A Board Member’s Checklist, Michigan Condominiums
Developer turnover is when control of a Michigan condominium passes from the developer to the co-owners, with board seats transferring as units sell (25%, 50%, 75%). The new board should obtain all records, audit the finances, and inspect for construction defects promptly, because defect-claim deadlines run from the transitional control date.
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 and was legally obligated to deliver.
“Developer turnover is one of the most critical junctures in a condominium association’s life. This is the moment when control of finances, reserve funds, common elements, and legal authority passes from the developer to the co-owners themselves. Hiring an attorney with specialized experience in representing community associations is essential to ensuring the transition is conducted in compliance with Michigan law, positioning the association to begin its self-governed future on solid legal and financial footing.”
Board control transfers on a schedule tied to the percentage of units sold by the developer, at 25%, 50%, and 75% sold, with elections required within 120 days of each milestone (MCL 559.152). Ensure the developer does not delay this process.
Request all governing documents, financial records, budgets, tax returns, bank accounts, contracts, insurance policies, meeting minutes and resolutions, owner records (including payment ledgers), construction plans, warranties, and a list of all pending and prior litigation. The developer must turn this information over when the co-owners assume control of the association’s board of directors.
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.
Review developer-era finances, reconcile all association funds, identify improper expenses, and determine whether the developer satisfied its financial obligations, including the required minimum balance of the reserve fund.
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.
Act promptly because statutory cancellation windows may apply. Decide whether to retain the existing property manager, hire independent management, or self-manage.
Confirm the association has appropriate property, liability, directors and officers, fidelity or crime, and other necessary insurance coverage.
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 legal counsel.
Michigan condominium turnover deadlines depend on the association’s governing documents, the dates units were conveyed, the transitional control date, 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 legal counsel.
A cooperative relationship with the developer can be helpful, but it is not a substitute for an independent investigation or review by an attorney.
~$400K
recovered for a roof-defect claim in a condominium of under 100 units
A condominium association with less than 100 units retained Hirzel Law to pursue claims for construction defects primarily related to leaking roofs. When pre-litigation efforts to resolve the matter amicably were unsuccessful, the association filed a lawsuit and ultimately recovered nearly $400,000.00.
Example based on an actual matter; details changed for privacy. Past results do not guarantee a similar outcome. Every matter depends on its particular facts, documents, claims, and applicable law.
Attorney’s fees and costs for developer and construction-defect claims are variable as costs depend on the size of the community, 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, then moves to investigation (engineering and reserve-study fees are paid separately to those experts), and may ultimately 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 ($325–$525/hr) |
| Construction defect investigation support | Hourly (experts billed separately) |
| Litigation against the developer | Hourly, or a hybrid of hourly and contingency, depending on the size of the case |
The association pays the legal fees as the matter progresses. However, as part of settlement negotiations, reimbursement of legal fees can be demanded, and certain types of claims against developers allow for the recovery of attorney’s fees.
Cooperation is helpful, but the board still needs an independent assessment of the association’s records, finances, contracts, property condition, and potential legal claims. The developer’s representatives cannot advise the co-owner-controlled board about whether the developer has fully satisfied its obligations.
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.
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 in certain cases. No recovery should be assumed until the specific facts are evaluated.
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 its negotiating position, or result in the loss of certain claims even if the developer is at fault.
Board members are volunteers, but the decisions made during developer turnover can affect every owner for years to come. A timely and thorough legal, financial, and engineering review can help the board:
Before your board signs a release, accepts the turnover, or allows another deadline to pass, schedule a Michigan 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.