association.  However, as the developer begins to sell units in the condominium development, pursuant to PREDFDA and the Condo Act, the developer is required to surrender control of the executive board to unit owners elected by the members of the association.  This process is known as “transition.”

Why is it important?

Transition ensures homeowner control, fostering a sense of community and accountability, and enabling residents to make decisions that best suit their needs and preferences.

Key milestones:

  • At 25% unit sales: At least 25% of the board must be elected owners.
  • At 50% unit sales: At least 40% of the board must be elected owners.
  • At 75% unit sales: Full board control transitions to elected owners.

What happens after transition?

  • The unit-owner-controlled board assumes responsibility for managing the community, including finances, maintenance, and enforcement of rules.

Responsibilities as a Homeowner:

  • Electing board members: Choose qualified individuals who represent your interests and have the skills to effectively manage the community.
  • Actively participating in meetings and voting: Stay informed about important decisions and have your say on matters that impact your community.
  • Serving on committees: Contribute your talents and expertise to specific areas like landscaping, security, or social events.
  • Following community rules and regulations: Ensure a harmonious and well-maintained living environment for all residents.

Taking control of your community association is an empowering experience. By understanding the transition process, your rights and responsibilities, and actively engaging in your community, you can collectively shape a vibrant and fulfilling living environment for yourselves and future residents.

However, navigating the transition process can be complex, involving legal intricacies and crucial decisions. To ensure a smooth and successful transition, it is critical that newly elected unit owner-controlled community association boards seek the guidance of an experienced community association attorney. By partnering with a qualified attorney, you can empower your community to make informed decisions and navigate the transition with confidence.  Contact John S. Prisco, Esq., at Becker to learn more about the transition process and how Becker can successfully guide your community from transition and beyond.