Transition Period

The timeframe during which control of the association transfers from the developer (declarant) to a homeowner-elected board of directors. This is one of the most consequential periods in an association's life because the decisions made and the records maintained (or not maintained) during transition set the foundation for the community's long-term governance and financial health. During the transition period, the developer typically controls the board and makes all governance decisions, including setting initial budgets, hiring management companies, and establishing the reserve fund. As units are sold, homeowner-elected directors gradually join the board until the homeowner members assume full control. Transition involves the turnover of a comprehensive set of documents, records, and assets: financial records and bank accounts, reserve fund balances, original governing documents, construction plans and specifications, warranties and guarantees from contractors and suppliers, insurance policies, vendor contracts, maintenance records, architectural review files, and any pending litigation or claims. In California, the Davis-Stirling Act (Civil Code Sections 4000-4190) and the Subdivided Lands Act establish specific requirements for the transition process, including what documents the developer must deliver and the timeline for doing so. The homeowner board should carefully review all transferred records, commission an independent reserve study and financial audit, and inspect common areas for construction defects before the statute of limitations on warranty claims expires. Failing to conduct thorough due diligence during transition can leave the association with underfunded reserves, undetected construction defects, and unfavorable legacy contracts.