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Transitions in Maine

Article written by Jack Carr, P.E., R.S., LEED AP, Criterium Engineers
Well, it is fall in Maine again. Fall, of course, is one of Maine’s four seasons (fall, winter, spring, and August). Fall is the time when a young man’s fancy turns to thoughts of the Patriots’ chances, raking leaves, and outside chores to do before winter arrives all too soon. This transition of seasons gets me to thinking about the transitions going on across the state in the condo world.
In previous articles I discussed the changing condominium real estate market and the new types of condominiums being developed here. Now I would like to focus on condominium transitions themselves, that is, the transition that occurs when the developer turns over control of the condominium’s board and the associated responsibilities, ownership, and governance to the new owners’ association.
Maine has a history of many of it condominiums (even some of the largest) being run totally in-house. That is, very little or no use of professional property managers, legal counsel, or accounting expertise. Due to lack of outside input, boards have had to depend on their own internal resources. Some are very fortunate to have very experienced board members who bring management, technical or financial skills to the meeting. Other boards are not so lucky.
When it comes to soon-to-be boards arising out of the transition process, the knowledge of what a transition is and what the rights are of the new owners’ association in protecting its interests is often very limited. Simply talking to a lawyer may not be enough. Just as not all doctors are trained in dietary medicine and nutrition, not all lawyers are well versed in their state’s condominium statues or have ever been through the transition process with a client.
I did not realize the significance of this until I recently assisted in a Boston lecture series at the Massachusetts Bar’s Massachusetts Continuing Legal Education, Inc. (MCLE) to discuss transitions in condominiums. As the only engineer in the lecture hall, I was wondering what an engineer could tell a group of highly qualified lawyers about condominium law and the issues surrounding it. Through presentations of case studies, construction contracting issues, and facility forensic methodologies, it became clear that there is a growing need in the legal community to develop the tools necessary to assist the ever expanding population of community associations throughout New England.
So how do new boards know what to do? Often times my firm receives a call from a board member with a story of a condominium complex that recently has been turned over to the new board only to find serious structural problems or other unresolved building deficiencies and an unresponsive developer. Upon meeting the board for the first time, I typically discover that the board has been preparing a punch list of problems but has no one to call for advice.
More often then not the board members are surprised to find out there are specific processes to help them through their difficulties. Whether the developer is willing to negotiate these issues in a good faith manner or more serious steps are required, the typical first step is the Transition Study. It is not unusual even for board members who have lived in various condominiums over the years to have never heard of a Transition Study, as their prior residences were well beyond the transition period.
The Transition Study’s primary purpose is to document alleged and discovered construction deficiencies so that they may be brought to the attention of the developer. By having these issues resolved, the community’s quality of life improves while avoiding future repair costs that should be borne by others.
Boards are often surprised with the side benefits that arise from a Transition Study. As the study’s review of construction plans, specifications, permits, certificates of occupancies, and common elements of the complex proceeds, knowledge of items such as a lack of warranties, schedule of suppliers, systems operations manuals, as-built drawings, utility line locations, etc., can often be just as valuable to the board’s future management as knowing about building defects.
Many think that Transition Studies are only originated by the new association. Some progressive developers see considerable benefit to themselves. If a developer was to be asked what his biggest worry was, the answer might be “the unknown.” With a Transition Study, a developer is presented a certified punch list that has the potential of limiting his future liabilities. He knows when he completes this specific list he can move on.
Developers sometimes use Transition Studies as a marketing tool. This can be especially important on a project that has developed a bad reputation, such as a condominium complex that was halted due to the failure of an initial developer and now a second developer is resurrecting the project. If suspect quality rumors are in the market place, a competent Transition Study could alleviate future buyers’ fears.
Just like fashion and the weather appear to go from west to east, so do condominium laws and management techniques. One of these is the Transition Study, and it has come to Maine.