Developer Turnover of Condominium Associations in Florida: Part II

By Hans C. Wahl October 6, 2021 Posted in Community Association Law Share

As discussed in Part I of this blog series, the developer controls a condominium association’s board of directors and, therefore, controls its operations and management prior to turnover. Once development is completed and units are sold, turnover of control of the association to the unit owners must occur. This blog post provides a summary of what condominium members must know regarding the developer’s required financial disclosures and document production at turnover.

Florida law regulates the process and procedure for turning over certain association documents and financial disclosures from the developer to the unit owners. Turnover is when the non-developer unit owners are first entitled to elect a majority of the board of director seats. That occurs at the turnover meeting. The developer is required to turn over the following documents to the association and owner-controlled board of directors at the turnover meeting:

• The recorded declaration, articles of incorporation, bylaws and all amendments thereto;
• The minutes of all developer-run board meetings;
• The association’s financial records, including financial statements from the incorporation of the association through the date of turnover;
• All association funds;
• A copy of the plans and specifications utilized in the construction of the condominium;
• A list of names and addresses of all contractors and suppliers for the construction of the condominium;
• Association insurance policies;
• A roster of unit owners;
• All contracts to which the association is a party, including employment and service contracts. Fla Stat. § 718.301(4).

The above list is not a complete list of the developer’s required turnover documents. A complete list can be found at Fla. Stat. § 718.301(4). The developer is required to pay all expenses associated with the compilation, preparation, and delivery of the turnover documents.  61B-23.003(4), F.A.C. 

The developer must also have a turnover audit performed.  61B-22.0062, F.A.C. This is a financial audit that must cover the period beginning with the date of the association’s incorporation and ending with the date of the turnover.  Id.  The turnover audit must include financial statements that describe the revenues and expenses separately for each fiscal year included within the audit.  Id. The developer must also include a statement of total cash payments that it made to or on behalf of the association.  Id. 

Every contract formed by the developer for the association prior to turnover must be fair and reasonable.  Fla. Stat. § 718.302(4). Any contract made prior to turnover that provides for the operation, maintenance or management of the association may be cancelled by the unit owners. Fla. Stat. § 718.302(1).  Any cancellation must be made by an approving vote of at least seventy-five percent of the non-developer voting interests.  Id.  Any contract made by the developer prior to turnover that requires the association to purchase or lease condominium property shall be deemed ratified unless rejected by a majority of the non-developer voting interests within eighteen months after turnover. Fla. Stat. § 718.302(2). 

Turnover of control of a condominium association from the developer to the unit owners can be a confusing and challenging process. Owners are often not aware of their rights, nor are they aware of the obligations of the developer. If your association has recently experienced turnover or is approaching turnover from the developer, you should ensure your owner-run board of directors is represented by competent counsel that is well-versed on Florida law regarding turnover and the developer’s obligations.

Join our Community Association Practice Group Educational Webinar Series, hosted by Hans C. Wahl, Wednesday 10/27/21 at 11 A.M. Hans will be presenting a detailed overview of Developer Turnover for Community Associations with a 30 minute Q&A. 

Zoom link:

https://us06web.zoom.us/j/81743112497?pwd=U1JPT2M4UEl5SElzT1ozMWxEUFZJdz09