What is developer control?

What control actually means

During this period the declarant holds a specific bundle of legal privileges, not just informal influence. Model common interest ownership law describes these rights as including finishing construction shown on filed plans, keeping sales offices and model units on site, using easements through the common areas to build, adding more property into the community, and appointing or removing the board's directors and officers. [S7]

The exact list, and the statute section that grants it, differs by state. Check your state's condominium or common interest community act, and your declaration's "special declarant rights" section, for your project's actual list.

How long it lasts

Control does not expire on a set date. It ends when a trigger written into state law, or sometimes the declaration itself, is met, whichever happens first. Florida uses percentage-of-units-sold and elapsed-time triggers that differ between condominiums and homeowner associations, and other states set their own numbers and events entirely. [S1, S2] Find your state's community association act and your declaration's turnover section before assuming any number applies to you. See Turnover triggers for how to find yours.

Who developer-appointed directors work for

A developer can appoint every director on the board during this period, but appointment does not change whose interest that director has a fiduciary duty to serve. Practitioner commentary is direct on this point.

"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 signs off on a thin reserve budget, or declines to investigate a construction problem because the developer would rather not pay for it, can be found to have breached that duty, even though the developer chose them for the seat. [S16, S17]

The four layers stacked on top of each other

Four things interact during developer control, and they do not always agree. State statute sets the floor: how long control can last and what the developer must hand over at the end. The declaration (also called the CC&Rs) can grant the developer more than the statutory minimum, or commit it to more. Common law duties, like the fiduciary duty above, bind the individuals sitting on the board no matter what the paperwork says. And a private overlay, mortgage investor rules such as Fannie Mae's, decides whether units in the community qualify for standard financing, treating a project as more established once its board has actually turned over to owners. [S8] None of these four layers substitutes for the others.