What New Condo Associations Must Know To Protect Their Interests
When you buy a new construction condo in DC, it's important to know the owner's board responsibilities and take the appropriate actions before important deadlines are missed. Even if you're not on the board, this is important information to share.
Background
Condo associations' primary purpose is to control the appearance, management and budget of the community. The association not only provides services and manages the community, it also has the authority to enforce regulations, levy assessments and impose fines for infractions by unit owners. Members pay dues and assessments and are obligated to follow the rules set out in the Covenants, Conditions and Restrictions (CC&Rs).
Developers create the association when developing a condominium and have controlling interest in the board until a certain percentage of owner-occupancy is reached. In order to protect their interest in the property, they may retain a specified number of seats on the board until the project is sold out. This protects their investment in the property. Once the owners take over the board, however, steps should be immediately taken to protect the owners' interests.
The Developer's Obligations
First, board members should be aware of the warranty provided by the developer in the purchase contract, and the DC law requiring developers to file a warranty bond, letter of credit or cash reserve with the DC government to offset potential structural defects for a two-year period from the date of the first sale:
Code § 42-1903.16. Warranty against structural defects; limitation for conversion condominiums; exclusion or modification of warranty
Developers can't be exempted from this warranty by using “sold as is” language for any residential condo unit. For conversion condominiums sold "as is,” the warranty applies to any components installed, or work done by the developer unless a more extensive warranty is given by the developer in writing.
Steps For The Board
A board should hire a qualified professional to evaluate the construction quality of the project while the enforcement period for any statutory or other rights is still in effect. This evaluation should be made by an engineer or architect or contractor with specialized training and experience in evaluating construction quality, selected by the Board, not the developer. Once the inspections/studies are complete the board has a number of options for remedy, which should be discussed with its legal representative.
*This information has been compiled from online legal and government sources and is not intended as legal advice. We are real estate agents, not attorneys. If you have questions about, or issues with condominium boards, latent defects, etc, please contact an attorney.
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