CAI-NJ June 2021

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are no outstanding issues or disputes. If the association objects, the municipality will often delay the release of the bonds until the dispute is resolved. In addition, because New Jersey offers a generous six-year statute of limitations for construc- tion defect lawsuits, risk-averse spon- sor/developers know that the threat of a post-transition lawsuit looms if it does not attempt to appease the association during transition. While transition is a ripe period that, if managed properly, can set an associ- ation up for long-term financial viability and functioning building systems and infrastructure, obtaining the leverage an association needs to make demands on a sponsor/developer is often an expensive endeavor. For instance, to convince a sponsor/developer during the transition process that certain con- struction defects exist which must be repaired (or paid for), the association will almost certainly need to obtain a transition Engineering Study that estab- lishes the following: 1. How were the community’s build- ings and site components sup- posed to be built? Answering this question requires careful review and analysis of the community’s architectural and engineering plans, installation instructions from the manufacturers of components or systems used in construction, applicable construction code pro- visions, and industry standards. 2. How were the buildings and site components actually built? Answering this question involves careful investigation of the com- munity’s as-built construction, and identification of areas where con-

oper will still have municipal performance bonds relating to site and infrastructure systems outstanding that it will want to close out in conjunction with transition. When the sponsor/developer applies for the release of the bonds, munici- pal officials will likely confer with the association board to make sure there

the potential to gain significant lever- age over the sponsor/developer and compel it to make needed construction repairs, payments, or other important concessions. Typically, the sponsor/devel-

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