Declarant-appointed boards

Why the developer gets to appoint your board

During the control period, a developer holds a defined bundle of legal powers, usually called special declarant rights. That bundle typically includes finishing the improvements shown on the filed plans, running sales and model units, using easements to build, and appointing or removing board members and officers while it controls the association. Appointing your board is one specific power inside that bundle, not a general license to run the association however the developer wants.

The exact rights reserved, and how long they last, are set out in your project's declaration and your state's statute, not in a rule that applies everywhere the same way. Which rights a declarant actually holds, and for how long, varies by state and by what your declaration reserved. Read your declaration's declarant-rights section to see your project's specific list.

Whose interest an appointed director actually serves

Once seated, a developer-appointed director's legal duty does not follow the person who appointed them. It follows the entity they now sit on the board of: the association, and the owners who make it up.

"Developer-appointed board members have independent statutory and common law fiduciary duties to the association."

Source: Understanding Breach of Fiduciary Duty by Developer-Appointed Directors in Condominium Associations, Hirzel Law, PLC

A director who treats a board seat as an extension of the developer's payroll, rather than as an independent fiduciary role, is not describing how the duty actually works. The seat comes with an obligation to the association that exists regardless of who put the director there.

Where that duty gets tested

The duty is easy to state and harder to watch in practice, because a developer-appointed board is often making decisions that affect the developer's own money. Two patterns come up repeatedly: a board declining to pursue a legitimate claim against the developer (for example, for construction defects), and a board setting reserve funding low enough to keep the developer's carrying costs down on units it still owns. Either choice can amount to favoring the developer's interest over the association's, which is a breach of the duty of loyalty, not just an ordinary business judgment call.

General board-duty commentary reinforces the same baseline: a director's obligations run to the association whether the director was elected or appointed, and self-dealing or under-funding for someone else's benefit is the classic fact pattern that generates a claim. Colorado Lawyer covers this from the general board-duties side. Whether any particular decision actually crosses the line is fact-specific, and courts in different states have not answered it the same way every time.

What owners can do before turnover

You do not have to wait for majority control to raise a conflict. Most states seat at least one owner-elected director well before the developer loses its majority, which gives owners a seat at the table, and standing to ask hard questions, earlier than people expect. Learn your own state's turnover triggers and what your state and declaration actually gave the developer under developer rights.

If you suspect a developer-appointed board is favoring the developer, the useful next step is usually a documented question to the board and, if it goes nowhere, a conversation with a transition attorney, not a unilateral accusation at a meeting. See negotiating with developers for how boards typically raise this without derailing the relationship they still need for turnover.