On January 23, 2013, Steve Williams, owner of Southwest Property Management outlined the issues associated with handover of the Home Owners' Association from the Developer / Builder to the Board of Directors elected by the owners of property at VillageWalk. His talk included two handouts; a Transition Committee Outline and Community Association Turnover. These are most helpful. Some of Steve's oral comments have been added to these documents (indicated in italics)

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The following is Frank Kearney's interpretation of what is involved in handing over control of the Board of Directors. You may also wish to check out the steps to handover of the Community Development District; these began in 2012.

Selected extracts from the legal documents for VillageWalk of Bonita Springs Association Inc.

DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS
1.38. "Transfer Date" shall mean the date that Class "B" Control Period ends. Unless the Developer elects to terminate control of the Association earlier, the end of the Class "B" Control Period and the Transfer Date shall be the date of the first election of Directors as described in the Articles.
1.8. "Class 'B' Control Period" shall mean the period of time during which the Class "B" Member is entitled to appoint a majority of the members of the Board, as provided in the By-Laws.
B. The Class "B" Member shall be the Developer. The rights of the Class "B" Member, including the right to approve or withhold approval of actions proposed under this Declaration and the By-Laws, are specified elsewhere in the Declaration and the By-Laws. The Class "B" Member shall be entitled to one (1) vote per Unit owned and, in addition, shall be entitled to appoint the members of the Board during the Class "B" Control Period. The Class "B" membership shall terminate and become converted to Class "A" membership on the Transfer Date
8.1. Directors. The affairs of the Association will be managed by a Board consisting of not less than five (5) nor more than nine (9) directors. The composition of the Board, the manner of election to the Board, the term of office and other provisions regarding the Board shall be established by the Declaration and the By-Laws of the Association. The number of Directors on the Board until the Transfer Date shall be three (3). After the Developer elects to divest itself of control of the Association, Directors must be Members of the Association.
8.4. Transfer Date. The first election of Directors shall not be held until 120 days after the Developer has closed all of the sales of the Units contemplated under the General Plan of Development, or until the Developer elects to terminate control of the Association, whichever occurs earlier.

ARTICLES
3.2. Number of Directors. The number of Directors in the Association shall be not less than five (5) nor more than nine (9), as provided in the Articles. The initial Board shall consist of three (3) members as identified in the Articles. The Board elected on the Transfer Date shall have not less than five (5) Directors, thereafter, the Board shall determine the number of Directorships for the succeeding year at the Board meeting prior to the Annual Members' Meeting, provided however, that the total number of Directors shall always be an odd number.
3.3. Nomination of Directors. Except with respect to Directors selected by the Class "B" Member, nominations for election to the Board of Directors shall be made by a Nominating Committee. The Nominating Committee shall consist of a Chairman, who shall be a member of the Board, and two (2) or more Members of the Association. The Nominating Committee shall be appointed by the Board not less than thirty (30) days prior to each annual meeting of the Members. The Nominating Committee shall make as many nominations for election to the Board as it shall in its discretion determine. Nominations shall be permitted from the floor. All nominees and candidates shall have a reasonable opportunity to communicate their qualifications to the Members and to solicit votes.
3.4. Election and Term of Ofice. Notwithstanding any other provision contained herein:
A. The Class " B Member Control Period shall terminate on the Transfer Date. On the Transfer Date and at each annual meeting of the Members after the Transfer Date, all Directors shall be elected by the Members, excepting however, the Developer shall be entitled to appoint one member of the Board so long as the Developer holds for sale in the ordinary course of business at least 5% of the Units constructed or anticipated to be constructed in VillageWalk of Bonita Springs.
B. On the Transfer Date: (i) so long as the Developer holds for sale in the ordinary course of business at least 5% of the Units constructed or anticipated to be constructed in VillageWalk of Bonita Springs, one Director shall be appointed by the Developer; (ii) two Directors shall be elected for a one year term; and (iii) two Directors shall be elected for a two year term. If on the Transfer Date, the Developer does not hold for sale in the ordinary course of business at least 5% of the Units constructed or anticipated to be constructed in VillageWalk of Bonita Springs, or if the Developer waives its right to appoint a Director, then the Members shall elect: (i) two Directors for a one year term; and (iii) three Directors for a two year term. With the exception of the Director appointed by the Developer, all Directors shall be elected by the Class "A" Members. Upon the expiration of the term of office for each Director elected for one year, all Directors shall be elected for two year terms.
C. When the Developer is no longer entitled to appoint a Director, then the Director appointed by the Developer shall resign and the remaining Directors shall be entitled to appoint a Director to serve the unexpired portion of the term. At the next Annual Members Meeting, the Members shall be entitled to elect a successor to serve a two year term.

FRANK KEARNEY'S TAKE / OPINION

The Developer is entitled to control the Association's Board of Directors until 95 percent of the homes are sold, or earlier if the Developer so chooses. If the Developer chooses to transfer control at an earlier date, so long as there are less than 1,572 homes sold, the Developer will be entitled to appoint one Director. If the Developer chooses to transfer control at an earlier date, and there are more than 1,572 homes sold, the Developer is not entitled to appoint a Director. If the Developer wishes, the Developer can appoint all of the Directors until 120 days after the last unit is sold.

Before that time, the Developer can (a) involve the VillageWalk community in the underlying governance process or (b) minimize such involvement. For example, committees of the Board could become more active (or could be appointed) to recommend actions to the Board of Directors. The Board is not obligated to appoint any Committees. The Board of Directors always has the final say, both before and after handover.

In my personal opinion, what will be critical is to have a Propety Manager, Town Manager and staff who will ensure that the Developer fulfills all his responsibilities at handover, including correcting any construction issues. This is tricky because up until that point the natural loyalty of the Property Manager and Town Manager will be to the Developer. Of even more importance is to have a Property Manager / Town Manager who has lots of experience in handover situations.

In my opinion, in an ideal scenario, here is what should happen before handover (or Transfer)

- A Transition Coommittee (with no official standing) should be selected to monitor pre Transfer activities
- Committees should be appointed by the Transition Committee (unless already appointed by the Developer) in consultation with the community for

• Activities,
• Architectural Control,
• Communications,
• Covenants,
• External Affairs,
• Finance,
• Grounds,
• Human Resources, and,
• Safety

- These Committees should make recommendations to the Ttransition Committee and the Board on topics within their control (recognizing that the Board (under Developer control) will not approve all proposed changes, especially contentious ones)
- The Transition Committee should assess the competence of the Property Management firm and the Town Manager to ensure that the right amount of experience, competency and independance is in evidence (if not the Task Force should begin a search for a new Property Management firm and/or Town Manager)
- The Transition Committee together with the Property Management firm and the Town Manager (and the Committees as appropriate) should develop a list of matters requiring correction by the Developer before the actual Transfer takes place

The bottom line is that there must be a solid group of residents who are involved early on in the process to ensure that VillageWalk's interests are protected.

Here is a diagram setting out the current organizational structure