Before the meeting

When the developer starts a new condo project, they create and control the first board of directors for the development. Depending on the state or province, there may be a time limit by which the developer must appoint an interim board after the condo plan has been registered. The names and addresses of interim board members are documented, and the members hold office until owners elect the first board. 

During the construction and initial sales of condo units, the developer will manage the condo’s operations and governance. This includes arranging to have a reserve fund study completed by an independent provider, among other things. The interim board is expected to act honestly, and in good faith with the best interests of the corporation/association.

When does the meeting occur?

This turnover meeting follows the same procedure as any other owners meetings. However, there is no exact date for this meeting to take place. Rather, a certain criterion must be met to get the ball rolling.

Once a certain percentage of units have been purchased, the meeting is scheduled. The threshold varies greatly depending on where you live.   

For example, the Florida laws that regulate the turnover process state that once owners other than the developer own at least 15 per cent of the units, they are entitled to elect at least one-third of the members of the board of directors. Unit owners are entitled to elect at least a majority of board members either three years after 50 per cent of the units have been sold to non-developer owners, or three months after 90 per cent of the units have been sold to non-developer owners, whichever occurs first.

In Ontario, once the developer no longer owns a majority of the units, the interim board has 21 days to call a turnover meeting. In Alberta, the developer has 90 days. In Canada, unit owners are elected to the board, and the interim members step back.

Agenda

The agenda for a turnover meeting covers two key items:

• The election of the first board of directors
• The handing over (or turnover) of corporation/association documents

Documents

The new board will need all of the corporation’s/association’s documents in order to manage their community as effectively as possible. If something is missing, the board won’t have all of the information it needs to provide concrete answers and make educated decisions. 

These documents include, but are not limited to:

• The original recorded declaration of condominium
• Articles of incorporation and bylaws
• The minute books
• Financial records
• Reserve fund study
• Bank accounts and statements
• Personal property of the association (indoor and outdoor furniture, office equipment, computers, etc.)
• Construction plans and specifications
• Names and contact info of all of the contractors, subcontractors and suppliers
• Agreements already entered into on the corporation’s behalf
• Insurance policies
• Bills of sale for the corporation’s assets
• The register of the owners

Depending on where you live, the developer may have a few additional weeks to turn over other important information such as:

• Warranties
• Plans, drawings, and specifications of the property
• Proof that the units and common elements have been enrolled in the New Home Warranties Plan
• A table that outlines responsibilities for repair and maintenance between unit owners and the corporation

Sometimes, a document is overlooked or forgotten. If that happens, the board should reach out to the developer immediately. If the condo cannot secure a document after having requested it, a court can order the developer to provide the documents. In addition, the developer could be subject to a fine and may have to pay the condo’s court costs. As such, it is in everyone’s best interest to ensure the document exchange process goes well. To ensure things go as smoothly as possible, both parties should consider having a lawyer present to confirm that all the required documents have been delivered to the new board. 

Electronic meetings

Like any member meeting, a certain number of people must participate in order for the turnover meeting to be valid and productive. Members need to vote on who they would like to represent them on the board. But if quorum is not met, the meeting will have to be rescheduled.

To encourage greater participation and simplify the entire meeting process, the condo may want to consider hosting an electronic turnover meeting. This may or may not be permitted in your city, so check state laws as well as your governing documents before moving ahead with an electronic meeting.

As most owners’ email addresses are collected at the time of final closing, the board could request consent to send electronic communications with owners. From there, they can send out items to members and provide them with proper notice electronically. Owners can cast their votes for their first owner-elected board of directors as well. You will need to find a platform that supports online meetings, but there are some strong options to consider. 

It is often a challenge to get owners out to a meeting. It is even more challenging to get them out to a turnover meeting, considering many unit owners are offsite owners. With electronic voting, those offsite owners can vote with ease because the process is simple and convenient.

This process may seem intimidating, but it produces more owner participation and makes the turnover meeting much easier to organize and manage.

After the turnover meeting

Once power and responsibilities have been handed off from the developer to the owners, the board has a lot of work to get done. For example:

• They should hire a lawyer, auditor, and engineer familiar with condos and condo issues
• The board may want to hire a property manager to take on some of the day-to-day responsibilities
• They must ensure that any necessary performance audits are completed
• They may need to cancel an agreement made by the condo corporation before the owner board was elected. They may be permitted to cancel contracts for services, such as security. Some cancellations must be done within 12 months. Others, such as mutual-use agreements, could require a court application
• They can seek different contracts for service providers 
• They must complete their own financial review. It is crucial that the board take charge of the corporation’s finances. They need to confirm whether the year-to-date financial performance is on track in relation to the current-year budget, if the current budget is realistic, etc.
• The board should have a reserve fund study conducted

Conclusion

A turnover meeting is an exciting and important stage in the development of a condo community. This is where the developer turns control of the corporation or association over to owners. The process must be done correctly to avoid problems down the road. Owners and developers are strongly encouraged to work together so that the interests of all parties are met. Happy condos begin with successful turnovers.