Phased developments

What makes a development phased

Some communities are complete on day one: every lot or unit is built and included in the declaration before the first sale closes. Others are not. A declarant may record a declaration covering only the first block of units, sell those, and add more later under development rights it reserved for itself. Industry practice calls this an expandable or flexible community. The land the declarant may still add is sometimes called additional real estate, meaning property outside the current declaration that the declarant has kept the right to bring in later.

Phasing is a financing and risk choice by the developer: build and sell the first block, use the proceeds and sales pace to decide whether the next block makes sense, and avoid finishing infrastructure for lots that might not sell. The right to do this comes from what the declarant reserved in the declaration and public offering statement, not from anything the association grants.

Why your turnover countdown depends on it

Where a state's turnover trigger runs on a percentage of units or lots sold, check what that percentage is measured against. Florida's homeowner association statute frames its majority-turnover trigger this way:

"three months after 90 percent of the parcels in all phases of the community have been conveyed to members other than the developer"

Source: Florida Statutes, section 720.307, The Florida Senate

"All phases" means the full plan the declarant disclosed, not just the block that exists on the ground today. A community that opened with sixty lots and has sold fifty four of them has hit 90 percent of what is built so far, not necessarily 90 percent of what the declaration lets the declarant eventually build.

The percentage, the time period, and whether a state counts "all phases" at all vary by state. Check your own state's homeowner association or condominium act, and the phasing section of your declaration, before assuming a number.

A new phase can mean a new declarant

When a declarant exercises its reserved right to add a phase, it does so by recording an amendment that annexes the new property into the community. Whoever executes that amendment becomes the declarant with respect to the property it adds, even if a different company recorded the original declaration.

That matters if the original developer sells its remaining development rights, or a new company takes over an unfinished project. The party currently holding rights over future phases is the one a board should track for what happens next; it is not necessarily the same party responsible for what happened during the original control period. See Annexation of future phases for how a specific annexation gets executed and recorded.