Confirm the turnover election deadline
The first unit owner board must be elected no later than 60 days after the sale of 75% of the units, or 3 years, whichever is earlier. Ensure the developer does not delay this process.
A Board Member’s Checklist, Illinois Condominiums & HOAs
Developer Turnover in Illinois: What Every Board Member Needs to Know
Schedule a Turnover ConsultationWhy is Developer Turnover Important?
Developer turnover is not simply the transfer of records and control. It is the board’s opportunity to determine whether the association received the money, documents, property, warranties, and completed construction that the developer promised.
“Developer turnover is where an association protects its future or inherits years of expensive problems. An experienced community association attorney helps the board uncover construction defects and collect what the developer owes, to prevent the developer’s exit from becoming the owners’ future financial burden.”
The Developer Turnover Checklist
Review the Books and Records provided by the Developer
Request governing documents, financial records, bank accounts, contracts, insurance policies, meeting minutes, owner records, construction plans, warranties, property and equipment schedules, and a list of all pending litigation. The developer must provide this information within 60 days of the election of the unit owner board.
Retain an experienced Community Association Attorney
Have a community association attorney review the turnover process, missing records, contracts, potential construction defects, and determine whether the developer has fulfilled all financial obligations to the association.
Retain an Independent Accountant
Review developer-era finances, reconcile all association funds, identify improper expenses, and determine whether the developer satisfied its financial obligations.
Retain an Engineer and Reserve Study Specialist
An independent inspection may uncover construction defects, incomplete work, or premature deterioration. A reserve study can help the new board understand future repair obligations and establish a realistic funding plan.
Review and terminate unfavorable developer contracts
Act promptly because statutory cancellation windows may apply. Decide whether to retain the existing manager, hire independent management, or self-manage.
Review insurance coverage
Confirm the association has appropriate property, liability, directors and officers, fidelity or crime, and other necessary coverage.
Do not sign a release without legal review
A turnover agreement, settlement, or release could affect the association’s ability to pursue claims for missing funds, incomplete work, or construction defects. A new board should not waive any of its rights without first consulting with counsel.
Key Deadlines, Do Not Miss
Different statutory provisions govern Illinois condominiums and common interest communities. The applicable deadlines may also depend on the association’s governing documents, the date the declaration was recorded, the percentage of units sold, the contracts involved, and the nature of a potential claim.
Do not rely on a general checklist to calculate a legal deadline. Have the association’s specific dates and documents reviewed by counsel.
Important deadlines may involve:
- Election of the first owner-controlled board
- Delivery of records, funds, contracts, and other association property
- Cancellation of certain developer-era contracts
- Construction-defect and property-damage claims
- Warranty and contractual claims
- Responses to proposed settlements or releases
Warning Signs to Watch for During Developer Turnover
- Missing financial, corporate, construction, or warranty records
- Assessments that appear artificially low
- Reserves that are inadequate for known future repairs
- Unpaid assessments and underfunded reserves, developers often set low assessments to sell units
- Unfinished construction or recurring water, concrete, roofing, paving, or drainage problems
- Delays in obtaining an engineering inspection
- Repeated assurances that problems will be repaired without written commitments to try to run out the statute of limitations
- Pressure to accept records or property “as is”
- Requests to sign a broad release
- Long-term contracts benefiting the developer or affiliated vendors
- Missing the contract-cancellation windows
A cooperative relationship with the developer can be helpful. It is not a substitute for an independent investigation or review by an attorney.
In Practice
$1.5M+
settlement in a 500-unit turnover defect matter
A condominium association with approximately 500 units contacted Hirzel Law regarding serious construction problems, including deteriorating concrete, road failures, roof leaks, and drainage issues. After the association retained qualified experts and developed comprehensive reports, Hirzel Law initiated litigation rather than allowing prolonged negotiations to jeopardize the association’s claims before the statute of limitations expired, and also improved the association’s negotiating position. The matter resulted in a settlement exceeding $1.5 million, including monetary compensation and repairs.
Past results do not guarantee a similar outcome. Every matter depends on its particular facts, documents, claims, and applicable law.
What This Costs
Attorney’s fees and costs for developer and construction-defect claims are variable as costs depend on the size of the community and the scope of any defects, and the willingness of the developer to resolve the issues. It usually begins with a review of the transition documents, reserves, and contracts, moves to investigation (engineering and reserve-study fees are paid separately to those experts), and may escalate to litigation if significant problems are discovered and the developer does not offer a reasonable resolution. Legal work is billed hourly, so the board has the opportunity to evaluate settlement as the negotiations are ongoing.
| Turnover phase | How it’s billed |
|---|---|
| Transition document & reserve review | Hourly Fees ($325–$525/hr) |
| Defect investigation support | Hourly (experts billed separately) |
| Claims against the developer | Hourly, or a hybrid of hourly and contingency, depending on the size of the case |
Who Ultimately Pays
The association pays the fees as the matter progresses. However, as part of settlement negotiations, fees can be demanded, and certain types of construction defect claims allow for the recovery of attorney’s fees.
Frequently Asked Questions
Do we need an attorney if the developer is cooperating?
Cooperation is helpful, but the board still needs an independent assessment of the association’s records, finances, contracts, property condition, and potential claims. The developer’s representatives cannot advise the owner-controlled board about whether the developer has fully satisfied its obligations.
Should the board sign the developer’s turnover agreement or release?
Not before the community association’s attorney has reviewed it. A broadly worded agreement or release may affect claims involving construction defects, missing funds, incomplete work, contracts, or other developer obligations.
Can a community association recover its attorney’s fees from the developer?
Recovery depends on the claims, contracts, statutes, and outcome of the matter. Legal and expert fees may be requested during settlement negotiations, and if an association is successful, it may have a statutory or contractual right to recover attorney’s fees. No recovery should be assumed until the specific facts are evaluated.
What should a Condo or HOA do if a deadline is approaching?
Do not wait until the last minute, as negotiations with a developer can often take a year or two. Gather the available documents and contact experienced community association counsel immediately. A delayed investigation can reduce the board’s options, weaken their negotiating position, or worse yet, result in the loss of certain claims even if the developer is at fault.
What will Hirzel Law need from our association?
- The declaration, bylaws, and rules
- The dates units were first sold, and the approximate percentage conveyed
- Records and correspondence received from the developer
- Financial statements, budgets, bank records, and reserve information
- Developer-era contracts
- Construction plans, warranties, inspection reports, and repair records
- A list of visible defects, unfinished work, or recurring problems
- Pictures of any construction defects or unfinished work
- A list of any complaints received from owners
- Any proposed turnover agreement, settlement, acknowledgment, or release
Do You Need an Attorney?
Board members are volunteers, but the decisions made during developer turnover can affect every owner for years. A timely legal, financial, and engineering review can help the board:
- Identify construction defects before they become larger problems
- Determine whether money or records are missing
- Avoid unfavorable long-term contracts
- Preserve potential claims
- Prevent owners from inheriting the developer’s financial obligations
Before your board signs a release, accepts the turnover, or allows another deadline to pass, schedule an Illinois developer-turnover review with Hirzel Law.
This material is provided for general informational purposes and is not legal advice. Legal rights and deadlines depend on the particular facts, governing documents, contracts, claims, and applicable law.