Found bazaar paragraph in Offering Plan...

While looking through our community's Offering Plan, I found this paragraph:

"(Name of management company deleted) has submitted a proposal to act as Managing Agent for a term of three (3) years from the closing of title to the last home in the development to manage the Condominium and Association for the amount set forth in Schedules B and B-1. There is no provision for early termination."

Our community is about 1/2 built now so the builder runs the show and runs the board (4 votes to 3). When turnover time comes, are the residents somehow obligated to a proposal that apparently was made 4 years ago when the builder began this condominium project?

This paragraph is buried among 487 pages of the Offering Plan. It essentially says that when the last home is sold and the builder leaves, we are somehow obligated to keep him on, pay him what was agreed to, and we cannot fire him for any reason.

Thanks,
Steve

Thanks, Tim.
I have questioned our board members and none have any recollection of ever voting upon the contract.
Without the board approval, can the builder enter into a contract that takes effect when he is no longer in charge?
Steve

After transition but before the last unit is sold, I would suggest that the "Homeowner Board" have an attorney look over the section and the contract. If the contract does not take effect until the last unit is sold then it may be as simple as amending the covenants before that happens. Not an attorney but I believe the contract could be terminated for cause i.e. if the MC did not adhere to the terms of the contract. You also may be able to void it if the fees are outside the normal and usual market fees.

In Ohio they changed the law to prevent things like this from happening: 5311.25

(D) Unless a contract or other agreement is renewed by a vote of the unit owners exercising a majority of the voting power of the unit owners association, neither the unit owners association nor the unit owners shall be subject to either of the following:

(1) For more than ninety days subsequent to the date that the unit owners other than the developer assume control of the unit owners association, any management contract executed prior to that assumption of control;

(2) For more than one year subsequent to an assumption of control, any other contract executed prior to that assumption of control, except for contracts for necessary utility services.

We have an "Open" board meeting on Tuesday, and I submitted three questions about that proposal:

There has been no mention of this in any board minutes. Please describe the exact status of this proposal, why the lack of provision for early termination, and has it been approved by any entity associated with this community?

Hopefully, I will get a meaningful explanation.

Question to GlenL... We are in New York. How can I find out if these is a similar law in New York preventing the developer from shoving something down our throats without even consulting us.
Steve