Condos and HOAs

Living with Rules

Do developers give thought to long-term governance in the communities they build?

It is no secret that developers build communities with one main goal in mind: selling out their inventory. 

While development in Florida and many other parts of the country has dwindled considerably over the last few years, now is the time for reputable developers to give some thought to new ways to ensure success for the product they are peddling.

Most purchasers look at all the obvious things: size and location of the community pool,  reliability of the security measures being offered and model types for their desired unit or lot.  A potential purchaser might not give much thought prior to the closing about how easy it will be to elect a board, whether the assessments are artificially low,  the transparency (or lack thereof) of community operations and whether or not the association’s governing documents are properly maintained and easily accessible.

Developers who really want their customers to be talking about how wonderful they are years after transition would be well advised to do the following:

-Create a streamlined governing body. Creating communities with 22 sub-associations and a master association might be easier for the developer to manage fiscally but it is a nightmare of duplication and confusion down the road which is almost impossible to untangle as people identify far too greatly with their “building” as opposed to the community overall.

-Create governing documents with practical realities in mind. Don’t make it difficult and/or impossible to amend the governing documents by requiring lenders’ consent. Why would you ever subordinate the association’s lien rights to lenders? Many developers can secure construction financing without doing so and so can you.

-Be a pioneer and understand that technology is here to stay and often cuts down on expense and time for communities who utilize it thoughtfully. Create an association website and upload the governing documents for inspection convenience. Create reasonable rules and regulations that allow the use of smartphones, scanners and tablets so owners can make their own copies of documents of interest without expending funds and without having the association undertake any labor in that regard.

-Do not create a budget with artificially low amounts to entice purchasers. Your customers certainly  want to make an informed purchase decision and you deny them this right when they are unaware of the costs it takes to really provide the common area services you deliver while you are still building homes.

The economic woes over the last few years have given developers ample free time to consider new ways of creating planned communities that will support long-term enjoyment by the residents. It all starts with a plan that makes sense for those who live in the community and not just those who buy.


-Take out your calculator when creating your documents to ensure that the percentages of ownership actually add up to 100%. One of the most egregious cases of developer error I’ve seen was in a large condominium where the percentages of ownership did not add up to 100% and were inconsistent with the surveys attached to the declaration.

-Create a real sense of community from the beginning. Rather than just highlighting your sales office, set up a Welcome Committee that is run by the residents and has nothing to do with your remaining sales. Hold regular meetings and set the tone for inclusion and transparency.

Comments (3 Comments)

  1. Donald says:

    From your blog to developers in-basket Donna. My community suffers from every one of these problems except I think our percentages add up correctly. All of these issues have kept our community from developing at a normal pace. Repairing documents is a nightmare. Budgeting for over 20 individual condos is a nightmare. We were under-reserved for 2 decades. The worst part is the architecture; designed and built so poor they cost a fortune to keep up now. On the plus side we do have a beautiful community even though the management and maintenance of it is a pain in the ass.

    Do we really have to notify lenders when we want to amend our documents? Its in our docs but what an absurd hurdle to jump. What are they likely to do if we do not?

  2. pam torre says:

    You are right you do not want lenders involved in amending documents. Our HOA Board makes it very difficult to get to documents and requires a certified letter return receipt requested letter necessary for every single thing.
    Thanks for all the great tips. We appreciate you out here.

  3. Gary says:

    Remember folks, every developer operates with an attitude known in the trade as “IBG”, which stands for “I’ll be gone”. Meaning; when the problems start in later years, I’ll be gone.


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