Question about Developer

Started by NancyG3 • 10 replies • 1906 views

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NancyG3 (North Carolina)
Posts: 342

Posted:

Can a Developer, prior to turning Assn over to homeowners, approve things done on homes that are not covered by the Covenants? Once everything is transferred over to the homeowners does the Board continue with what the Developer allowed without changing the Covenants? Thank you for the information.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

While the Declarant is in control, they can pretty well allow anything they so desire to. They have the control.

The Covenants that are in place when the owners take over are the ones that must be followed.

If you liked/wanted the changes the Declarant allowed then have the Declarant change the Covenants to reflect the changes before the takeover. The Declarant can do such.

If no changes are made then you will be faced with the plea of well the Declarant let so and so make so and so change so I should be able to. When you object there will be screams of selective enforcement. You reply should be the Declarant granted waivers and we are not.

NancyG3 (North Carolina)
Posts: 342

Posted:

Thank you JohnC.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By JohnC46 on 07/27/2013 5:19 AM
then have the Declarant change the Covenants to reflect the changes before the takeover. The Declarant can do such.

Not everywhere. He can't do that in Connecticut (and a handful of states the have adopted the UCIOA).

Actually, I question if that can be done anywhere unless it's specified as a clause in the CCRs (or Declaration). The CCRs are a contract between parties and one party to the contract cannot change the contract without the agreement of the other parties (or a certain percentage of the other parties) unless a provision in the contract allows for such a change.

MatthewW4 (Arizona)
Posts: 500

Posted:

I agree with Bruce on this. Unless there is a clause in the declaration allowing the developer/declarant to approve things that would otherwise be violations, the developer was wrong to approve any variations.

What you can do about it after the fact is going to depend a lot on what the variation was. The owner will argue that in good faith he sought and received permission from the developer. Apparently no other owners objected at the time and construction was completed. If this was not the last home built or sold in the development, then those who came later bought with implied consent to the variation.

I have read several court opinions dealing with owners who built in violation of their covenants. Whether the courts will order something to be removed seems to hinge on whether the owner knew before he built that his structure would violate the covenants and, to a lesser extent, how far construction went before someone objected.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By MatthewW4 on 07/27/2013 12:55 PM
I agree with Bruce on this. Unless there is a clause in the declaration allowing the developer/declarant to approve things that would otherwise be violations, the developer was wrong to approve any variations.

What you can do about it after the fact is going to depend a lot on what the variation was. The owner will argue that in good faith he sought and received permission from the developer. Apparently no other owners objected at the time and construction was completed. If this was not the last home built or sold in the development, then those who came later bought with implied consent to the variation.

I have read several court opinions dealing with owners who built in violation of their covenants. Whether the courts will order something to be removed seems to hinge on whether the owner knew before he built that his structure would violate the covenants and, to a lesser extent, how far construction went before someone objected.

Matt

I agree about they could/might be wrong, but usually Declarants control all until a given period of time. Their votes outnumber all others so even if they go about it the "proper way", their votes can easily carry it.

Simple example. Docs call for a BOD but the Declarant controls the BOD thus the ARC. The covenants call for "earth tone" house colors and the ARC must approve any color. The ARC "approves" what they consider an "earth tone" color but others do not like and that person objects. True no purple houses but WTF are earth tones....LOL

Developers/builders/declarants "make deals" all the time in order to sell a home/unit. I do not like it nor am I justifying such, but it happens all the time.

We are working on a transition from Declarant to owners. The transition is amicable and professional. I have raised several issues that I believe the Declarant (while still under their control) can change to make it easier for we owners to run things. Quorum definitions/modifications, proxy voting, dumping nominating committees, etc.

I am not advocating it should/can be done in the back room amid cigar smoke, but it can be done "properly" when one controls the majority of votes as most Declarants do.

MatthewW4 (Arizona)
Posts: 500

Posted:

John,

We need to first clarify if the "violation" is something explicitly set forth in the convenants. For example, if the recorded covenants prohibit a cell phone tower, the developer has no lawful right to permit one. Once a declarant records the restrictions and starts selling lots, he is bound to his own restrictive covenants.

On the other hand, if the covenants provide for some sort of architectural control, such as the color of the shutters, it would be within the discretion of the developer to permit pink shutters when all others are required to be blue. Like you say, it's just part of Let's Make A Deal.

NancyG3 (North Carolina)
Posts: 342

Posted:

Gentlemen: After posting my question I searched our Covenants and found the following: "Amendment Prior to Sale by Declarant. At any time prior to the closing of the first sale of a Lot by Declarant,the Declarant, and any mortgage holder, if any, may amend this Declaration by mutual consent. The closing of the first sale shall mean transfer of title and delivery of a deed and not execution of a Contract of Sale or a like document." Also,"Responsibility of Declarant. The Declarant herein shall not in any way or manner be liable or responsible for any violation of these restrictions by any person other than itself. In addition, nothing contained in this Declaration shall be deemed to be a representation by Declarant with regard to the requirements of any governmental authority and it shall be the duty of each Owner to comply with any such requirements in addition to the provisions of this Declaration." These 2 Sections were found under General Provisions. Will this help in the forum? I haven't checked the NC Act.

NancyG3 (North Carolina)
Posts: 342

Posted:

There is something in the NC Planned Community Act under definitions: "Special declarant rights" means rights reserved for the benefit of a declarant including, without limitation, any right(i)to complete improvements indicated on plats and plans filed with the declaration;(ii)to exercise any development right;(iii)to maintain sales offices, management offices, signs advertising the planned community, and models;(iv)to use easements through the common elements for the purpose of making improvements within the planned community...........".

This was found in Chapter 47F, North Carolina Planned Community Act.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Nancy,

May the Declarant approve things that the CC&Rs prohibit? No. That is not unless the covenants or laws give them this right. However, that won't stop them from doing it in order to make a sale.

May the Declarant amend the CC&Rs as they see fit? Typically yes. The Declarant typically controls the voting power to amend any of the documents. However, any changes need to be recorded.

Should a member who requested permission for a change, received permission from the declarant and then when the members take over be forced to undo the change because it was not authorized in the governing documents? Personally, I don't think they should. They asked permission and had good faith belief that the entity who gave the permission had the authority to authorize it.

TomW14 (Texas)
Posts: 10

Posted:

What does the developer have to file with the state or local government when they turn over ownership to the association? Does the new board have to remover the developers name from all of the CCR documents? All of our documents still have the developers name on them from 20 years ago. I cant find anyting that says the developer has turned over "control" to the Association.

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