Real Estate & Property Law

Developer Control in an HOA - When Does It End?

Here is a question I received recently about developer control:

"I am a home owner in a 2000+ home master planned community. There were only ### homes built before the original owners sold to a local developer. The new owners are not and have not been building anything additional for economic reasons.

Our HOA board consists of five members, two from the community and three from the current owner which gives him / them the majority.

The question is, ia there anyway for the home owners to get/ take control of the board so we can control the direction our community wishes to go?"

The association governing documents (the Bylaws and also probably the CC&Rs) usually specify when developer "control" ends. "Control" is usually established by giving the developer 3 votes per Lot in a planned development, or Unit in a Condo development, which is often referred to as "weighted voting." This voting scheme commonly ends either when all the Lots or Units are sold out or 5 years after the completion of building. If the development is not built out in 5 years, there may be other language in the documents that locks in an outside date for "turnover". That is the time when the owners generally gain control on the board. Sometimes developers will relinquish control earlier but I do not believe it is not a common occurrence.

Full post as published by California Condo & HOA Law on October 27, 2009 (boomark / email).