Declarant Control Condominium and HOA Communities

Declarant Control Podcast Intro

Buying a new Wisconsin condo or entering a new community Association or planned development often comes with more than just fresh paint and modern finishes. It also means stepping into a community that is still in its earliest stages of development. At the center of this beginning lies a concept many buyers have never heard of until they are already under contract: Declarant Control.

Declarant Control is the period when the original developer, also known as the declarant, retains significant authority over how the Association is run. This power can extend to decisions about budgets, reserves, rules, and even the direction of the entire community. While it is intended to provide consistency during the initial build-out, it also means homeowners are living under a system where their voices may not yet carry full weight.

For newly created associations across Wisconsin, this control can last for years, depending on how quickly units are sold or how the declaration is written. During this time, the developer often makes critical choices about common areas, landscaping, reserve funds, and ongoing maintenance contracts. These decisions can have long-lasting impacts on condo fees and the overall financial health of the HOA.

In this video, we explore how Declarant Control operates in newly created condominiums, what Wisconsin law says about it, and how homeowners can prepare for the eventual transfer of authority.

Full Transcript

Okay, let’s unpack this. Today, we’re diving deep 
into a fascinating um sometimes misunderstood  

corner of real estate. It impacts millions of 
homeowners, maybe even you, often without you even  

realizing it. We’re talking about something 
called Declarant Control in condominiums,  and planned communities. Right. We’ve looked through a whole stack of articles, legal blogs,  

community discussions, and our mission really is 
to demystify this critical period. Yeah. Pull back  

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the curtain a bit. Exactly. Reveal the potential 
pitfalls and hopefully empower you with what we’ve  

learned from all these sources. And what’s really 
interesting here is how this idea I mean it’s  

absolutely essential for getting a new community 
built. Right. Sure. You need someone in charge  

initially, but it can also create well significant 
friction, long-term issues for homeowners if you  

don’t fully grasp the implications. So it’s not 
just what it is. No, it’s why it matters so much  

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to your home, your money, your say in how things 
are run. Okay, so let’s start with the basics.  

This declarant, who are we talking about? Simply 
put, it’s the developer, the builder who actually  

creates the **condominium** project or the planned 
community. Got it. And the **Declarant Control**  

period. That’s that specific initial time frame. 
The period where the developer keeps significant  

control over the homeowners **association**, meaning 
the board of directors. The board. Yeah, but also  

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its operations and critically its finances. 
Now, our sources do point out there’s a reason  

for this. A logic from the developer’s angle. 
Oh, absolutely. Think about it. During those  

early stages, construction, marketing, sales. 
The developer needs to make sure their vision  

holds together. Keep things consistent. Exactly. 
They need to finish the projects, sell the units.  

You can’t have, say, the first 10 buyers forming 
a board and suddenly deciding to paint everything  

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purple, you know? Right. that could mess up the 
whole plan, the marketability. It’s really a  

way for them to protect their investment and make 
sure the community actually gets built as planned.  

Okay, that makes sense. It’s like they’re steering 
the ship while it’s still under construction.  

Yeah. But how long does this developer 
control actually last? Is it indefinite? Oh,  

definitely not. Thankfully, uh the duration varies 
quite a bit state by state. That’s a key thing we  

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saw in the legal sources. So, it depends where 
you live pretty much. Often it’s tied to selling  

a certain percentage of the units. You’ll often 
see numbers like 75% or maybe even 9% sold. Okay?  

Or sometimes it’s linked to a specific number of 
years. Typically, you know, maybe 5 to seven years  

after the first sale. Sometimes it’s whichever 
comes first. We found some specific examples,  

right? Yeah. Like uh Wisconsin law limits it 
to 3 years or 75% of units sold unless there’s  

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a specific amendment. And in North Carolina, 
it seems common for control to last until 75%  

of units are sold or a certain number of years 
pass again, whichever happens first. It shows  

lawmakers are trying to put some kind of limit 
on it. It’s interesting how the specifics change,  

but the basic idea of a limit seems common. Is 
there a larger legal reason for this consistency?  

Yeah, if you zoom out a bit, a lot of state laws 
for these communities are influenced by big model  

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acts, things like the Uniform Common Interest 
Ownership Act, UCIOA, or the Uniform **condominium**  

Act. So templates basically kind of they provide 
a framework. So even if state A has a 5-year limit  

and state B has a seven-year limit, the underlying 
goal is similar. Balance the developers need to  

build with the homeowner’s right to eventually 
run their own community. Balance. Yeah, that  

sounds good in theory, right? But achieving that 
balance in practice, that’s where things can get  

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um complicated. And that leads us right into 
the potential downsides, right? Because while  

declaring control is okay, necessary to start, 
it could become a real source of headaches for  

homeowners. The huge source, our sources, legal 
blogs, those online forums, they paint a pretty  

clear picture of some serious concerns. It boils 
down to a fundamental conflict of interest,  

doesn’t it? How so? Well, the developer’s 
main goal during that control period is  

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usually short-term. Sell units quickly, maximize 
profit, minimize their own costs, okay? But the  

community’s needs are long-term. Maintaining 
property values, ensuring financial stability,  

funding future repairs. Those goals often 
clash and the developer appointed board might  

lean towards the developer’s interests. often, 
yes, intentionally or not. That’s where you see  

things pop up like uh declarant self-deing, which 
comes up a lot in homeowner discussions. Financial  

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mismanagement, too. Declarant self-deing. Yeah. 
What does that look like in practice? Beyond the  

obvious, maybe. Well, it can be subtle, like maybe 
the developer awards the landscaping contract or  

security or even repair work to companies they 
own or are affiliated with. Uh, keeping the money  

in the family, so to speak. and maybe not always 
at the most competitive price for the community.  

Another big one is deferring maintenance. Putting 
things off. Yeah. Making sure the place looks  

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shiny and new for sales, but maybe putting off 
essential upkeep on things like the roof or the  

pool pumps or the building exteriors. Just cutting 
costs during the sales period so the problems  

don’t show up until later. Precisely. Kicking 
the can down the road for the homeowners to  

deal with financially later on. Bassing the buck 
essentially. Wow. And maybe the sneakiest tactic,  

setting those initial **HOA** fees really, really 
low. That sounds good though, right? Low fees are  

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attractive. They are. It’s a great selling point. 
But it often means they’re not putting enough  

money into the reserve fund. The rainy day fund 
for big repairs. Exactly. The fund for replacing  

the roof in 15 years or repaving the roads or 
major system overhauls. So, you buy in thinking  

the fees are low, only to get hit with huge 
increases or a massive special assessment a few  

years later because the reserves are practically 
empty. You got it. It’s a short-term win for the  

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developer sales pitch, but potentially long-term 
pain for the residents. A real financial time  

bomb. It really makes you question what you’re 
inheriting. And it’s not just the money, right?  

What about the actual construction, the quality of 
the building itself? That’s another huge area of  

concern. A developer controlled board might be, 
let’s say, reluctant to aggressively pursue the  

developer for construction defects because they’re 
essentially suing themselves or their boss. Pretty  

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much it directly hits the developer’s bottom line. 
We’ve seen sources mention cases where they might  

even try to use the Association’s money, your 
money, to fix things that should be covered by  

the developer’s warranty. Uh, that adds insult 
to injury. draining already low reserves to fix  

the developer mistakes. And layered on top of all 
this is the feeling of powerlessness homeowners  

often report during this period. Right. The lack 
of transparency, not having a voice. Exactly. We  

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saw news reports like some from North Carolina 
detailing these intense fights homeowners had  

just to get control of their own HOAs. They felt 
shut out of key decisions affecting their homes,  

their money, their community life. Must be 
incredibly frustrating. Absolutely. So, what’s the  

lasting damage here when the homeowners finally do 
take over? Well, the handover isn’t always a clean  

slate. The new homeowner board often inherits a 
pile of problems like those underfunded reserves  

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we talked about, poorly maintained common areas 
from deferred work and sometimes even ongoing  

lawsuits related to defects or financial issues 
from the control period. So, they’re starting  

behind the eight-ball, way behind. It’s a heavy 
burden financially and logistically that can  

impact the community’s health and property values 
for years, long after the developer packed up and  

gone. Okay, so turnover happens, the control 
period officially ends. Phew, sigh of relief.  

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Maybe not quite. Yeah, not so fast. Because 
even after the homeowners elect their own board,  

the developer often retains certain specific 
rights. They’re called special declarant rights.  

Special rights. That sounds important. Where are 
these found? They should be spelled out clearly  

in the main governing document, usually called 
the declaration or the CCNRs. They’re not secret,  

but maybe easily overlooked if you’re not looking 
closely when you buy. Okay, give us some examples.  

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What kind of special rights are we talking 
about? Well, think about this. The developer  

might keep the right to maintain sales offices or 
model homes within the community even after most  

people have moved in. Yeah. Sometimes for years, 
especially if they’re building in phases. They  

might also reserve the right to use common areas 
like your pool or clubhouse for marketing events  

to attract buyers for remaining units or future 
sections. So, they’re still using your amenities  

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to sell their product essentially. Yes. Or they 
might retain the right to build future phases,  

maybe even annex more land, which could change 
the density or character of the community you  

bought into. Wow. So, the developer’s influence 
can definitely linger. It really can. Which means  

that new homeowner board when they finally get 
elected, they have a massive job on their hands  

immediately. Monumental is a good word for it. 
They step into serious fiduciary duties, a legal  

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responsibility to act in the best interests 
of the **association** and potential liabilities,  

too. So, what are job number one, two, and 
three for that new board? Okay. Critical  

first steps based on our sources. One, get a 
professional reserve study done immediately.  

Find out the real financial health and future 
needs. Okay. Two, conduct a full forensic  

financial audit covering the entire declarant 
control period. Look for any signs of that  

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self-dealing or mismanagement. Follow the money, 
right? And three, hire independent engineers or  

inspectors to do a thorough inspection of 
all the common elements, roofs, structures,  

systems, looking for hidden construction defects. 
That sounds like a lot of work and potentially  

expensive work right out of the gate. It is, 
but it’s crucial for understanding what they’ve  

inherited. And what if they do find big problems? 
construction defects, missing money. Wrong. Are  

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they just stuck? Not always. This is often when 
they face a really tough decision. Should they sue  

the developer, taking on the company that built 
the place? Exactly. It’s costly, time consuming,  

stressful. Yeah. But often it’s the only leverage 
they have to get defects fixed properly or recover  

mismanaged funds. It’s about protecting the 
community’s assets long term. And you mentioned  

some states are making that easier. Yeah, we saw 
notes about legal changes like in Wisconsin giving  

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condo owners more power to pursue those lawsuits 
after turnover. It suggests a trend towards  

empowering homeowners, which is interesting. 
So for that new board, it’s really about due  

diligence squared. They have to be detectives 
almost. Absolutely. They need to dig into the  

records, get expert advice, and be ready to act 
decisively to protect everyone’s investment. Yeah.  

Understanding their rights and the developers 
potential lingering liabilities is just vital.  

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Okay, this is all incredibly useful. Let’s shift 
to actionable advice. What does this mean for you,  

the listener, if you’re thinking of buying or 
if you already live in one of these communities,  

right? Let’s talk practical steps. Starting 
before you even buy, due diligence seems like the  

absolute mantra here. It’s everything, your number 
one tool. Before you sign anything, you absolutely  

must read the governing documents. All of them. 
the declaration, CCNRs, bylaws, rules, the whole  

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stack, the whole nine yards. And don’t just 
skim. This is your contract with the community.  

It spells out the rules, your rights, their 
rights, and specifically related to this topic.  

What should you be hunting for in those docs? Look 
for the section on the **Declarant Control** period.  

Understand how long it lasts, what triggers 
its end, and crucially, look for any mention  

of those special declarant rates that might 
stick around after turnover. Know what you’re  

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getting into basically. Exactly. Also, dig into 
the financials. Ask for the Association’s budget,  

recent financial statements, meeting minutes if 
possible. What are the red flags there? Unusually  

low HOA fees compared to similar communities. 
That can be a big one. A reserve study that  

shows significant underfunding or meeting minutes 
that mention deferred maintenance projects. These  

are all warning signs. And if things feel complex 
or it’s a brand new development, get professional  

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help. Seriously, consult an attorney who 
specializes in community **association** law before  

you buy. It’s an expense, yes, but it can save 
you so much heartache and money down the line,  

they know what to look for. Okay, good advice. 
Now, what if you’re already living there and the  

developer is still in control? Are you just stuck 
waiting? No, not at all. Engage, be proactive,  

go to the **association** meetings, even if they 
feel pointless sometimes. Listen, ask questions.  

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Document any concerns you have about maintenance, 
finances, anything. Get involved. Yes. And find  

out if your state law allows homeowners to elect 
some representatives to the board even during  

the control period. Many states have phased 
transitions. If so, get involved in electing  

knowledgeable, committed homeowners. Maybe 
formed a resident committee. Great idea. Even  

a small group of informed organized residents can 
monitor what the developer is doing and advocate  

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for the homeowner’s interests. There’s strength in 
numbers and shared information. Okay. And finally,  

for those folks on the brand new homeowner board, 
right after turnover, what’s the immediate game  

plan boiled down? All right, the critical first 
moves. One, commission that independent reserve  

study. Two, order the full forensic financial 
audit of the developer’s time in charge. Three,  

get that comprehensive engineering inspection of 
common property. Don’t delay. Do not delay. And  

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if those steps uncover significant problems, major 
defects, financial irregularities, get experienced  

legal counsel involved immediately. Time is often 
of the essence in these cases due to statutes  

of limitations. It really hammers home that 
knowledge is power here. It truly is. The more you  

understand as a homeowner, whether buying, living 
under **Declarant Control**, or serving on the board,  

the better you can ask the right questions, push 
for accountability, and protect your community’s  

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future. It’s about being an active citizen in your 
own neighborhood. So, we’ve definitely journeyed  

through the complexities of declare and control 
today. We’ve seen why it exists, the uh very real  

potential pitfalls, and most importantly, how 
you can navigate it. It’s clearly a critical,  

sometimes really challenging phase for any 
condo or HOA type community. Absolutely. But one  

where being informed and engaged makes all the 
difference. You know, it strikes me developers  

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might lay the bricks and mortar, but it’s 
really the engaged, informed homeowners who  

build and protect the actual foundation for the 
community’s long-term success. The power does  

shift eventually, but that responsibility 
to understand your rights, to act on them,  

that starts the minute you even think about buying 
in. That’s a fantastic thought to end on. Really  

puts the power and the responsibility back with 
the homeowner. As you look at your own community,  

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or maybe one you’re considering, we hope this 
deep dive gave you plenty to think about.  

Until next time, keep digging, keep learning, 
and keep asking those important questions.

Closing Thoughts

Understanding how Declarant Control works is an important step in protecting your investment and ensuring the long-term success of your community. Every new Wisconsin condo comes with unique challenges, but with the right knowledge, owners can confidently navigate the transition from developer to resident governance.

If you have questions about New Wisconsin Condos, HOA type governance, or the early stages of **newly created associations**, I bring over 27 years of real estate experience in helping buyers and owners make informed decisions. Reach out anytime to talk about your options and what works best for your situation.

Disclaimer: This article and podcast is provided for general informational purposes only and does not constitute legal advice. Condominium and HOA laws can vary significantly by state and specific community documents. Readers should not act upon this information without seeking professional counsel. For guidance tailored to your situation, consult with a qualified real estate attorney or other licensed professional in your jurisdiction.