For every condominium and homeowner association, “control” is eventually transferred by the developer to an owner-controlled governing board after construction. This is called “transition.” A successful transition is one in which the owner-controlled board works with the developer to ensure appropriate governance, adequate financial resources, and a properly designed and constructed community. But what happens when negotiations fail?

How Does It Work?

The procedure for effective turnover of control is set forth by the New Jersey Condominium Act, N.J.S.A. 46:8B-1et seq., and the New Jersey Planned Real Estate Development Full Disclosure Act (PREDFDA), N.J.S.A. 45:22A-21, et seq. Under the Condominium Act, unit owners are statutorily entitled to elect all of the members of the governing board upon the conveyance of 75% of the units in a condominium. PREDFDA provides that turnover may occur on one of three triggers:

  1. 60 days after conveyance of 25% of the lots, parcels, units or interests, not less than 25% of the members of the executive board shall be elected by owners;
  2. 60 days after conveyance of 50% of the lots, parcels, units or interests, not less than 40% of the members of the executive board shall be elected by the owners; or
  3. 60 days after conveyance of 75% of the lots, parcels, units or interests, the developer’s control of the executive board shall terminate at which time the owners shall elect the entire executive board.