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Subject: Can We Legally Transition from Declarant/Developer
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10/07/2019 7:31 PM  
Our By-Laws currently state that the declarant control period shall be ten years or settlement of 100% of the lots and uses the language "on the earlier of". Based on this I'm assuming since ten years have passed the declarant control period is officially over. I've included the specific language below. Wanted to hear from others what they think, based on this language can a good attorney help us transition power from the declarant?

Language from By-Laws

1.17 Declarant Control Period. "Declarant Control Period" shall be the period beginning upon the recordation hereof and terminating on the earlier of (a) ten (10) years thereafter, (b) the settlement of one hundred percent (100%) of the Lots permitted for the Development to parties other than the Declarant; or (c) at such earlier time as specified in a written instrument in recordable form made by Declarant and delivered to the Association.

Under voting rights it states that "The Class B member shall be the Declarant who shall be entitled to three votes for each Lot owned. The Class B membership shall cease and be converted to Class A membership on the happening of either of the following events, whichever shall first occur:
(a) The expiration of the Declarant Control Period; or
(b) When the Declarant, in its sole discretion, determines to withdraw from Class B membership in the Association and so notifies the Association in writing.


10/07/2019 8:47 PM  
How many lots did the declarant purchase?

But since section a) is first in the second paragraph, It looks like the 10 year period has commenced. I would write a casual letter to the Declarant and ask them when they are holding elections for officers and turning over the community to the members. If the Declarant's response is not forthcoming, you may need to talk to a lawyer that specializes in HOA deals.


10/09/2019 2:13 AM  

Based on what you provided, I agree that the declarant control is over.

My suggestion is to:

1) gather support from other members who are willing to do the work of running the Association.
2) approach the declarant (in writing) and request that they honor the terms of the declaration and transition control of the Association to the membership.

If the declarant declines, or makes no attempt at transitioning control, then the members will have to band together, pay an attorney and take the issue to the courts.

Note: Be ready for transition responsibilities.


Here is some info:

Best Practices - Transition from the Foundation for Community Association Research (pdf document)

Transistion Plan an HOA's formalized plan for transition.

Developer/Homeowner Transition: A Guide To Success

Developer Transition in a Community Association This website is intended to specifically address the issues facing townhome, condominium, and homeowner associations in North Carolina. [still has good general information as well]

Subject: HOA transition from developer control to homeowner control Thread in HOATalk that discusses having a Transition Study done by an engineering firm.

(South Carolina)


10/09/2019 12:28 PM  

Several of the main things to look for before transitioning are what about the roads? Are they private, public, been accepted by the local governmental authority, etc.? Do not get stuck with unacceptable roads and have to pay a small fortune to bring them up to the level of acceptance.

Another is how much Money is in the Reserve Fund to be turned over?

Along the lines of money, especially look to see if the new association is assuming any debt from the get go?

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Forums > Homeowner Association > HOA Discussions > Can We Legally Transition from Declarant/Developer

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