A developer-controlled HOA is one where the builder still appoints the board, sets the budget, and holds most of the votes, because it hasn't handed the association over to the owners yet. That handoff is called turnover, and it's usually tied to how many homes have sold. Until it happens, the company that sold you the home also runs the association you pay dues to.
This is normal in new construction, but it changes what you should read before closing. The starting budget may not reflect what the community really costs to run, the developer may still be able to amend the declaration, and lenders review the project differently until owners take over. Here's where each answer lives in the documents.
The short version
- The developer (the "declarant" in most documents) appoints the board until turnover.
- Turnover follows a sales percentage, a time limit, or the developer leaving. The documents set the trigger; many states set an outer limit.
- Look for reserved declarant rights: amending the declaration, adding phases, and controlling architectural approvals.
- Early dues can run low if the developer pays reduced assessments on unsold units.
- Fannie Mae treats a condo project as "new" while the developer controls the HOA.
What a developer-controlled HOA actually means
Before the first home sells, the developer records a declaration (the CC&Rs), forms the association, and appoints the first board. Those directors are often developer employees. The developer also owns every unsold lot or unit, and each one carries votes.
Many declarations go further and create a separate class of membership for the developer, often labeled "Class B," with more votes per lot than owners get. California's Department of Real Estate describes the arrangement plainly in its subdivision buyer's guide: the developer controls the HOA for an extended period through preferential voting powers.
None of this is a red flag by itself. Someone has to run the association while the community is being built. The issue is incentives. A developer wants to sell its remaining inventory, which means attractive dues, steady construction, and flexibility to change the plan. Your interest as an owner is a fully funded association that maintains what was promised.
The provisions that govern this period usually sit in the declaration under headings like "Declarant Rights," "Declarant Control Period," "Class B Membership," or "Turnover." Board composition and election rules sometimes live in the bylaws or articles of incorporation instead. If you've never read a declaration, our guide on how to read HOA CC&Rs before buying covers the basic layout.
How long does a developer control an HOA?
The developer stays in control until the trigger in the documents is met or state law forces turnover, whichever comes first. Triggers usually take one of three forms: a percentage of units sold, a fixed number of years, or the developer no longer offering units for sale.
State statutes set the outer limits. Two examples:
- Florida HOAs. Under Florida Statutes 720.307, owners can elect a majority of the board three months after 90% of the parcels in all phases are conveyed, among other triggers. The developer keeps at least one seat while it holds at least 5% of parcels for sale.
- States using the Uniform Common Interest Ownership Act. West Virginia's version, Code 36B-3-103, ends declarant control no later than 60 days after 75% of units are conveyed, two years after the developer stops selling, or two years after it last added units. Owners must also get seats along the way, once 25% and 50% of units have sold.
Florida condos follow a separate statute with different milestones, and other states use their own numbers. Check the rule for the state where the property sits.
Phasing stretches the timeline. If the declaration lets the developer annex land or add buildings, the denominator for "90% sold" can keep growing.
The documents give you the trigger. They won't tell you how many units have closed today. Ask the developer or the listing agent for that number and an expected turnover date.
What the developer can still change after you buy
Most declarations reserve rights to the developer that owners don't have. Buyers tend to skip these provisions. Common ones include:
- Amending the declaration without an owner vote, sometimes limited to corrections or adding phases, sometimes broader.
- Annexing land or adding units, which changes the size of the community and how costs are shared.
- Controlling architectural review until turnover, so the developer approves or denies your exterior changes.
- Using common areas for sales offices, model homes, and signage.
- Assigning these rights to a successor developer if the original one sells the project.
For each right, read three things: what it lets the developer do, whether it needs any owner consent, and when it expires. A right that ends at turnover is very different from one that lasts "so long as the declarant owns any lot."
Developer-era contracts matter too. The developer may sign a multi-year management contract or an amenity lease before owners have a say. In UCIOA states, the owner-elected board can often end certain declarant-era contracts without penalty on 90 days' notice (West Virginia Code 36B-3-105 is one example), but that protection depends on state law and on the contract type.
Once owners take over, changes follow the normal amendment process. We cover how owner votes and thresholds work in can an HOA change the rules after you buy.
Why HOA dues often change after developer turnover
Dues in a developer-controlled HOA reflect the developer's budget, and that budget can understate long-term costs for a few reasons you can spot in the documents.
Reduced developer assessments. Many declarations let the developer pay a reduced assessment on unsold lots, or skip assessments entirely and instead cover any operating shortfall directly. Either way, the full cost per home isn't visible until the developer stops paying that way. Look in the assessment article for terms like "deficit funding," "declarant exemption," or "subsidy."
Thin reserves. New roofs and new paving don't need replacing yet, so it's easy to set reserve contributions low. The bill still arrives later, and owners pay it. Check the budget's reserve line and whether a reserve study exists. Our post on HOA reserve funds when buying a condo explains what a healthy reserve looks like.
Amenities not yet built. If the clubhouse or pool is scheduled for a later phase, today's budget may not include the cost of running it.
Warranty-period repairs. Builder warranties can cover early defects, which keeps the repair line low in the first years.
After turnover, the owner board sets a budget that has to cover everything. Sometimes the change is small. Sometimes it isn't. No reliable data shows how much dues typically move, so be skeptical of anyone who quotes a number. Compare the current budget against the costs it should carry, and ask the developer how its assessments are calculated.
How developer control affects your mortgage
Fannie Mae's project standards classify a condo project as "new" when, among other conditions, the HOA is still in the developer's control. An "established" project requires that control has been turned over to the unit owners, along with at least 90% of units sold, construction complete, and no further phasing.
That classification changes how your lender reviews the building. A new project gets a different review than an established one, often with more questions about sales, completion, and the budget. Some projects clear that review easily. Others run into problems, especially with lots of unsold inventory or units the developer is holding to rent. If the project can't meet the guidelines, it may be non-warrantable, which narrows your loan options.
This applies mainly to condos. Single-family homes in a developer-controlled HOA usually don't face a project review, though your monthly dues still count in your debt-to-income ratio.
Tell your lender early that the developer still controls the HOA, and ask whether the building has been reviewed before. A lender that has already closed loans in the project can usually tell you what it needs. It's better to learn about a review issue during the inspection period than a week before closing.
How ClearHOA reads this for you
ClearHOA reads your declaration, bylaws, rules and regulations, or HOA addendum and pulls the developer-control provisions into a plain-English report. That includes the turnover trigger, the declarant's reserved rights and when they expire, how the developer's assessments on unsold units are handled, and any amendment powers the developer kept. Each item cites the section it came from, so you can check the source language yourself. It takes about 90 seconds. Upload your HOA documents and you'll see what the developer can still do before you're bound by it.
Frequently asked questions
How long does a developer control an HOA?
Until the turnover trigger in the governing documents is met or state law requires turnover, whichever comes first. Statutory limits vary: Florida HOAs turn over three months after 90% of parcels are conveyed, while UCIOA states like West Virginia use 75% plus time-based backstops.
Can the developer change the CC&Rs after I buy?
Only if the recorded declaration reserved that right. Many do, sometimes limited to corrections or adding phases, and usually ending at turnover or when the developer sells its last unit. Check the "Declarant Rights" section for the scope and expiration of any amendment power.
Do HOA fees go up after developer turnover?
They can. If the developer paid reduced assessments, covered shortfalls directly, or kept reserve contributions low, the owner-elected board may need to raise dues to cover real costs. Not every community sees a jump. Compare the budget against actual expenses and reserve needs before you buy.
Does the developer have to pay HOA dues on unsold units?
It depends on the declaration and state law. Some declarations require full assessments on every unit. Others allow a reduced rate or let the developer fund operating deficits instead. The assessment article of the declaration says which applies, and for how long.
Can I get a mortgage on a condo where the developer still controls the HOA?
Usually, yes. Fannie Mae classifies these as new projects, which means a different lender review. Projects with heavy unsold inventory, incomplete construction, or budget problems may fail it, which can make the condo non-warrantable. Raise developer control with your lender early.
If your agent has sent over the HOA documents for a new-construction home, upload them to ClearHOA. You'll get a plain-English summary of what you're agreeing to, including who controls the board, when that changes, what the developer can still amend, and the dues and risk flags that matter, before you sign.