What is a Transition Study, AKA Deficiency Report, Warranty Analysis, Warranty Inspection?
When a condominium is developed, it is initially owned by the Developer, but at some point, the units are sold, and the number of units owned by the Developer is fewer than those owned by individuals. So, the facility is transitioned from Developer control to Condominium Association control. This process can take months or even years.
Usually at the beginning of the transition period, the Condominium Board of Directors commissions a transition study. This is essentially a large home inspection to check to see if there are any defects that need to be remedied by the Developer, especially those that can lead to major damage to the building or structure over time. Usually, an engineer or architect performs the study and notes deviations from the Building Code, industry standards, and manufacturer’s recommendations. This is a roof to basement review of the common and limited common areas and often includes the surrounding grounds (parking areas, irrigation systems, mailboxes, light poles, etc.) and amenities (pool, walking trails, signage, etc.). Part of the study includes the review of documents such as the project construction drawings, Public Offering Statement, and Replacement Reserve Study.
This is initially a visual review and typically does not include any dismantling or testing of building components. However, a second phase of the study may be necessary to better evaluate the cause of some defects, such as water intrusion. The engineer will provide a report listing any defects found during the study, which can be presented to the Developer as part of a request to remedy the areas of concern.
Be prepared that all defects listed in the Transition Study Report will not be fixed by the Developer. Ultimately this is a legal negotiation between the Developer and Condominium. So, an attorney is needed to represent the Condominium. The Attorney advises the Condominium during the process and interacts with the Developer’s attorney, files court paperwork, aids in crafting a Settlement Agreement, and many other items. Having an attorney familiar with the laws of the jurisdiction in which the Condominium is built is a must. There are legally established timelines related to the warranty provided by the Developer on the Condominium.
In Washington, DC a professional engineer must conduct and sign the transition study report. Recently the use of an Architect for the Transition Study has been met with push back.
For more information, check out the resources published by the Community Associations Institute at Best Practices Reports – Foundation for Community Association Research (caionline.org)
We have a short presentation intended for a Lunch and Learn setting to provide insight into the basics of Transition Studies and what to expect during the process. Please email info@YourStructurePros.com to set up a presentation date.