HoA can acquire units in the community?

Is the following a normal clause in an HoA? The clause in the HoA and there is an accompanying CC&R.

This community is in phase 1 of a 6 phase development of 124 units consisting of single family house, apartment buildings, and townhouse condos. The developer maintains 100% control via class A/B voting rights until all units are transferred or 15 years elapses.

It would seem like the following clause would give the developer/investors the ability to buy up unsold units on the backs of the early homeowners and exit the project if things went bad while he was still a majority owner. To me, this clause should not take effect until after the developer has exited the project or the clause should be removed completely. HoA overreach or normal?

TRUSTEES PURCHASE OF UNITS
With the prior approval of a majority in interest of the Unit Owners, the Trust
may acquire Units of the Community. Acquisition of Units by the Trust may be made
from any funds in the hands of the Trustees; or if such funds are insufficient, the Trustees
may levy an assessment against each Unit Owner in proportion to his or her beneficial
interest, as a common charge; or the Trustees, in their discretion, may borrow money to
finance the acquisition of such Units, provided, however, that no financing may be
secured by an encumbrance or hypothecation of any property other than the Units to be
acquired by the Trustees.

In the event that a Unit shall be acquired by the Trustees, all Unit Owners shall be
deemed to have waived all rights of partition with respect to such Unit or Units as are
acquired by the Trustee.

Not familiar with such a clause.

Did an internet search for that language. Came across the following link to a MA association:

http://meeb.com/assets/Robbins-Brook-DOT.pdf

From their docs, appears that declarant is gone and transfer has occurred. You might want to reach out to that association and find out what their experience was.

Gary,

Are the developers using this clause (or threatening to use it) or is this just something you found in the CC&R's?

I have never seen a clause like this but I would think that the requirement for "approval of a majority in interest of the Unit Owners" will stop a lot of potential shady dealing. The phrase, "a majority in interest of the Unit Owners" implies that the class A/B voting scheme would not apply; they cannot do this without an actual majority of property owners approving. Of course, until a majority of the lots are sold then the developer is still the "majority in interest of the Unit Owners."

One thing I have learned from this forum is that buying into a development in its earlier stages is risky. In spite of everyone's good intentions, things can sour quickly leaving buyers with nothing but empty promises.

As Larry and I said, clause is not familiar.

The association I provided the link to (we don't use names here) had the exact same language as you have.

Yes that association is post development. But the language was probably put in place by the developer. (That kind of wording would typically be a carried over, not added).

So IMO it would be worthwhile for you to speak to them on:
what concerns they had while the developer had control; and
why they kept that language after transfer.

Also, it could be a local thing. I know that MA has a unique land court system - so they may have special ways of dealing with issues.

What has me spooked in this situation is I asked to amend the clause so that it wouldn't take effect until after the "Transition Date". This is the date after which the developer has turned over control of the HoA to the homeowners and exited the project. My request to amend was declined with the reason given it might impair their options. I know it's probably a low priority, but the thought of the HoA, under the control of the developer, buying up condo or apartment units on the backs of the single family homeowners regardless of the reason seems wrong.

As single family house owners we're only signing on to buy a house, not invest in the rest of the project. The single family house HoA needs are relatively small - maintaining 2 open space parcels and some common driveway areas. The rest of the single family portion of the project are public roads and infrastructure maintained by the municipality. To me it would have been much simpler to have one HoA for the houses, one for the condos, and one for the apartments since the needs are very different. Together the one composite HoA and CC&R total 55 pages!

GaryH7Mass :
1- Good comment by Larry B13 above. Urban condo universes see many 'first owners' who were unable to recover their purchase price several years after registration of the Declaration.

Or who got clothes-lined by developer contracts that allowed numerous delays. Or who hoped there would still be a view from the balcony other than another new balcony facing them from 6 feet away.

Or whose contracts failed to protect them from un-consented developer changes like turning a lobby clothes closet into a furnace unit. Some first buyers however dance for joy . . .

2 - You ask about "normal". Is very much "normal" in the universe of condos/HOAs
( Jurisdictions like mine chose to legislate a Board of Directorship instantly into place upon registration of Declaration, with milestone transitions of Director seating as sales milestones are reached ).

A Trust transitional model may recognize that a developer will want out cleanly after profitability ends. But leaving final stage governance to domination by the earlier majority owners, may impede that exit and/or depress prices/complicate a developer's arbitrary choices in later stages. Over a century ago in my jurisdiction Trust models were used to succeed private proprietary developers of Building Schemes in the absence of statutory frameworks like condominium models.

So it might be "normal" in the absence of a more modern statutory Board of Director governance model with legislated transitions, CCR transitions, consumer protections, accountability to existing owners etc . . .