Developer on BOD

Started by MichaelJ8 • 3 replies • 1165 views

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MichaelJ8 (Illinois)
Posts: 113

Posted:

We are about to have the developer turn over the association to us. Several owners realized that the by-laws state that as long as the developer owns units he has to be on the board. As slow as the units are selling he could be on the board a long time. Question is "Does this seem normal or could we be overlooking something?"

Thanks

JohnO6 (Georgia)
Posts: 424

Posted:

I've not seen that before, but it doesn't really surprise me. Original governing documents are almost always written to protect the interests of the declarant and/or builder(s).

First, I think you should assess the situation and see if it's really a problem.

If the general feeling in the community is that it is, then you look carefully in your governing documents about how to amend the by-laws. Be sure to look carefully for rights of the declarant to approve changes. But if (s)he is turning over the association, such restrictions may (or may not) be less likely.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Michael,

Typically the governing documents are written to allow the developer to have x number of votes for each lot they own. This only applies at a general meeting. At a board meeting, unless your governing documents specify otherwise, each director only gets one vote. Therefore, even if you owned 50 lots, as a director - you only get one vote.

At a general membership meeting you would (using the 50 lot example) get 50 votes (one per lot. The developer might get 100 votes per lot (look in your documents). Therefore, they would certainly have a better chance of placing who they want on the board.

Personally, I wouldn't worry about it. It might actually make the turnover easier as the Board can directly ask the developer questions.

Side note - to limit possible perceived issues from the membership, I would not appoint the builder to the offices of the Treasurer or President.

Tim

DennisS7 (Florida)
Posts: 32

Posted:

We also have the Developer on the Board. Our community consist of both resident owned lots and leased lots. The Developer owns the leased lots but the voting power is given to the lessee. Our docs dictate that "the Developer shall have the right to appoint a member to the Board of Directors for so long as Developer holds title to any Lot within any portion (which they probably always will).
It is understood that the developer has a lot to lose if the community fails and his only purpose on the Board has been to protect the Developer's interest. The Developer representative abstains from all issues as long as the vote don't impact the Developer. The current representative, unlike his predecessors, works very will with Board, keeping both the HOA and Developer aware of activity.
Dennis

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