Academy/HOA & Community Association 101
The lifecycle of a community association
From recorded declaration to declarant control to turnover, then an annual cycle that repeats for as long as the community exists.
Every community association moves through the same arc: a developer records a declaration that creates it, controls the board while building and selling, then hands control to owner elected directors at turnover. After that, the association repeats an annual cycle of budgets, assessments, and maintenance for as long as the community exists.
Birth: the declaration creates the association
A community association does not exist until someone records a declaration, often called CC&Rs or a master deed, with the local land records office. That single filing does the legal work: it creates the common interest community and the association that will govern it, and attaches its rules to every lot or unit inside the boundary it describes. Before that recording, there is no association to join and no board to sit on, no matter how many houses are already built.
"any instruments, however denominated, that create a common-interest community, including any amendments to those instruments."
Source: Nevada Revised Statutes Chapter 116, Common-Interest Ownership (Uniform Act), Nevada Legislature
The declarant control period
For a while after that first recording, the developer, called the declarant, runs the board. That is normal: the declarant is still building and selling units and needs to make decisions without waiting on a homeowner vote. But that control has a ceiling. Statutes that adopt a common interest ownership act set a hard cutoff that ends declarant control even if the declaration is silent or the developer wants to keep going.
"Sixty days after conveyance of 75 percent of the units that may be created to units' owners other than a declarant."
Source: Nevada Revised Statutes Chapter 116, Common-Interest Ownership (Uniform Act), Nevada Legislature
Nevada's 75 percent and 60 day figures are just one state's numbers, not a national rule. Check your own state's statute and your declaration for the trigger that actually governs your community.
Turnover: control passes to the owners
Turnover, sometimes called transition, is the moment declarant control ends and an owner elected board takes over. It might happen because a statutory deadline arrives, because the declarant finishes selling units, or because a trigger written into the declaration fires first. However it happens, the effect is the same: the people living in the community, not the company that built it, now run the association.
Ongoing operations, year after year
Once owners are running the board, the association does not have a finish line. It repeats the same annual cycle indefinitely: draft a budget, share it with owners, collect assessments, and maintain the common areas, then do it again the next year. Some of that cycle includes a built in check by the owners on the board's numbers.
"If the proposed budget is rejected, the periodic budget last ratified by the units' owners must be continued until such time as the units' owners ratify a subsequent budget proposed by the executive board."
Source: Nevada Revised Statutes Chapter 116, Common-Interest Ownership (Uniform Act), Nevada Legislature
Whether owners must approve the budget outright, or can only vote to reject it, depends on your state's statute and your own declaration and bylaws.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Your community's builder still owns and is actively selling 40 percent of the lots, well below your state's turnover trigger. Who controls the board right now?
Turnover just happened and an owner elected board is now in charge. What happens to the annual budget cycle?
A parcel of land has no declaration recorded on it yet, though several houses are already built there. Which statement is true?
- Nevada Revised Statutes Chapter 116, Common-Interest Ownership (Uniform Act), Nevada Legislature
Related elsewhere in the Academy
HOA & Community Association 101
See how that annual cycle actually runs, from first draft budget to year end close, in The annual operating cycle of an HOA.
How long declarant control lasts, what triggers turnover, and whether owners must approve or can only reject the annual budget all vary by state statute and by your own declaration and bylaws.