Condo Developer Refuses to Pay Common Fees After Relinquishing Declarant Control

L.J. from New London County writes:

Dear Mister Condo,

Our condo association was recently transferred from declarant control to owner control from the developer. There will be a total of 13 units WHEN completed. There are presently 8 units sold and the developer holds rights to 5 units (lots). These are individual unattached homes on lots. The new condo association has assessed an HOA fee to the developer for his development real property lots which is about 1/4 of the HOA fee for Sold Units. These fees are associated with landscape / snow removal / Insurance not related to dwelling coverage etc. The developer has refused to pay his HOA fees. What are the options available to the Condo Association?

Mister Condo replies:

L.J., condo association that are in developer transition are governed differently from associations that are fully under control of the Board. As such, the declarant often has special rights that are outlined in the governing documents and may need interpretation from a qualified attorney. At the very least, I would think the new Board should be working with its own attorney during this process as the developer’s attorney is working for the developer, not the association. I could get into all the potential pitfalls a new association like yours could face without legal representation during this crucial stage of association development but I think you are learning it first-hand with a developer that is refusing to pay his fair share of assessments to cover common services. I’m not saying that he has to; that is for your governing documents to dictate. And even if the documents state he must pay these fees, his refusal to do so may indicate legal action may be necessary. My best advice for you and your fellow unit owners is to make sure the association has its own attorney during this important phase of developer transition. It is the only way to have your own legal professional looking out for your best interests. Good luck!

Leave a Reply

Your email address will not be published. Required fields are marked *