A developer controlled community always begins with the promise of a fully built neighborhood someday, but the early stages often leave owners wondering when their association will operate independently. Ultimately, the community can’t mature until homeowners have a real voice in how the association is run.
What is a Developer Controlled Community?
Developer-controlled HOA communities begin with a simple structure. The developer owns the project, holds the authority to appoint board members, and directs the decisions that shape the neighborhood during construction.
The board reflects the developer’s interests during this phase because the community still operates as an extension of the development project.
Most governing documents state that the developer has full authority to run the association until it meets specific conditions. These conditions often relate to the number of sold lots or completed homes. On the other hand, some communities place timelines or percentage thresholds that apply even if construction moves slowly.
Developer control includes rulemaking, budget decisions, amenity planning, vendor selection, design approvals, and long-term financial planning for the association.
During this period, homeowners move in early and join a community that continues to grow around them. The developer makes decisions that affect daily living without homeowner input, which is why tension often grows as more owners move into the neighborhood.
Are Developers Qualified to Run Communities?
A developer-controlled HOA community operates differently because the developer’s goals are not always aligned with homeowner priorities. Developers understandably focus on completing construction, selling homes, and making sure the project is profitable. Daily operations, long-term maintenance, and future reserve needs often sit lower on the priority list because the developer plans to leave once build-out ends.
Developers may hire management companies or consultants who handle the basics, but decisions still reflect the developer’s larger business plan. The community sometimes receives amenities later than expected or gets budgets that do not match future needs. The board appointed by the developer may approve expenses that benefit the development process far more than the association. On the other hand, many developers care about the long-term sustainability of their projects, especially because it reflects on their reputation.
All things said, developers can run communities adequately during early construction, but they do not approach governance the same way a homeowner-elected board would. Naturally, homeowners want more stability and to protect property values in the long run. These priorities do not always match the developer’s immediate interests.
Homeowner Input in a Developer Controlled Community
Homeowners who move into a developer-controlled community often feel powerless because they can’t elect the board yet. Even if owners form committees or raise concerns, the developer still holds the authority to approve or deny every decision. Of course, this does not mean homeowners must stay silent during the early stages of the association.
Owners can gather as a group and present concerns to the developer. They can provide written requests, community petitions, detailed maintenance observations, and consistent feedback. These can influence the developer’s decisions. Developers want satisfied buyers because negative feedback can affect future sales.
Organized communication is equally important, as it can consistently shed light on issues. When it comes to construction defects, amenity delays, landscape failures, or safety concerns, owners can document everything and send the information directly to the developer-appointed board.
Homeowners can also attend meetings, review available financial reports, and communicate with the management company. While they can’t vote yet, they can build momentum, form committees, and establish a foundation for future homeowner control.
When Does the HOA Transition From Developer to Homeowners?
A developer-controlled community must turn over control to homeowners once specific conditions outlined in the documents or state laws are met. These conditions usually involve the percentage of sold lots or completed units.
Many governing documents require a transition once the developer sells 75 percent of the homes. Some communities transition earlier if the developer finishes construction faster than expected.
Developers often transition control in stages. Homeowners might gain one or two board seats before gaining complete control. This staggered approach helps residents learn the association’s structure as the community continues to grow.
In Texas, the transition timeline for condominiums is set out in the Texas Uniform Condominium Act. Section 82.103 requires the association to open board seats to owners once 50 percent of the units have sold. At that point, at least one-third of the board must be elected by owners other than the declarant, and the association must hold that election within 120 days.
The statute does not stop there. It also requires the end of declarant control once 75 percent of the units are conveyed to owners other than the declarant. The period of control can’t run past 120 days after that point, which means the developer must step back and allow the owners to take complete control of the board promptly.
How can Homeowners Force an HOA Developer Transition?
A developer controlled community association sometimes experiences delays in transition, especially when the developer does not want to hand over authority. Some developers delay the transition because construction falls behind schedule. Meanwhile, others delay because they prefer to maintain control over approvals or amenities.
Homeowners must review state laws and their governing documents to confirm whether transition conditions have been met. Once the required percentage of sold lots or completed units is reached, the developer must begin the transition process. If the developer refuses, homeowners can send written demands citing the relevant provisions. It is important to document evidence to support the demand.
Additionally, owners can also consult legal counsel. If the documents or state laws support transition, an attorney can send a formal demand or pursue legal action. Courts can compel the developer to transition control if the conditions clearly require it.
FAQs
Do developers pay dues and assessments like homeowners?
Most of the time, developers draft governing documents that exempt them from paying dues and assessments. That said, the developer is responsible for the expenses until enough residents can pay dues that cover all costs.
Who pays for the expenses of the association?
The association uses collected dues to pay for expenses. Until there are enough homeowners to cover the costs, the developer must fund the budget. If the budget falls short, the board must adjust its finances or identify cost-saving options.
Can the developer change the governing documents before transition?
Developers often hold amendment authority during construction. The board must review amendments closely after the transition to ensure they align with the community’s long-term needs.
What happens if the developer leaves problems behind?
Owners can pursue construction defect claims or consult legal counsel if the developer fails to address major issues before transition. Documentation becomes essential in these situations.
Understanding is Key
A developer controlled community can’t reach long-term stability until homeowners take the wheel. To support this, homeowners must understand when and how the transition should happen. Similarly, developers must do their part in ensuring the smooth transfer of control.
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