Developer Abuse

After reading a number of posts I thought I would open a topic on developer abuse.

First, is it right that a developer can change CC&Rs unilaterally without regard to those who have purchased units already?

Second, should a developer really continue to have the iron grip past say 2/3rds of the units being sold? What if they "can't" sell completed units?

Also, do they really have the rights they exercise? Or is it a matter of they get away with it because of the cost of fighting them? (Combined with the fact that inevitably any cost not covered by D&O insurance is passed to the HOA.

I am about to the point that I believe that the HOA should never be under the developer. Instead the developer can either keep direct control through some point, or the developer can create their own organization (that does not qualify under state non-profit laws).

Also, I would personally set something along a five year limit from the first certificate of occupancy, after which every low owner has an equal voice in all governance of the neighborhood. I would allow this to be in phases of a neighborhood, but once the first house is ready in that phase then the clock starts ticking.

If the developers had to face the music for leftover lots, they would not bother to hold lots that are doing nothing.

They abuse the game and as such they should lose the rights. Further, since many municipalities are requiring HOAs for approval of the plats the rules should further change.


This is just plain ignorance talking. The deck is highly stacked against them and we are talking about the ability to change rules mid stream with no warning. There is good reason why many states see a host of bills regarding HOAs every session. And much of the problem starts with the tone the developer sets.

If we allow them to continue they should have to have several disclosure statements. For instance the buyer has to sign a document with large bold letters - I have no rights with respect to fairness. I am entering a one sided contract where the developer can intentionally inflict property damage. I understand that the developer now has a right to mortgage the well being of the home I just bought and I will pay the full cost.

Most non-profit laws were written to protect organizations that are serving the public. Just why is it that we allow profit organizations to abuse such protections?

I tend to agree with John that if buyers don't like the landscape, they aren't forced to buy and can take their vote (their dollars) elsewhere.

I don't see how the deck is stacked against them at all!

I can't imagine moving into a development where I knew upfront that the developer was a **** and that the development was iffy.

I also agree that the developer is the one putting up all the risk and investing in the infrastructure of the development, along with all the planning, and the hoops with local zoning that they must also jump through, so there is considerable flexibility and control they rightly should have at the beginning.

I can see, though, Kirk's point about buying into a development early on and then all the rules get changed.

We had our developer do some things we were told would never happen (such as approving all vinyl exteriors when we were told (and the CC&Rs specified) all brick, stone or similar and no vinyls). He also allowed two pre-fab houses when they were also not allowed by the original CC&Rs. But we were fortunate that those did not become the "norm" and there are only 3 homes here that are either all vinyl or prefab.

For the most part, however, he was pretty easy to work with and even allowed for early turn-over.

But the development right next to us has not fared as well. That developer is probably the type to which you are referring.

I do think there should be more consistent laws and statutes that do offer HOAs and H/Os more protection. But it would still need to be balanced in a way so as not to restrict development and growth.

This isn't what I was suggesting. Not even close.

I'm not saying they wouldn't buy into another development WITHOUT an HOA, only that the should walk and not buy from a developer who is doing crappy work or has a crappy history.

If one does one's homework, one would most definitely be able to tell what a developer will tend to be like. Unless they are brand new to the scene, they have a history somewhere that can be reviewed.

I don't know about other communities, but there's a fairly small number of residential developers in this community. I would guess probably fewer than 20?

I can't imagine buying in a development that is being tricked out by a brand new developer. I would probably pass on that. I want one that has a track record. I want to go visit his other developments. I want to see what sort of problems he's dealt with over the years and how they've been handled.

Since it's almost impossible to find a new development without an HOA or without a developer who at the very least has binding elements to which he must adhere, then researching a developer's history should very much be part of one's homework when buying a house.

I know that's what my husband and I are doing right now. We are looking to move closer to Lexington sometime in the next 5 to 10 years. We are watching developments in certain areas, and we've already got a list of a handful of developers that we will very much avoid. We know a few that have a great reputation, but they don't have anything currently going up in the areas we want. This is a huge investment. Maybe the first time a buyer jumps right in because he may not know exactly the things he's supposed to be looking for or asking, but that's not us at this stage.