Real Estate

HOAs and Real Estate Developers

If your home is part of a large community that's managed by a homeowners association (HOA), the real estate developer is responsible for creating the HOA. When homeowners have a legal dispute with the developer, there can be a conflict. This is especially true when the developer is still active on the HOA board and the dispute requires HOA intervention.

Developers Form HOAs

Ordinarily, a real estate developer will decide to invest in building a community, such as a condominium complex, with the goal of turning over management responsibilities at some time after construction is complete. Under normal circumstances, it can take a few years before all units are sold. Until they are, the developer retains some control over the HOA.

The Real Estate Developer Can Change HOA Documents

Since the developer is responsible for creating the HOA, it drafts the governing documents for the HOA. These documents in turn set the fees and assessments that homeowners must pay. It can be years before the developer cuts all ties, so you have no choice but to live with the terms. Moreover, HOA documents usually provide the developer with certain rights in the property. These include:

  • The ability to fully control the HOA until every unit is sold
  • The right to market and continue to develop the property
  • The right to use the property for certain purposes.

Your Developer Is Responsible for Faulty Construction

Real estate developers remain liable for any defects or faulty construction that cause damage to a planned residential community. When the damage affects only the inside of you unit, it's your responsibility, not the HOAs, to get the developer to correct the problem. If the developer opposes your request for repairs and is still active on the HOA board, you need to understand your legal options. Your needs may be better served by hiring a lawyer who has experience dealing with real estate developers and HOAs.

Homeowners May Need Their HOA to Sue Developer

When the faulty construction or defect affects common areas of the property rather than your specific home, it's likely that your HOA will need to initiate any legal action against the developer. If the HOA is still controlled by the developer, however, you may encounter some resistance. In this case, you and your fellow homeowners may need outside legal help before you see any resolution.

A Real Estate Lawyer Can Help

The law surrounding HOAs and real estate develoeprs is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. We hope you found it useful. For more detailed, specific information, please contact a real estate lawyer.

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