Can a Developer Legally give Control to a Property Management Company?

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“A developer has given control to a Property Management Company, is this legal?

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I live in a Condo association in Pa. Our community is approx. 25% full and our condo documents state 2 members of the association should serve on the board at this time. Therefore the residents have elected 2 board members (one being myself). However when we have board meetings the developer (who supposedly is the other 75% of board) has no communication with us an never shows up at the board meetings. Instead the property management company is there in his place. They never let us decide anything, and they adhocly do what they want without even consulting us. For example, they decided to impose fines for miscellaneous problems, but they do so randomly and only enforce the rules on some residents. When we as board ask for their reasoning, they say it’s confidential. They also won’t allow us to see all the financial statements, but instead provide with a “mickey mouse” overview of where we stand.

I don’t understand, our documents call for 2 board members at this phase in our community, yet we have zero power, nothing official ever takes place. Do we have any legal recourse?

Is there something I can do about this situation? We’ve already wrote a letter to the developer, but he doesn’t seem to care. In general, he is an irresponsible developer and can’t seem to even pay the construction company to finish the rest of the units in the development.”

In general, there are written documents which control the details of condo and homeowner’s associations. These documents are enforceable contracts. So, it would be a question of reviewing the documents to see what is supposed to happen, and if necessary suing the developer to enforce the contract.

However, it is not unusual for developers to write these contracts in such a way that they maintain all or nearly all authority until all (or a large percentage) of the units are sold. If the documents allow the developer this kind of authority, there may not be much you can do until more units are sold.

Some states have passed laws in recent years providing minimum requirements for these sorts of associations; you may also wish to review your local law on the subject. To the extent that the documents provide less than the law requires, the legal minimum will apply.

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Author: House Attorney

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