“[Developers] landscape like you’ve never seen,” says Doug Coupe, a retired high school principal from Vermont who owns a house at Belfair, near Hilton Head Island, South Carolina. “Most people who are building a home get small shrubs and wait 10 years for them to grow. Here, everything comes in 10- or 20-quart bales. They’re mature plants, so it looks like the place has been here forever.

“And this [level of expectation] affects the staff too. They made sure the shoeshine guy knew your name even if you hadn’t been here in six months. They’ve gotten used to the developer mentality, so our greens guy had a virtually unlimited budget. He could hire people and trim around every little bush and make the place look like Augusta National.”

But after the developer has sold most of the available homesites, control of the community shifts from the developers to the property owners. After that transition, for residents and members, the money they’re spending on the club and community is their own.

“All of a sudden, we’re running it and we’ve got to watch our pennies,” says Coupe, who served as the club’s acting general manager this spring and summer. “We can’t afford to have five staff members standing around in anticipation that we might require some service. So the staff has to be told that, on the one hand, we want the same level of service as when the developer was running the place, but we’re not necessarily going to provide the resources for you to do that.”

The transition can be tricky, potentially burdening unsuspecting residents with unplanned responsibilities and costs. It’s nearly a given that dues will be higher, but the key is to avoid nasty surprises.

“There is a disconnect in purposes there,” says Frank Vain, president of the McMahon Group, a St. Louis-based consulting firm that has assisted more than 50 private golf communities in making this transition. “The developer has a time horizon that’s governed by his desire to exit the property as soon as the lots are sold. At the other end of the scale is the homeowner, who’s going to be there forever. I don’t think the average buyer is thinking in those terms.”

Once the developer turns the property over to the homeowners, he or she no longer has to pay for the marketing expenses—landscaping, fancy parties, staff—that make the “product” look as seductive as possible. That cost, which can run into the millions annually, now becomes the homeowners’ responsibility if they want to maintain the same level of solicitude.

Still, the transition doesn’t need to be unpleasant or shocking. There are three basic rules savvy homeowners should remember: Get help. Ask questions. Start early. These might sound like nothing more than good old common sense, but a lot of people who have been successful enough to be able to buy into a private golf community fail to perform the due diligence.

“A lot of people don’t even know the questions to ask and then they are committed and it’s too late,” cautions Terra Waldron, general manager and vice president at Desert Highlands in Scottsdale, Arizona. She advises homeowners to look carefully behind all the glitz, at “the operational costs, their financial statement, and what the developer’s past history has been.” Start early
Most covenants spell out exactly when the developer is to turn the property over to the homeowners’ association (HOA). At Bright’s Creek Golf Club in Mill Spring, North Carolina, and at River Valley Ranch near Aspen, Colorado, that figure is set at 90 percent of the lots sold. Bright’s Creek is still a long way from reaching that point, but River Valley Ranch, which when built out will have 550 homes, turned over 18 months ago with few problems.

“One of the best things [the HOA] did was to start early,” says Brian Leasure, who owns a house in the community and is also the on-site realtor. That gave the HOA plenty of time to have a reserve study done and to adjust the dues accordingly. “By doing it a couple of years before the turnover, there was no big homeowner’s increase at the time of the turnover.”

Ask questions
As obvious as it might sound, it’s important to figure out what exactly is being turned over and what condition it’s in. When will the tennis courts need resurfacing? Is the boiler in the clubhouse on the verge of breaking down?

“One of the things we learned—after the fact, I’m a little sad to say—is that typically most of the equipment a developer has—the lawnmowers, the tractors, the gators, even the lightposts—is leased,” says Coupe. “Unfortunately the transition board we had at the time didn’t account for that. They assumed we were getting all this equipment as an asset. Now we’re paying leases on all this stuff.”

It’s not incumbent on the developer to volunteer all this information. He is required to provide an accounting that’s honest, but he’s probably not going to remind you of the all questions you’ve neglected to ask. You’ll want to know about the membership structure: Desert Highland’s Waldron counsels against having many different membership levels, which leads to class warfare. Social members aren’t going to be happy if they’re expected to help refurbish the bunkers on the golf course. And what provisions are made for emergencies or unforeseen shortfalls? What happens if the golf membership falls below the level needed to maintain it? What about capital improvements?

“You may see that the fitness center is very crowded or that when they try to have parties they have to limit the attendance because the clubhouse isn’t big enough,” says Vain. “That means that somebody’s going to be coming to you in the next few years saying, ‘We need to expand the clubhouse, it’s going to cost X, and we’re going to have to pay for it.’ You don’t want to buy an expensive home in one of these developments and find out that you’re being assessed for the turnover or that the dues have doubled and suddenly your retirement dream is getting chewed up because of a shift in finances.”

Get help
As a property owner, one way to protect your interests is to hire a consultant who’s familiar with all of this. It’s a complicated business, so it might not be enough to elect lawyers and accountants to the transition board, though that’s not a bad start. Owners could hire a consultant like McMahon or an experienced general manager who knows the tricks and pitfalls. Again, you’ll want to make the hire early and, if possible, retain him or her for several years after the transfer.

Another great source of information is the homeowners at other communities built by the same developer. Tom Harris, director of marketing and sales at Bright’s Creek, goes out of his way to introduce potential buyers to residents of the company’s older community, Forest Creek Golf Club in Southern Pines, North Carolina.

Above all, don’t be reluctant to ask questions about the process, and don’t become so starry-eyed by the community that all the wariness and good judgment that got you here in the first place evaporate.

“That’s the biggest mistake a buyer makes,” says Harris. “Getting so emotional about a pretty piece of land or a lake site that they don’t ask the questions about whether this is going to be a good community five years from now.”