Developer rights in governing documents

Where declarant rights come from

The developer who builds a community and records its declaration (the CC&Rs) is called the declarant. Because a recorded declaration creates and restricts property rights for every lot in the community and binds whoever owns those lots later, it can also grant the declarant special powers that ordinary owners do not have.

Those powers are not a courtesy extended to the founder. They exist only because the declaration says they exist, in the same way the declaration binds every other owner who buys into the community.

What those rights typically include

During what governing documents usually call the period of declarant control, the developer commonly controls the board itself, meaning it can appoint and remove directors rather than have them elected by the membership. The declarant also commonly controls the budget and architectural approval during this window.

Exactly which powers are granted, and how they are worded, varies by declaration and by state. Read the declarant-rights section of your own declaration rather than assuming it matches another community's.

When declarant control ends

Declarant control does not last forever, and it does not require a board vote to end. It ends automatically at whichever trigger, written into the declaration or set by state statute, occurs first.

New Mexico's statute illustrates how these triggers are commonly structured: control ends no later than the earliest of sixty days after a set percentage of lots are sold to other owners, two years after the declarant stops offering lots for sale, two years after a development right was last used, or the day the declarant voluntarily records a termination. New Mexico Statutes

The percentages, timeframes, and exact list of triggers are set by each state's own statute and by the declaration itself; New Mexico's formula is one example, not a national default. Check your own declaration's declarant-rights section and your state's statute for the actual numbers that apply to your community.

Why this still matters after control ends

Even after declarant control ends, lenders reviewing a unit sale or refinance in the community still check that the governing documents the declarant originally recorded are organized and complete.

"Legal and recorded documents including the covenants, conditions and restrictions, declaration of condominium, or other similar documents that establish the legal structure of the project."

Source: Fannie Mae Selling Guide, B4-2.1-01, Fannie Mae

Documents left disorganized from the declarant-control era can create real financing friction for owners trying to sell, long after the developer is gone.