Can a builder hold majority on a homeowners association?
We recently moved into a new community, and I would like to join the board of directors. The current board is made up of builder representatives, not homeowners.
Is it legal for the builder to control the board? They don’t even live in the community, and I thought it was a “homeowners association.”
I am concerned that they do not have the best interest of the community in mind when making decisions that affect the homeowners.
— E. Adams
Hello E. Adams,
Thank you for a great question.
Your association’s bylaws outline your specific community’s governing regulations as it relates to the administration and management of your association, so I encourage you to refer to your bylaws to better understand your association’s corporate structural guidelines.
Generally speaking, new communities with homeowners associations are often structured so that the builder has the right and the obligation to hold the majority of the board-member positions, also referred to as the declarant positions.
Association boards typically consist of five positions (although I have seen as few as three and as many as seven).
In the case with five director positions, three of the five director positions are typically declarant positions, which are
appointed by the builder.
The other two positions are often designated as homeowner positions, and available for homeowners who wish to run for election.
One of the primary reasons why builders and developers are entitled to declarant positions is to protect their investment and interest in the community during development.
Your association’s bylaws will specifically address the duration the builder is entitled to hold its declarant positions. Most have a definitive date, or percentage of homes occupied, before the declarant positions are released to the members of the association — or the homeowner community at large.
Although it may appear at times that the goals of the builder and homeowners are not aligned, my experience has been that builders have the best interest of the community in mind when drafting policies and making association decisions.
It is important to keep in mind that the builder has a vested interest to ensure that the community is successful.
Additionally, the majority of the builders I have worked with are focused on homeowner satisfaction, whereby it becomes critical to solicit homeowner feedback for consideration prior to making association decisions.
As a result, the will of the majority of the homeowners in a community typically shapes the association’s actions and decisions.
That said, there are several ways homeowners can become involved in their community association.
Consider running for one of the two homeowner-held board positions or look to join one of your association’s committees.
If your association does not have established committees, suggest chairing a committee that interests you.
Common association committees include a finance, social, architectural-review or a landscape committee. Committees serve at the pleasure of the board, are an important part of a healthy association and give homeowners a voice.
Simply because the builder holds a majority of the seats on the board of directors does not mean that homeowners cannot make a difference and ensure that they are instrumental in the association’s decision-making process.
I believe that once homeowners become more involved in the association’s processes, it will become evident that builder and homeowner interests are more aligned than originally thought.