PocketLaw | Georgia Code | Control of Association by Declarant;

Control of Association by Declarant; Surrender of Control to Unit Owners; Liability for Books and Records; Cancellation of Leases and Contracts

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If provided for in the condominium instruments and subject to any limitations contained in the condominium instruments, the association's articles of incorporation, the association's bylaws, or this article with respect thereto, the declarant shall be authorized to appoint and remove any member or members of the board of directors and any officer or officers of the association. The declarant's authority to appoint and remove members of the board of directors and officers of the association shall in no event extend beyond and shall in all cases expire immediately upon the occurrence of any of the following:
1. The expiration of any time limit specified for such purpose in the condominium instruments, which time limit may not be enlarged or extended after the conveyance by the declarant of a condominium unit without the express consent of all unit owners;
2. Unless the declarant at that time has an unexpired option to add additional property, the date as of which units to which four-fifths of the undivided interests in the common elements pertain shall have been conveyed by the declarant to unit owners other than a person or persons constituting the declarant;
3. The expiration of seven years after the recording of the declaration in the case of an expandable condominium or the expiration of three years after the recording of the declaration in the case of any other type of condominium; or
4. The surrender by the declarant of the authority to appoint and remove members of the board of directors and officers of the association by an express amendment to the declaration which is executed and recorded by the declarant.
  No formal or written proxy or power of attorney need be required of the unit owners to vest such authority to appoint and remove members of the board of directors and officers of the association in the declarant, the acceptance of a conveyance of a condominium unit being wholly sufficient for such purpose.
Upon the expiration of the period of the declarant's right to control the association pursuant to subsection (a) of this Code section, the right to control shall automatically pass to the unit owners, including the declarant if the declarant then owns one or more condominium units. The declarant shall be jointly responsible and liable with the members of the board of directors and the officers of the association to the unit owners for ensuring that the books, records, and accounts of the association are in proper order, that the association is in good standing under the laws of this state, and that the affairs of the association have been conducted in a prudent and businesslike manner, all as of the date upon which the declarant's right to control the association expires. The declarant shall not be insulated against liability to the unit owners because any act, omission, or matter complained of during such period of control may have been done, omitted, or permitted by or on behalf of the association as a corporate entity. Nothing contained in this Code section shall make any successor to the declarant responsible or subject to liability by operation of law or through the purchase of the declarant's interest in the property or any part thereof at foreclosure for any act, omission, or matter occurring or arising from any act, omission, or matter occurring prior to the time the successor succeeded to the interest of the declarant.
1. Notwithstanding and prior to the usual expiration of the period of the declarant's right to control the association pursuant to subsection (a) of this Code section and notwithstanding any provision to the contrary in any condominium instruments, the association's articles of incorporation, or the association's bylaws, the right to control also may pass to the unit owners as provided in this subsection if the declarant fails to do any of the following:
  1. Incorporate or maintain an annual registration pursuant to subsection (a) of Code Section 44-3-100;
  2. Cause the board of directors to be duly appointed and the officers to be elected pursuant to subsection (b) of Code Section 44-3-100;
  3. Maintain and make available to owners, upon written request, a list of the names and business or home addresses of the association's current directors and officers;
  4. Call meetings of the members of the association in accordance with the provisions of the association's bylaws at least annually pursuant to Code Section 44-3-102;
  5. Prepare an annual operating budget, establish the annual assessment, and distribute such budget and notice of assessment to the owners in accordance with the condominium instruments no later than 30 days after the beginning of the association's fiscal year; or
  6. Pay property taxes on common property of the condominium for two or more years.
2. In the event that the declarant fails to meet one or more of the obligations of this subsection, then any owner, acting individually or jointly with other owners, may send the declarant written notice of the failure to comply with such requirements and provide the declarant a 30 day opportunity to cure the failure; and such notice shall be sent by certified mail or statutory overnight delivery to the declarant's principal office. If the declarant fails to cure any or all deficiencies identified in the notice within 30 days of such notice, then any owner, acting individually or jointly with other owners, shall have standing individually, and not solely through a derivative action, to institute an action in the superior court of the county in which any portion of the condominium is located in order to obtain a declaratory judgment to grant the owner or owners control of the association by ordering an election and setting the terms thereof, or issuing any other orders appropriate to transfer control of the association. The superior court shall have authority to hold a hearing and issue a summary ruling on said action at any time designated by the court not earlier than 20 days after the service thereof, unless the parties consent in writing to an earlier trial. No discovery shall be had unless ordered by the court for good cause. In addition, the superior court shall be authorized to issue a summary ruling on the conveyance of any intended common areas or other property in the common interest community to the association or other appropriate entity. If the owner or owners prevail in such action, then the superior court shall award to the owner or owners all reasonable attorney's fees and costs incurred for the prosecution of such action. This subsection shall not be the basis for any liability against any party or agent of any party outside of the exclusive remedies provided herein.
In addition to any right of termination set forth therein, any management contract, any lease of recreational area or facilities, or any other contract or lease executed by or on behalf of the association during the period of the declarant's right to control the association pursuant to subsection (a) of this Code section shall be subject to cancellation and termination at any time during the 12 months following the expiration of such control period by the affirmative vote of the unit owners of units to which a majority of the votes in the association pertain, unless the unit owners by a like majority shall have theretofore, following the expiration of such control period, expressly ratified and approved the same.

(Ga. L. 1975, p. 609, § 33; Ga. L. 1990, p. 227, § 9; Ga. L. 2012, p. 1031, § 1/SB 136; Ga. L. 2017, p. 352, § 3/SB 46.)

The 2012 amendment, effective July 1, 2012, added subsection (c) and redesignated former subsection (c) as present subsection (d).

The 2017 amendment, effective July 1, 2017, substituted the present provisions of subsection (c) for the former provisions, which read: "Notwithstanding and prior to the usual expiration of the period of the declarant's right to control the association pursuant to subsection (a) of this Code section, the right to control also may pass to the unit owners as provided in this subsection if the declarant fails to do any of the following: (1) incorporate the association pursuant to subsection (a) of Code Section 44-3-100; (2) cause the board of directors to be duly appointed and the officers to be elected pursuant to subsection (b) of Code section 44-3-100; (3) maintain and make available to owners, upon written request, a list of the names and business or home addresses of the association's current directors and officers; (4) call meetings of the members of the association in accordance with the provisions of the association's bylaws at least annually pursuant to Code Section 44-3-102; or (5) prepare an annual operating budget and establish the annual assessment and distribute the budget and notice of assessment to the owners in accordance with the condominium instruments no later than 30 days after the beginning of the association's fiscal year. In the event that the declarant fails to meet one or more of the obligations of this subsection, then any owner, acting individually or jointly with other owners, may send the declarant written notice of the failure to comply with such requirements and provide the declarant a 30 day opportunity to cure the failure; and such notice shall be sent by certified mail or statutory overnight delivery to the declarant's principal office. If the declarant fails to cure any or all deficiencies identified in the notice within 30 days of such notice, then any owner, acting individually or jointly with other owners, may file a petition in the superior court of the county in which any portion of the condominium is located in order to obtain an order to grant the owners control of the association. The superior court shall have authority to hold a hearing and issue a summary ruling on said petition at any time designated by the court not earlier than 20 days after the service thereof, unless the parties consent in writing to an earlier trial. If the owners prevail in such action, then the superior court shall award to the owners all reasonable attorney's fees and costs incurred by the owners for the prosecution of such action."

Law reviews.

- For annual survey on construction law, see 66 Mercer L. Rev. 27 (2014).

JUDICIAL DECISIONS

Conditional termination not permitted.

- Nothing in O.C.G.A. § 44-3-101(c) permits any "conditional termination," one which may ripen eventually, upon which termination would be effective as of some prior date; although the time limitation in O.C.G.A. § 44-3-101(c) is not a statute of limitation, it serves an analogous function in that it establishes a limited period beyond which an association loses its right thereunder to terminate contracts. Capitol Infrastructure, LLC v. Plaza Midtown Residential Condo. Ass'n, 306 Ga. App. 794, 702 S.E.2d 910 (2010).

Rooftop terrace declared common element versus limited common element.

- Trial court properly granted a condominium association and the association's board summary judgment and properly declared a tenth-floor rooftop terrace a common element for all unit owners in a suit involving a dispute over the terrace because the express terms of the original declaration designated the terrace as a common element. Further, an amendment stating otherwise that was signed by a former managing member, and not the association, no longer controlled since the former managing member's control ended by the time the declarant sought to amend the declaration to assign the entire fenced area of the tenth-floor rooftop terrace as a limited common element benefitting only the penthouse unit. Walker v. 90 Fairlie Condo. Ass'n, 290 Ga. App. 171, 659 S.E.2d 412 (2008).

Termination of telecommunications contract.

- Superior court's judgment declaring that an agreement between a condominium association and a telecommunications company was subject to termination by the association pursuant to O.C.G.A. § 44-3-101 was vacated because the 12-month period of O.C.G.A. § 44-3-101(c) expired without the association having terminated any telecommunications contract, rendering the issue in its declaratory judgment action moot, and the declaratory judgment upon a moot issue was not authorized under the Declaratory Judgment Act, O.C.G.A. § 9-4-1 et seq.; by the time the superior court issued the declaratory judgment, the statutory period of O.C.G.A. § 44-3-101(c) had expired, and any right the association had to cancel and terminate contracts under that statute expired. Capitol Infrastructure, LLC v. Plaza Midtown Residential Condo. Ass'n, 306 Ga. App. 794, 702 S.E.2d 910 (2010).

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